Brazil should lead G20 efforts in developing globally recognised standards for nature-related disclosures, non-profit CDP has said, as the country considers mandating compliance with target 15 of the Kunming-Montreal Global Biodiversity Framework (GBF).
During a G20 side event hosted at the Brazilian embassy in Berlin, Frederik Buchholz, policy manager at the climate disclosure organisation, stressed that governments and regulators of the bloc should implement high-quality mandatory disclosure of environmental impacts and dependencies that go beyond climate.
According to CDP, biodiversity-related and plastic-related disclosure requirements are still very much in their early stage, with only a handful of G20 jurisdictions – the EU, Brazil, Indonesia, and India – having some form of requirements for companies to report such information.
“We should bear in mind that this is insufficient,” he said.
Citing a report released in Oct. 2023 and based on CDP data, Buchholz said: “We had a record of over 23,000 companies in the world disclosing data on climate change through our platform, but only a fifth of them actually disclosed some high-level information on biodiversity. Also, only 5,000 companies disclosed water-related information.”
“We also see that water and plastic-related disclosure requirements remain highly inconsistent, highly incomplete, and missing key indicators and metrics.”
Buchholz noted that if countries fail to introduce holistic environmental disclosure policies and regulations, the investors’ ability to price climate and nature-related risks and opportunities will be hindered.
In light of that, the G20 should encourage the development of globally recognised standards for nature and biodiversity disclosure, CDP’s policy manager said, adding that this involves ensuring that all the standards are integrated into an international regulatory framework.
“National policies should lean on a building block approach using the global baseline offered by the International Financial Reporting Standards (IFRS) for capital markets, and the Global Reporting Initiative (GRI) standards for broader impact disclosure.”
Frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD), which provides recommendations and guidance on how to align corporate disclosure with the GBF, can also inspire standards development under the most innovative policies, he added.
BRAZIL’S LEADING ROLE
Given its rich biodiversity, Brazil should lead the way by adopting and implementing comprehensive nature disclosure standards, Buchholz claimed.
“Brazil has become the first country to align with ISSB, setting an unprecedented record. It could do the same for nature in the future,” he said.
“We believe that Brazil’s businesses can significantly contribute to global understanding and management of nature-related financial risks and opportunities.”
During the discussion, the national secretary for biodiversity and forests at Brazil’s ministry of the environment – and former executive secretary at the Conference of Biological Diversity (CBD) – Braulio Dias, highlighted that his country is currently discussing the possibility of making it mandatory by law for all companies to comply with target 15.
“We have been reviewing the existing laws to see if these can provide a sufficient basis for us to require the implementation of target 15 as a mandatory commitment,” he said.
“Some firms prefer that it remains voluntary, but others would like to see it becoming mandatory for all companies operating in Brazil.”
In its target 15, the GBF calls for businesses and financial institutions to publicly disclose their risks, dependencies, and impacts related to biodiversity throughout their value chains and portfolios, in a bid to improve transparency on how businesses and financial institutions impact biodiversity and are in turn affected by nature loss.
Last month, Brazil launched an initiative to lay the groundwork for a common framework on ‘bioeconomy’ as a part of its G20 Presidency, as the country prepares to host the 2025 UN climate summit.
By Giada Ferraglioni – giada@carbon-pulse.com
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