Navigating climate uncertainty: Strategic planning with imperfect data
by Sam Gill
The need for business to understand its impacts and dependencies upon nature is quickly increasing in importance. Four recent developments will shape the future of corporate biodiversity reporting and performance for the rest of the decade:
The most pressing development for many companies is the CDP, with responses for this year’s questionnaire required by 27 July 2022. It’s therefore worth investigating the six questions in a little more detail.
The first CDP biodiversity question is about governance: ‘Is there board-level oversight and/or executive management-level responsibility for biodiversity-related matters within your organization?’ The requirement is to demonstrate that biodiversity is considered at the highest levels in the organisation for business strategy, risk management policies, annual budgets, future financial planning, and/or overseeing major capital expenditures.
The next question is relatively straightforward: ‘Has your organization made a public commitment and/or endorsed any initiatives related to biodiversity?’ This could include commitments for net positive, TNFD and the SBTN (and Sustainable Development Goals, the Convention on Biological Diversity etc.).
For most industries, biodiversity impacts are predominantly in the value chain rather than in direct operations. For this reason, the third CDP questions asks, ‘does your organization assess the impact of its value chain on biodiversity?’. This will be a particularly challenging question for many companies to answer, but it’s important to demonstrate traceability in supply chains and at the very least show awareness of major biodiversity impacts in the value chain, both upstream and downstream.
The SBTN has released initial guidance setting out five distinct steps (assess; prioritize; measure; act; track) for corporate biodiversity leadership. The fourth CDP question relates directly to the ‘act’ step: ‘What actions has your organization taken in the reporting year to progress your biodiversity-related commitments?’ The fifth CDP question relates directly to the ‘track’ step: ‘Does your organization use biodiversity indicators to monitor performance across its activities?’ These questions get to the heart of whether the company can demonstrate nature-positive influence, and it is recommended that companies distinguish between indicators of state (e.g. habitat condition), pressure (e.g. change in habitat cover) and response (e.g. company actions to improve a habitat).
The final CDP biodiversity question is, ‘Have you published information about your organization’s response to biodiversity-related issues for this reporting year in places other than in your CDP response?’ The expectation is that biodiversity factors are integrated into financial reporting, and so the TNFD reporting framework (and associated guidance) will be directly relevant for this.
Even if you are not familiar with TNFD, SBTN and GRI, this year is shaping up to be one of convergence for reporting on biodiversity impacts and dependencies. So, if your business can perform in line with CDP expectations, thankfully you’ll be well-placed to respond to other developments. The same four themes of governance, strategy, risk management, and tracking & monitoring are common across CDP, TNFD and SBTN (and will be for GRI).
There are significant challenges to fulfil the new CDP biodiversity requirements, and the biodiversity module will not be scored in its first year. But by acting now companies will have a competitive advantage as much of what we’ve discussed in this article will become the norm (or even mandatory in some jurisdictions) in a few years; there is consensus that the global biodiversity crisis is comparable and related to the climate crisis. Looking a little further ahead, further convergence of sustainability disclosures will be facilitated by the International Sustainability Standards Board, which has recently published its draft requirements for sustainability-related financial information. This will shape global expectations for both environmental and social reporting.
To comply with the new biodiversity module, CDP recommend referring to IUCN guidance, though SLR also highly recommend the CDSB Framework as it’s a more comprehensive document with excellent sources of additional information. SLR’s dedicated professionals, including 65 ecologists, are also available to help you to prepare. Our services include everything from assistance with this year’s CDP questionnaire, to lifecycle assessments for value chain insights, to a comprehensive biodiversity strategy including science-based targets. Our global ESG Strategic Advisory team can help place biodiversity reporting into broader environmental, social and governance context. Please get in touch with us if you would like to discuss the new CDP requirements, or if you have any questions about what promises to be a pivotal year for biodiversity.
 For more information, and a link to the initial guidance, see: https://sciencebasedtargetsnetwork.org/how-it-works/what-are-sbts/