The UN Biodiversity Conference of the Parties (COP 16) in Cali, Colombia, signalled a critical shift: nature is no longer a peripheral concern but a core business imperative. With over 23,000 participants, the largest COP to date, the conference underscored the urgency of addressing the biodiversity crisis. This article explores the key takeaways from COP16 and their significance for businesses.

The Biodiversity Crisis: A Material Risk for Business

With a million species facing extinction and biosphere integrity significantly transgressed, the need for action is undeniable. Biodiversity loss poses a significant threat not only to the planet but also to businesses. Half of global GDP is dependent on nature, and in the EU, this dependence rises to 75% of firms, meanwhile 80% of European habitats are in poor condition.

COP16 demonstrated a growing appetite for change, with discussion around the various reporting frameworks and regulations that have emerged to guide businesses in managing and understanding their relationship with nature.

TNFD: The Taskforce for Nature-related Financial Disclosures (TNFD) is empowering businesses to assess and disclose their biodiversity impacts. Launched in 2021, it is a reporting framework that aims to redirect financial flows away from nature-negative outcomes and towards nature positive ones. See our TNFD publication for further information.

Adoption is accelerating, with over 500 companies and financial institutions now committed to TNFD-aligned reporting, representing a 60% increase since the start of 2024. Furthermore, one-third of MSCI 1500 Index companies are now TNFD adopters, indicating a growing commitment to implementing nature goals and disclosures.

CSRD and ISSB: Regulations like the Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) are compelling companies to assess their nature related dependencies and impacts via materiality assessments. As investor interest in nature intensifies, reporting on these issues will likely become standard practice.

Nature Action 100

Nature Action 100 is the first global investor-led engagement initiative focused on addressing nature and biodiversity loss. Conceived by the Launching Investor Group, and forming as a global initiative in 2022, it aims to support investors in engaging companies on nature loss.

Its Company Benchmark Assessment reviews corporate progress against key ‘investor expectations’ on nature. These ‘investor expectations’ are a series of 6 actions determined by Nature Action 100 that investors will call on companies to take, such as setting clear commitments, implementing nature-based strategies and establishing governance oversight over nature-related dependencies.

The results of the inaugural benchmark assessment were announced at COP 16, which found that most companies (two-thirds) are disclosing a commitment to protect nature, with two-thirds of those companies having a commitment that extends out to the wider value chain. Additionally, almost half (47%) of companies disclose nature targets with 37% also disclosing their plans to implement said targets.

On the downside, only one company has disclosed evidence of a robust materiality assessment of nature-related dependencies, impacts, risks or opportunities. As companies begin to report on the results of their double materiality assessments under CSRD and eventually ISSB, it is likely that more nature-related dependencies will be recognised.

Looking ahead: challenges and opportunities

Despite steady progress, significant challenges remain. COP 16 highlighted the scarcity of reliable nature-related data and lack of clarity around what nature-based metrics should be used for measuring impact.

Frameworks like TNFD and Nature Action 100 offer valuable guidance for improving nature-related disclosures and understanding dependencies and impacts. While materiality assessments will also be crucial for identifying key risks and opportunities.

Addressing the data gap and developing robust metrics will be essential for effective action. The next article in this series will delve into the TNFD's roadmap for enhancing access to nature-related data, a critical step towards a nature-positive future.