We're at a pivotal moment for the corporate world’s understanding of biodiversity’s connection to climate change and the financial implications of nature loss.
This changing tide was apparent at the U.N.’s COP15 meeting in Montreal, Canada, last month, where more than 190 countries agreed to a historic package of goals and targets aimed at halting and reversing nature loss by 2030.
Investors and the private sector are paying more and more attention to the topic of biodiversity, but only a small share of companies globally have set targets to protect biodiversity or address deforestation, according to research by S&P Global Sustainable1.
This trend holds true even for regions where governments have set ambitious biodiversity goals, such as in the European Union. Only about one-third of Europe's biggest companies have set such targets, while adoption rates are even lower among the largest companies in Asia-Pacific and the U.S.
Most companies with biodiversity targets aim to reach their goals by 2030, according to S&P Global Sustainable1 data. But we also see that only a small share of companies have committed to preserving biodiversity or addressing deforestation across their supply chains, where most of the damage is being done.
The picture is similar when it comes to nature-related finance. At present, financial institutions’ offerings related to biodiversity or ecosystem services are far less developed than their products geared toward climate change, an analysis of S&P Global Corporate Sustainability Assessment data shows.
Addressing the biodiversity and climate crises in tandem is also increasingly urgent. One key example of how biodiversity and climate change are intertwined is the low-carbon transition, which will require a huge expansion in the supply of elements like lithium and copper to support new infrastructure. Mining exploration around the world is picking up to meet this need, but research by S&P Global Sustainable1 has found that existing mines and exploration sites overlap with some of the world’s most important areas for biodiversity. Of the 1,276 mining sites that intersect with Key Biodiversity Areas, 29% of these sites are for extracting minerals needed for the low-carbon energy transition. Enabling the energy transition while managing the potential negative impacts on biodiversity is a complex challenge.
Although we see some encouraging signs from the private sector, our data indicates corporations still have a long way to go — including when it comes to the way we communicate about nature and biodiversity. We heard repeatedly during COP15 about the lack of shared language around nature and biodiversity, and the need for education around these topics. S&P Global Sustainable1 is working to address some of these challenges by convening a knowledge community to consult on the development of data intelligence to accelerate a shift of capital towards nature-positive outcomes through the universal lens of the Taskforce on Nature-related Financial Disclosures (TNFD).
This piece is a part of the annual State of Green Business report.
