Health companies reliant on functioning ecosystems and healthy water supplies for business continuity are taking the lead in reporting their nature dependencies through the Taskforce on Nature Related Financial Disclosures (TNFD) and striving to curb their impacts on the natural world, with several leading multinationals mapping their value chains to understand their biodiversity impacts more closely.

Pharmaceutical giant GSK completed a first attempt towards the draft guidelines for TNFD in its 2022 annual report and is one of the first companies to work towards validated targets for the Science Based Targets for Nature (SBTN), while it has also evolved its nature strategy to align with the global biodiversity framework to halt and reverse biodiversity decline by 2030.

These efforts have given the GSK team a much “deeper understanding” of its true impacts and dependencies on nature, said Sarah Dyson, head of corporate responsibility at GSK, during the Natural Capital Summit 2023 hosted by City and Financial Global.

For example, many GSK products rely on active pharmaceutical ingredients sourced from suppliers and manufacturers that are often in highly water-stressed areas, so a key focus for the company is understanding how to navigate the complexities of water stress, and reducing the risks posed to its business, Dyson explained.

“Nature helps our climate strategy but it also helps human health and our business to be more resilient,” she told the conference held earlier in November.

GSK therefore aims to ground its nature strategy within its overall business strategy to help it grow as a company, reduce risk, and improve resilience in its supply chain, which are all areas that engaging with the TNFD methodology really helps with, said Dyson.

TNFD

The main aim of the cross-stakeholder TNFD taskforce is to help businesses and financial organisations in reporting on their dependencies and impacts on nature through ascertaining exact metrics, despite the complexities of biodiversity.

It released its 14 final recommended general disclosures on nature-related dependencies, impacts, risks, and opportunities during Climate Week in New York in September, with the disclosures following the same approach of the Task Force on Climate-Related Financial Disclosures (TCFD), around the four pillars of governance, strategy, risk and impact management, and metrics and targets.

At the time, GSK said it would be among the first to adopt the voluntary disclosures on nature-related issues.

“Protecting nature makes our business more resilient and helps us deliver for patients by ensuring the supply of raw materials needed to manufacture vital medicines and vaccines. That’s why we’re proud to be a member of the TNFD,” said Julie Brown, chief financial officer at GSK.

NATURE & HEALTH

Nature plays a key role in supporting human health and providing the medicinal compounds required for many sources of curative care. From “supporting physical activity to enhancing immune function”, there are many beneficial effects brought on by the contact between people and nature, such as “improved mental health to reduced diabetes”, says a scientific study on ‘Nature’s Contributions to Human Health’.

The study also points out that “three-quarters of the world population rely on herbal and traditional medicine as a basis for primary health care (PHC) because of its affordability, accessibility, and long cultural history”, with many herbal and traditional medicines sourced directly from the surrounding environment.

The longstanding links between healthcare and nature are also recognised by Reckitt Benckiser, a UK-based producer of health, hygiene, and nutrition products, with brands such as Dettol, Vanish, Lysol, and Durex.

Valuing natural capital to the level it deserves is vital for Reckitt’s business continuity, said David Croft, global head of sustainability at Reckitt, also at the Natural Capital Summit 2023.

Reckitt is working with Nature Based Insights to measure biodiversity in its key value chains, such as latex, and determine how to build more resilient and stronger ecosystems through agricultural interventions with farmers, for example, said Croft.

“With latex farmers, we’ve set up a system of premium payment, which means they get a better value for their latex [that is produced sustainably and] means we can start to incentivise and work with them on enhanced agronomy that strengthens biodiversity and also on additional projects that might sit around the farm, upstream or downstream, to help strengthen biodiversity and that total value chain,” he told the event.

It’s vital for Reckitt to understand the socio-economic drivers impacting the farmers in order to be able to properly incentivise them to make change, he explained.

“The starting point is to know where the raw material comes from, the second point is to understand how it gets put together – what the agricultural practices and what the risks are, and then thirdly, it is to understand what are the motivations for people in that landscape – the asset owners and how you can impact and influence them,” said Croft.

WATER STRESS

Navigating areas of water stress is also a key focus area for Reckitt, particularly at a number of its factories in India where water stress is a critical conversation and where water security issues are often the driving factor behind deciding where to locate facilities.

“We want to create those sites to be water neutral, if not water positive. That requires thinking about water use efficiency inside the factory gates, but more importantly, thinking about where will that water supply be for the long term, for the next 25 years, which means working with local governments, NGOs, and communities,” said Croft.

It’s often better to frame things positively, by presenting the business opportunities offered by improved access to water, rather than business risk, he explained.

For example, Reckitt has benefitted from improved rainfall in some catchment areas in particular monsoon seasons, which has led to an increased number of crop cycles and socio-economic benefits.

USING THE TNFD

Using the TNFD framework helps bring a “consistency of approach” for companies around how to measure their risks and dependencies on nature, which will translate into how they manage risk and more importantly, how to create opportunity, which is much more motivating” for a business than risk, said Croft.

“In the road to 2030, risk is going to be part of the motivations to create change within value chains but it needs to be complemented by the right sorts of policy frameworks and encouragement activities to incentivise people to make change,” he added.

The framework also “helps bridge the translation gap” for a business between an area many professionals are unfamiliar with (nature accounting) and more business-centric risks, said Croft.

For example, nature-based reporting could highlight the water security issues posed to many factories and/or the need to source raw material from healthy ecosystems in order to produce high-quality products.

Reckitt has also developed a ‘Sustainable Innovation Calculator’ that looks at every aspect of new product development or existing product redevelopment to consider how to make it more sustainable, which includes thinking about the carbon, water, and packaging footprint, said Croft.

And alongside that, the company has created a ‘Biodiversity Impact Metric’, which pulls from global datasets and the Biodiversity Intactness Index run by the National History Museum, which allows for scenario-type analysis and forward projections of many thousands of species and locations.

“That allows us to look at key value chains and consider the impacts at the heart of those value chains … But even more importantly, it helps us to think what are the different interventions that we will then make, and how will that impact across the biodiversity, climate, and socio-economic indicators for that landscape and the communities within it,” said Croft.

ASTRAZENECA

AstraZeneca is another health company aiming to map its biodiversity risks and dependencies in line with the TNFD framework, and expects to do so by the end of 2024, as well as disclosing its performance according to SBTN methodologies, it told Carbon Pulse.

The Anglo-Swedish biotech company aims to reach net zero by 2045 and will offset any residual emissions (no greater than 10% of its 2019 GHG footprint) through high-quality nature-based removals generated by its AZ Forest programme.

Under AZ Forest, AstraZeneca pledges to plant and maintain 200 million trees by 2030, restoring over 100,000 hectares across six continents, and removing about 30 million tonnes of CO2 over 30 years, said John Atkinson, compliance associate director at AstraZeneca.

The trees will be planted as a “diverse mix of native and locally appropriate trees that will last decades” and the company will work together “with communities, ecological partners, and governments to ensure that the reforestation can regenerate the land and support broader co-benefits,” Atkinson told Carbon Pulse.

AstraZeneca is on track for a 98% reduction in its Scope 1 and 2 emissions by 2026 and aims to halve emissions from its entire value chain by 2030 through collaboration with suppliers, on track to meet its 2045 net zero target.

The company is also aiming to reduce its planetary impact through “increasingly efficient, circular use of natural resources” that are sourced, consumed, produced, and disposed of in a sustainable way, while it is also “working to protect and restore ecosystems to improve health outcomes and tackle environmental drivers of disease, such as water and air quality, through our focus on water stewardship and biodiversity,” said Atkinson.

He acknowledged that quantifying impacts and dependencies on biodiversity across global supply chains is a complex challenge and that using a science-based approach to reporting is key to ensure consistency across industries disclosing their nature-based impacts.

CHALLENGES

Reckitt’s Croft stressed that making a lot of complex data actionable in value chains is one of the key challenges around tackling and reducing biodiversity impact. Reckitt uses various data sources to track its nature-related impact, from satellite imagery to track deforestation, to artificial intelligence and the NHM Biodiversity Intactness Index, he said.

When looking to report in line with the TNFD and tackle nature-related risk, companies should focus on the most material issues to their business first and foremost, as well as making good use of potential partnerships such as NGOs, academic institutions, and farming communities, he said.

GSK’s Dyson said that companies should make use of the relationships, processes, and knowledge already gathered internally for TCFD reporting, to help them in their TNFD disclosure efforts.

“[Internal] finance and risk teams have developed lots of understanding around climate issues that can be transferred to TNFD … From a company perspective, you probably have more information in the company than you realise, so start with what you’ve got,” she said.

By Bryony Collins – bryony@carbon-pulse.com

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