Living Planet Report 2022
On October 12, the World Wildlife Fund (WWF) and the Zoological Society of London revealed in their 2022 Living Planet Report a staggering insight about the current state of biodiversity: from 1970 to 2018, the world’s wildlife populations plummeted by an average of 69%.
The study measured the average change in the relative abundance of 31,821 populations around the globe. Results varied by species and geographic region and included both increasing and decreasing growth trends; but the overwhelming pattern was a steep decline in biodiversity.
The significant downward trend is attributed primarily to land-use changes, such as deforestation, that destroy or fragment natural habitats. The report further indicates that climate change may soon pass land-use changes as the leading contributor to biodiversity loss, if global warming is not kept below 1.5°C. Anthropogenic activities that trigger rising temperatures are increasingly altering natural ecosystems and driving mass mortality events.
WWF has published the biennial Living Planet Report since 1998. The rate of wildlife population decline observed in the most recent report is consistent with that of previous findings, indicating a serious lack of global progress to conserve and restore biodiversity. In fact, of the twenty Aichi Biodiversity Targets for 2020—which were adopted by 196 countries in 2010 under the UN’s Convention on Biological Diversity—none were met in full, and some even reported negative progress. Furthermore, we are not on track to meet the Paris target to limit warming to 2°C.
Falling short on these targets not only puts wildlife populations at risk but also threatens the well-being of current and future human generations. Biodiversity loss has larger implications for the economy, public health, and social stability—including businesses.
Biodiversity loss: implications for businesses
So, why should businesses care about a 69% decline in the world’s wildlife population? What does this finding mean for corporate responsibility and subsequent action? Companies should act on biodiversity in order to secure their operations, retain investor interest, comply with reporting requirements, and play a role in agenda setting.
- Disruptions to business growth and operations: Biodiversity loss presents a direct threat to business operations, due to a dependence on scarce and variable resources. These risks may materialize in the form of decreased production, disrupted supply chains, and higher costs. For example, a 2022 report by Planet Tracker suggested that the sales of the most overfished species typically generate the lowest profit.
- Increasing investor interest: As investors recognize the risks associated with climate change, they are placing a growing pressure on companies to measure, manage, and report their environmental impact—including biodiversity. UBS, for instance, states that “biodiversity is part of our overall integration of ESG considerations into the investment process.” Investors taking steps to minimize their exposure to stranded assets will be more inclined to direct capital to those demonstrating lower risk via a commitment to sustainability. As a result, businesses that fail to demonstrate and minimize biodiversity impacts may face difficulties accessing capital.
- Emerging and existing reporting requirements: At present, corporate disclosure requirements on biodiversity are lacking…but gaining traction. Existing and upcoming biodiversity disclosure measures include:
- Taskforce on Nature-related Financial Disclosures (TNFD): includes recommendations for environmental risks including biodiversity loss
- CDP Climate Change Questionnaire: as of 2022, includes biodiversity questions developed in alignment with IUCN’s Corporate Reporting on Biodiversity Guidelines
- Science Based Targets Network (SBTN): currently developing science-based targets for biodiversity
- Global Reporting Initiative (GRI): currently updating the Biodiversity Standard (GRI 304) to reflect the global best practice for biodiversity reporting
- Corporate Sustainability Reporting Directive (CSRD): will require biodiversity targets and potential financial implications of biodiversity impacts, risks, and opportunities
Although many of these initiatives fall under voluntary frameworks, they help participating companies demonstrate their environmental—and biodiversity—impacts to key stakeholders, including investors. Companies using these standards should be aware of upcoming changes and be prepared to meet biodiversity disclosure measures. CSRD, on the other hand, stands out as a mandatory corporate sustainability reporting directive. Beginning in 2023, all large companies in the EU will be required to disclose their sustainability performance, including information on biodiversity. While the directive only applies to the EU, the legislation may inspire other regions to adopt a similar approach—a future that companies should be prepared to satisfy.
- Upcoming role in COP 15: In December 2022 in Montreal, Canada, countries of the Convention on Biological Diversity (CBD) will convene for the UN Biodiversity Conference (COP 15). At the event, countries are expected to agree on and adopt a new set of goals for the post-2020 global biodiversity framework. Beyond its symbolic value, the outcome of COP 15 will influence government policies and ultimately, businesses. Companies will be expected, if not required, to play a role in the development, implementation, and success of the framework.
Many companies are responding proactively to biodiversity loss by taking steps to reduce operational and reputational risks and, in turn, attracting investors and new growth opportunities. However, as risks to operations grow, new [mandatory] standards emerge, and governments face pressure to set aggressive biodiversity targets and policies, businesses must be prepared to act accordingly. As the 2022 Living Planet Report states, businesses, governments, financial institutions, and the public have an “unmissable opportunity” to not only halt but reverse nature loss.