With biodiversity loss affecting ecosystems and companies around the world, nature needs to have a seat at all boardroom tables today
(Originally published in Board Agenda, February 15, 2023)
Ray Anderson, the former founder, chairman, and CEO of Interface once said: “I had a revelation about what industry is doing to our planet. I stood convicted as a plunderer of the earth. In the future, people like me will go to jail.” More than 20 years later, his prophetic words may soon come to pass.
The COP15 biodiversity summit in Montreal last December yielded the unprecedented Kunming-Montreal Global Biodiversity Framework. With almost 190 countries on board, including China, it is a huge step towards stopping, and even reversing, the biodiversity loss that is devastating our world. The first laudable aim is to preserve 30% of our planet’s lands and seas by 2030.
This framework will have far-reaching repercussions in the business world, too. It has thrust biodiversity and nature-based solutions to the forefront of sustainability discussions.
Nature as business priority
Terms such as “nature-positive” are now common currency among forward-thinking leaders, as was evidenced at this year’s World Economic Forum annual meeting in Davos, Switzerland. Companies and governments are scrambling to develop strategies and action plans. Make no mistake; Nature (with a capital N) has to be a business priority for board directors.
Nature can no longer take the punishment that humanity has meted out, and the warning signs are there for all to see. The numbers of bees, our crucial agricultural pollinators, are plummeting. According to research conducted by PNAS, almost one in three animal and plant species could face extinction by 2070 due to climate change. The Amazon, and old-growth forests everywhere, are being hacked down in the cause of human progress. Coral reefs are vanishing. It is a long, depressing, and human-inflicted litany of natural woe.
We need to remember just how integral nature is in our working lives, our communities and our very well-being. Nature provides businesses with trillions of pounds worth of services. Not sure? Think about how our crops are pollinated, think about the value of water, or think about what clean air means. All the incredible products invented by pharmaceutical companies have their roots in nature. We all depend directly and indirectly on nature and yet we have sat back and watched nature being destroyed at a rapid rate. We actually are in the process of destroying ourselves.
Therefore, there are large risk factors to consider for board directors. Climate-change regulations are stacking up and nature-based ones will now not be far behind.
Corporate risk factors
The Corporate Sustainability Reporting Directive (CSRD), which has been formally adopted by the European Parliament, will mean that multinational companies must start, as of January 1, 2024, to complete formal corporate reporting requirements on a wide range of environmental, social and governance areas, including greenhouse-gas emissions, climate-change mitigation strategy, pollution and what impact their companies are having on biodiversity and ecosystems.
The Taskforce on Nature-related Financial Disclosures (TNFD), which is based on the Taskforce on Climate-related Financial Disclosures (TCFD), has published its draft framework for nature-related risk management and disclosures for companies. This framework, which is due to be finalized in September, has four main categories of recommended disclosures for companies:
- Risk and impact management
- Metrics and targets
Wait; there’s more. The UN Environment Programme recently joined forces with S&P Global to create the Nature Risk Profile, a new methodology that will analyze companies’ dependencies and impacts on nature. The work of the Science Based Targets Network (SBTN) is built on the success of the Science Based Targets initiative (SBTi), aligning companies and major cities to adopt science-based targets for water, land, oceans and biodiversity by 2025. It has issued draft guidelines on how companies can examine their financially material nature-related issues and supply chain footprints.
New legal factors
Let’s not forget potential legal jeopardy. This month, ClientEarth, a group of environmental lawyers, has sued 11 board directors at oil giant Shell over its climate strategy. It claims that the climate strategy is inadequate, which puts the company’s long-term viability at risk and hampers efforts to protect the planet. According to ClientEarth, this is the first ever case of its kind.
In November last year, Belgium was the first European country to add ecocide — “unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts” — added to its penal code.
There is a groundswell of support in Europe and other parts of the world, led by the Stop Ecocide Foundation, to amend the statutes of the International Criminal Court and place ecocide alongside war crimes, genocide and crimes against humanity. This could mean that in the future board directors go to court, or even prison.
Much of the work today for boards focuses on internal governance, such as audit committees. However, there is little focus on external governance or in this case, environmental governance. Too few board members understand what is happening with our environment, climate change and biodiversity. Since more than half of the world’s GDP is dependent on a healthy nature, there are trillions of reasons why boards should factor in nature to their planning.
Nature brings opportunities
We could learn much from Indigenous people and their regard for nature. The Haudenosaunee (Iroquois) still hold dear their Seventh Generation Principle: that the decisions we make today should result in a sustainable world seven generations into the future. And remember, although Indigenous people are less than 5% of the world’s population, they protect 80% of the world’s biodiversity. These are stewards of our future.
Paul Polman, author of “Net Positive: How Courageous Companies Thrive by Giving More Than They Take” and one of our global faculty of experts at Competent Boards, sees upward momentum for the future. “What companies now understand is that if they look at that nature dimension, which is so vital for the existence of most of these companies, that it creates enormous opportunities.
“We now see more companies making commitments to be water positive, actually giving back more water than they take. We see companies making enormous commitments on regenerative agriculture, from Pepsi to Nestle as well as Unilever and others. There are coalitions being formed to lobby for science-based targets on nature and having legislation in place that forces companies to publish what their impact is and not discharge them to society.”
If you’re on a board, then you have a fiduciary legal responsibility to all the company’s stakeholders. And we live on one planet, based on one ecosystem. Therefore, nature has to be one of your key stakeholders around the decision-making table.
Mother Teresa once said: “If we have no peace, it is because we have forgotten that we belong to each other.” I will add to that, if I may: we have such global unrest because we have forgotten that we belong to nature, too. If we collectively want to act on this new Global Biodiversity Framework, then the time is now for making drastic changes at all organizations. And for that, we need smart, educated board directors to supervise the Future Boardrooms of choice.
Helle Bank Jorgensen is the founder and CEO of Competent Boards, which offers online climate and ESG education programs from a worldwide faculty of board directors, senior executives, investors and industry experts. She is also the author of the Amazon bestseller “Stewards of The Future: A Guide for Competent Boards”.Back To News & Views