The lack of a common approach to biodiversity reporting among emerging standards for corporate disclosures is poised to hamper comparability of companies’ impacts on nature, a paper has said, calling for a global framework that integrates and aligns existing methodologies to be established.
The study, led by researchers at Sweden’s University of Gothenburg and published in the journal Current Opinion in Environmental Sustainability (COSUST), cross-mapped five frameworks guiding firms in assessing and disclosing their impacts and dependencies on biodiversity, finding significant disparities in the measurement approach as well as reporting requirements.
“Standards exhibit variation across all dimensions, and address diverse aspects of biodiversity reporting, encompassing impacts and dependencies, risks and opportunities, management approach, and governance,” the study said.
“The measurement approaches employed range from primary and secondary biodiversity data collection to the assessment of financial exposure. While some of the standards entail specific reporting requirements, others adopt a more flexible ‘comply or explain’ approach.”
Researchers took into account the European Sustainability Reporting Standards (ESRS) under the EU’s Corporate Sustainability Reporting Directive (CSRD), the Global Reporting Initiative (GRI), the International Sustainability Standards Board (ISSB), ISO/TC 331, and the Taskforce on Nature-related Financial Disclosures (TNFD).
While disclosures under the TNFD and ESRS encompass the broader societal implications of environmental damage, GRI and ISSB mostly focus on financial performance from the perspective of owners’ and creditors’ decision-making, according to the researchers.
“The measurement and quantification of corporate biodiversity impact remain complex, often involving the identification and characterisation of ecological interactions over a long period of time. Determining materiality, a cornerstone of reporting, is challenging due to varying perspectives on what is material,” the study said.
“Moreover, ensuring the accuracy, reliability, and comparability of reported data poses significant hurdles, demanding rigorous methodologies and data validation. Without confidence in the data presented, biodiversity information cannot be assured, and without assurance, its credibility is undermined.”
GROWING EXPECTATIONS
Companies face growing expectations to contribute to biodiversity conservation, as target 15 under the 2022 Kunming-Montreal Global Biodiversity Framework (GBF) urges them to regularly monitor, assess, and disclose their risks, dependencies, and impacts.
Recently, different frameworks have emerged to steer the corporate sector through this process.
TNFD launched its final recommendation in September, with 320 companies worldwide already engaged as early adopters.
In January, the Global Reporting Initiative (GRI) announced its new biodiversity standard for supporting organisations in assessing their impacts on biodiversity.
“The heterogeneous approaches recommended … are likely to generate diversity in reporting practices, making it challenging for the companies’ stakeholders to interpret and assess the quality of biodiversity reporting,” the study said, stressing the need for a common framework.
“Such a framework would offer greater clarity of what is being reported, highlight if comparisons are possible, and enhance transparency of the reporting landscape.”
Experts have increasingly pointed out the disparities between measurement approaches and requirements under existing standards.
Last year, Johan Lammerant, lead of a workstream within the EU Business and Biodiversity Platform, underscored that TNFD recommendations are more consistent than the ESRS, as the latter is “full” of optional biodiversity-linked disclosures.
By Sergio Colombo – sergio@carbon-pulse.com
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