Published: October 17, 2024
Corporate commitments to protecting biodiversity and halting deforestation have risen since the signing of the Global Biodiversity Framework in 2022 but remain extremely rare, according to S&P Global Sustainable1 data.
Latin America is the region with the highest share of companies making these commitments. Colombia, the host of the UN’s COP16 biodiversity conference, is the global leader in corporate commitments on biodiversity and deforestation.
Among the companies that have publicly committed to protecting nature, only a quarter have conducted risk assessments of the biodiversity impacts of their own operations and upstream suppliers, signaling there is much more work to do on locating and addressing impact even for corporate leaders.
In December 2022, hundreds of representatives from governments around the world hammered out a landmark agreement to address nature and biodiversity loss — a global crisis increasingly recognized as exacerbating climate change and creating significant economic risks to industries and communities. The signing of the Kunming-Montreal Global Biodiversity Framework (GBF) was a watershed moment akin to the creation of the Paris Agreement on climate change, and it signaled a new level of urgency and global cooperation to fight nature loss.
In the two years since, measuring and abating nature risk has become a bigger component of corporate strategy. The launch of the Taskforce on Nature-related Financial Disclosures (TNFD) and the announcement of the International Sustainability Standards Board’s next research project — biodiversity and ecosystems — have expanded the business world’s view of sustainability risk management to include companies’ impacts and dependencies on nature and ecosystem services.
But while more companies are recognizing the business risks of nature degradation and biodiversity loss, public commitments to protect biodiversity and ecosystems, halt deforestation and assess biodiversity impacts remain rare across the corporate world. A new analysis of S&P Global Sustainable1 data shows that the number of companies with biodiversity commitments has doubled but remains low — 233 out of a sample of 8,629 assessed firms. The data also shows that even among the leading companies, there is more work to do: Less than one-quarter of companies with a biodiversity commitment have also assessed the biodiversity impact risk of their own operations and their upstream suppliers, meaning they have not yet assessed what meeting that commitment will take.
Nature is fundamentally important to business because it is the foundation of the global economy: About $44 trillion of global economic value generation, which was over half of global GDP in 2019, is moderately or highly dependent on natural assets and ecosystem services, according to the World Economic Forum. Ecosystems also underpin human efforts to slow climate change. Land and ocean carbon sinks have absorbed about 56% of human-caused CO2 emissions annually over the past six decades, according to the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report. Weakening those ecosystems degrades that buffer against the worst global warming scenarios, in which climate physical hazards become more extreme.
There are some bright spots around the world, however. In Europe and Latin America, for example, a significantly higher percentage of companies have committed to having a net positive impact (NPI) on biodiversity and to addressing deforestation. Colombia, the host of the upcoming UN Biodiversity Conference known as COP16, is the global leader in corporate commitments on biodiversity and deforestation. And many of the industries with significant operations in remote ecosystems, such as Metals & Mining, have higher rates of biodiversity commitments.
This analysis uses data collected through the S&P Global Corporate Sustainability Assessment (CSA), an annual evaluation of the sustainability practices of thousands of companies globally. The CSA assesses companies on 23 topics on average, including what policies they have on biodiversity and deforestation. The analysis of changing commitment levels over time uses a constant universe of companies that were assessed in both the 2022 and 2023 CSA cycles.
The assessment asks whether companies have a group-wide commitment to achieve a net positive impact (NPI) on biodiversity. The NPI commitment is aligned with the GBF and requires a company to stabilize its impact on biodiversity across its value chain by 2030 to allow for ecosystems to recover over the next 20 years, with the ultimate goal of net improvements by 2050.
CSA data shows that following the UN’s 2022 COP15 biodiversity conference, biodiversity NPI commitments rose across nearly every industry. In three industries — Gas Utilities, Electric Utilities and Paper & Forest Products — at least 10% of companies have publicly made this commitment, with the Metals & Mining and Construction Materials industries close behind. Companies in these five industries operate at least partially in remote areas — gas pipelines and electrical transmission lines may cross hundreds of miles of undeveloped land, while mining firms often operate in significant ecosystems. Recent research by S&P Global Sustainable1 found that 71% of mines extracting nickel, lithium and other minerals needed for the energy transition operate in ecosystems that are significant for preserving biodiversity globally.
Across all industries in the 2023 CSA, a total of 233 companies out of 8,629 assessed have publicly made an NPI commitment — more than double the 89 companies with this commitment in the 2022 CSA. Among these leaders, however, not all are taking steps to assess the impacts of their operations and their suppliers on biodiversity. Less than half of companies with an NPI commitment have conducted a biodiversity impact risk assessment of their own operations, and only 24% have assessed their own operations and upstream suppliers. For many industries, nature risk is more concentrated in supply chains where raw materials are sourced.
Deforestation, particularly in the agricultural sector, represents one of the largest sources of damage to biodiversity globally. Forests provide habitats to about 75% of bird species and 68% of mammal species, according to the UN Food and Agriculture Organization report The State of the World’s Forests 2024 – Forest-sector innovations towards a more sustainable future. The expansion of cropland and grazing land for livestock combined accounts for almost 90% of global deforestation, according to the UN’s 2023 Sustainable Development Goals Report.
Forests also function as some of the largest terrestrial carbon sinks and absorbed some 7.6 gigatonnes of CO2 from the atmosphere annually between 2001 and 2019, according to a 2021 study published in the scientific journal Nature Climate Change. These natural carbon sinks are essential to limiting global warming. The first global stocktake at the UN’s COP28 climate conference emphasized the importance of conserving natural carbon sinks as an element of mitigating emissions to meet the Paris Agreement goal of limiting the increase in the global average temperature to well below 2 degrees C above preindustrial levels and ideally to 1.5 degrees C.
As with broader biodiversity commitments, corporate pledges to halt deforestation have been on the rise but remain uncommon. About 6% of assessed companies, 475 of a sample of 8,591, have a commitment to either “no net” or “no gross” deforestation. “No gross deforestation” means the company has made a commitment to end all deforestation, whereas “no net deforestation” refers to offsetting losses with future reforestation. Some of the top industries in deforestation commitments were also leaders in NPI, including the Paper & Forest Products industry, where the commitment rate nearly tripled to 32%. More than half of these companies have committed to a no gross deforestation policy, which could reflect a shift in strategy toward alternative plantations, wood product inputs and recycling.
While the Food Products, Food & Staples Retailing and Beverages are some of the leading industries on this topic, the vast majority of these companies continue to have no commitment to halting deforestation. These industries rely on agricultural inputs throughout their supply chain, and while research has shown they consider supply chain management to be a top material issue, that has not extended to protecting forests.
One of the great ironies of agriculture-driven deforestation in some of the world’s largest tropical rainforests is that these forests are the engines for weather systems that regional agriculture depends on. The Amazon rainforest not only receives torrential rainfall each year; through a process called evapotranspiration, moisture released by the dense vegetation there generates new rainclouds that farms in Brazil and the surrounding countries rely on to grow crops. That means extensive deforestation to satisfy agricultural demand for land could eventually undermine agriculture across the local region in a fundamental way.
Latin America has been the site of extensive deforestation, substantially the result of clearing land in the Amazon basin to create grazing for cattle. Worldwide, non-fire related tropical forest loss has totaled between about 2 million and 4 million hectares annually for the past two decades, according to the World Resources Institute (WRI). However, parts of Latin America have made dramatic progress in curtailing deforestation. WRI found that in Brazil and Colombia, primary forest loss decreased 36% and 49%, respectively, between 2022 and 2023. At the same time, however, forest loss increased in countries including Bolivia and Nicaragua.
CSA data shows that Latin America is the leading region globally for both NPI commitments and no deforestation commitments, and that within the region, Colombia has by far the largest share of companies prioritizing biodiversity and forests. About 4.4% of Latin American companies have made NPI commitments, versus the global rate of 2.7%, and 17% of Latin American companies have a no-deforestation commitment, almost three times the global rate of 6%.
Colombia is the only country where a majority of companies assessed in the CSA are committed to no deforestation. Colombia’s 65% commitment rate is roughly twice as high as the next two countries, Portugal and Thailand. Primary forest loss decreased 49% in Colombia from 2022 to 2023, after a six-year period of intense deforestation that coincided with a peace agreement between the country and the Revolutionary Armed Forces of Colombia, according to WRI. Colombia’s president, Gustavo Petro, has made forest conservation a central issue in further peace talks with other rebel groups who maintain control over large swaths of the country’s rainforest.
Leaders from government, business, civil society and Indigenous peoples will gather in Cali, Colombia Oct. 21 for COP16, the next UN biodiversity conference, where discussions will center around what concrete action needs to be taken to meet the goals of the GBF, signed in 2022. The GBF’s headline target is preserving 30% of land and ocean area under protection and restoring 30% of terrestrial and marine ecosystems by 2030. At COP16, countries are expected to publish National Biodiversity Strategies and Action Plans, analogous to the nationally determined contributions that guide countries’ strategies for reducing emissions and combatting climate change. Ahead of COP16, bodies such as the World Economic Forum are calling for countries to reconcile their climate and biodiversity strategies as two sides of the same coin.
While the GBF is an intergovernmental agreement, it recognizes the role that major corporate actors will play in addressing nature loss. Target 15, one of the GBF’s 2030 goals, is for parties to enable businesses — particularly transnational companies and financial firms — to assess and disclose their risks, dependencies and impacts on biodiversity across their own operations, supply chains and portfolios. Target 15 aims “to progressively reduce negative impacts on biodiversity, increase positive impacts [and] reduce biodiversity-related risks to business and financial institutions.”
The GBF sets out the goal of near-term action, with progress expected over the next five years. Data from the 2023 CSA shows that many of the companies that have made commitments aligned with the framework’s goals have not set timeframes for implementing their NPI or no-deforestation strategies. Roughly one-third of companies aim to achieve NPI on biodiversity by 2030, and close to half have no stated timeframe.
It appears likely that the business world will face more pressure to monitor and measure its impact on biodiversity and ecosystem services. Reporting standards and regulations are trending toward more inclusion of nature and biodiversity risks. These include voluntary frameworks like the TNFD recommendations and regulatory ones such as the EU’s Regulation on Deforestation-free Products. The latter requires a business operating in the EU market to prove that its products do not originate from recently deforested land or have contributed to forest degradation. The ISSB has also announced that one of its next two research projects will focus on biodiversity and nature risk, signaling that new nature-related standards could be developed for adoption in jurisdictions around the world just as the ISSB’s previous standards have been.
