Biodiversity

Biodiversity refers to the variety and variability of life on Earth. It encompasses the entire natural world, from the smallest of microbes to entire ecosystems, as well as the ecological and evolutionary processes that sustain life. Biodiversity includes not just species that may be endangered, but all living things – including animals, plants, fungi, bacteria, and more.

However, human activities – including production, overconsumption, pollution, and land use changes – continue to erode biodiversity and the surrounding environment. In recent years, the United Nations has reported “unprecedented” rates of environmental deterioration, habitat loss, and extinctions as a result of human behavior. The UN has labeled over 40% of Earth’s land surfaces as “degraded” and estimates over one million extinctions by 2050.

Consequences of Biodiversity Loss

Biodiversity is responsible for our food, water, and oxygen (among other needs), so threats can carry significant risks. Beyond these natural ramifications, this decline in biodiversity also has economic and social consequences.

According to the United Nations Development Programme, the ongoing destruction of healthy ecosystems may cause a $2.7 trillion annual decrease in global GDP by 2030. This stems from ecosystems’ deteriorating functions, such as decreases in wild pollination and timber availability. As the World Economic Forum explains, “$44 trillion of economic value generation – over half the world’s total GDP – is potentially at risk as a result of the dependence of business on nature and its services”. This loss in GDP would have a disproportionate impact on low-income countries, whose economies typically rely more strongly on nature. For instance, Sub-Saharan Africa’s dependence on forest products could engender a 9.7% annual loss in GDP by 2030, while South Asia could see a 6.5% decline due to its reliance on pollinated crops. Countries with fewer resources also face larger obstacles in switching production and consumption.

Current Actions and Initiatives

It is not too late to address biodiversity loss. The United Nations Development Programme even describes the protection of biodiversity as “one of the cheapest and most effective ways” to combat climate change and desertification – as long as we can conserve at least 30% of the world’s surface area (as outlined by COP15 below). Recent significant biodiversity initiatives include the Taskforce on Nature-Related Financial Disclosures (TNFD), other biodiversity reporting requirements, and the Kunming-Montreal Global Biodiversity Framework (GBF).

The Taskforce on Nature-Related Financial Disclosures (TNFD)

The TNFD seeks to guide organizations through nature-related risks, balancing financial and environmental goals to create nature-positive outcomes. Building upon the Taskforce on Climate-Related Financial Disclosures (TCFD), the TNFD aims to establish a universal standard under the same four TCFD categories (Governance, Strategy, Risk Management, Metrics and Targets), but with specific guidelines regarding biodiversity and nature.

Despite just launching in 2021, the TNFD is already supported by over 800 organizations and representing $20.6 trillion in assets under management. It is releasing beta versions of its standards throughout 2023 and expects to publish its final framework this September.

Other Reporting Initiatives

We are beginning to see biodiversity issues being built into various reporting frameworks beyond the voluntary TNFD. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires numerous companies doing business in the EU to file audited annual sustainability reports utilizing the European Sustainability Reporting Standards (ESRS). The first set of ESRS, adopted by the European Commission in July 2023, requires companies to perform materiality assessments on a wide variety of sustainability topics – including biodiversity – applying the principle of double materiality (looking at both whether biodiversity has a material impact on the company and whether the company has a material impact on biodiversity). Moreover, the International Sustainability Standards Board (which is working to consolidate and develop global reporting standards), has identified biodiversity as one of its next four research projects for standards development.

Kunming-Montreal Global Biodiversity Framework (GBF)

Organized by the United Nation’s Convention of Biological Diversity, the COP15 conference in December 2022 hosted nearly 200 nations for a two-week summit in Montreal, Canada. Expanding upon its first meetings in October 2021, COP15 solidified biodiversity goals under the Kunming-Montreal Global Biodiversity Framework (GBF).

Adopted by 196 countries, the GBF outlines four global goals and 23 targets, emphasizing consistent monitoring, disclosure of nature-related data, and pollution reduction, among other ambitions, to “halt and reverse” biodiversity loss by 2030. It includes a commitment to protect at least 30% of Earth’s land and water areas by that year — upwards of the 17% of land and 20% of water under protection today.

Looking Ahead

Despite current support for the GBF, the TNFD does not expect to see immediate results. Instead, the taskforce predicts that governments, companies, and organizations will take at least 6-12 months to create nature-positive strategies with embedded biodiversity efforts. This will be aided by the TNFD’s release of its completed framework this fall, as well as the United Nations Development Programme’s Nature Pledge. Leveraging a $3.2 billion nature-centric portfolio, the UN has committed $189 million to support over 140 countries in their biodiversity initiatives. In the meantime, the GBF stipulates that governments will create new national biodiversity strategies and action plans (NBSAPs) and expand education in these areas. And, we expect that Governments will face pressure from citizens, NGOs, and the international community to demonstrate progress in connection with biodiversity before the 2024 COP16 conference.

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