Sustainability Ratings Data Reveals Critical Gaps in Private Sector Action on Biodiversity

May 24, 2022 EcoVadis ‏‏‎

Exactly one month after Earth Day, the lesser-known but equally vital International Day for Biological Diversity on May 22 calls much-needed attention toward the global biodiversity crisis and reminds us that individuals, governments and businesses cannot thrive without healthy ecosystems. The earth lost 10 million hectares of primary forest annually in the last decade alone, and nearly half of all pollinator species face extinction, threatening our food supply.

Luckily 2022 is poised to be a year of action on the global biodiversity crisis with the face-to-face UN Biodiversity Conference in Kunming, China is set to take place later this year, and the TCFD and GRI are set to release far more stringent reporting frameworks for nature-related risks and biodiversity loss. 

We've taken the opportunity to analyze EcoVadis 2021 sustainability ratings data, which reveals important trends and shows where major gaps and opportunities lie. 

Efforts on the Biodiversity Crisis Fall Drastically Short

The analysis sheds light on a serious lack of visibility on the biodiversity crisis, which is best illustrated when compared to awareness of other sustainability issues. While nearly 40% of all companies had policies on energy consumption and greenhouse gas emissions – and another 40% had set policies on resource use and waste – less than 1% of companies had set policies on biodiversity. This figure increased to a still meager 5% for companies in high-risk sectors like agriculture and construction. 

Going beyond policies to consider the implementation of actions, a similar pattern emerges: 60% of companies in high-risk sectors had enforced no concrete actions to prevent biodiversity loss, whereas a quarter had implemented only one. The figures continue to drop sharply when looking at advanced management systems: just over 15% of companies realized two or more biodiversity protection measures. Whatever roadblocks lie in the way must be quickly overcome if the private sector is to make valuable contributions toward saving earth’s ecosystems.

Our data confirms several interesting trends. First, businesses are still too reluctant to integrate biodiversity into their ESG programs, owing to long-held misconceptions that it is too complex, expensive or difficult to track progress on. This is partly attributed to bad branding – efforts to unify and simplify the myriad of global ecological crises into one widely accepted term may be the Achilles heel of the biodiversity crisis. The word biodiversity was only ever meant to be a placeholder – an umbrella term referring to an endless range of ecological disasters, the death of nature, from microscopic to planetary scale. Biodiversity has a certain vagueness that allows it to be freely adapted – and rightly so – to define any ecological crises, but it is left looking overly convoluted. Shaky nomenclature has perpetuated confusion and misassociations and driven a tendency toward weaker private-sector commitments with little traction. 
 

Secondly, EcoVadis rating data shows that biodiversity-related risks on business operations are still seen as too indirect or irrelevant to inspire meaningful action. Under these assumptions, companies would rather prioritize other topics where the link to risk is more concrete. As a result, we continue to see a disproportionately higher willingness to make commitments on climate action, where efforts can more easily be defined by measuring emission reductions.

A Ticking Bomb 

We’ve seen it too many times to ignore. Major events, from the COVID-19 pandemic to Russia’s unprovoked invasion of Ukraine, are teaching us the same lesson: External disruptions, even those that are far away, have far reaching consequences on global supply chains. Biodiversity crises are no different – businesses stand to suffer enormously if species go extinct and whole ecosystems collapse. This point was driven home at a recent event held by Bain Macro Trend Group: Those who subscribe to the traditionally reactive, “wait and see” approach will be the least equipped to withstand future shocks. Instead, businesses need to take an investor mindset by understanding exposure and investing in resilient and adaptive supply chains – ones that stand to protect nature.

Taking heed of this advice, an effective private-sector biodiversity program must be proactive and acknowledge future risks that haven’t yet happened but draw nearer every day. Because once bees, forests and other ecosystems are gone, they can’t be brought back. And in that scenario, supply chain disruptions will be the least of our problems.

Taking Private Sector Action to the Next Level 

To get the ball rolling, companies must identify their level of exposure to biodiversity threats, so that priorities and timelines can be set. Sectors heavily dependent on commodities that come from agriculture or aquaculture will face the greatest risks from sites where raw materials are sourced. Those less dependent on agricultural commodities may need to focus efforts on regional or even on-site ecosystem risks. Once defined, well-structured policies must be developed that demonstrate commitment and accountability. Strong policies should include quantitative, publicly announced targets with short-term deadlines and a scheduled review process to track progress against expected outcomes.

The next step is implementation. Action on biodiversity does not require expensive technologies or reinventing the wheel – nature protection strategies have existed since long before the industrial revolution. Businesses should aim to protect ecosystems by integrating nature-based solutions and regenerative land management into both their operations and procurement decisions. In high-risk forest and agricultural sectors, this means finding alternatives to large-scale monoculture production systems, which drive rapid soil erosion and deforestation. Instead, they should rely on polyculture – agriculture systems where several native species are grown together. Intensive tillage and use of synthetic pesticides, fertilizers and herbicides must be avoided.

Organizations that source commodities from high-risk agricultural and forest sectors should conduct due diligence and partner with small-scale farming operations that use regenerative land-use techniques. Small-scale operations provide greater support to local communities and encourage farmers to take ownership over local ecological threats and implement best practices. Sectors with little to no dependence on land or water-based commodities should address local biodiversity issues near production sites and offices. This can be done through active leadership or participation in regional and even on-site nature restoration projects (see some great examples here).

A Path Forward

Governments around the world will convene at the high-stakes UN Biodiversity Conference in Kunming, China at the end of this year to agree to a new set of goals for nature over the next decade through the post-2020 Biodiversity Framework. As conversations on biodiversity visibly accelerate at the national and international level, businesses must catch up and demonstrate their willingness to lead. EcoVadis’ 2021 ratings data highlights that the first step forward is to drastically increase – and quantify – their public commitments and actions toward the protection of earth’s ecosystems. Businesses should closely follow the outcomes of the Conference and use the resulting post-2020 Biodiversity Framework as a basis to set their biodiversity agendas and become part of the solution.

EcoVadis Ratings can help companies identify and mitigate biodiversity risks, strengthen their efforts to protect ecosystems across global supply chains and harness the benefits ecosystems provide. For more information on how you can support your supply chain partners on biodiversity, get in touch to learn more.

About the Author

EcoVadis ‏‏‎

EcoVadis is the world’s most trusted provider of business sustainability ratings, intelligence and collaborative performance improvement tools for global supply chains. Backed by a powerful technology platform and a global team of domain experts, EcoVadis’ easy-to-use and actionable sustainability scorecards provide detailed insight into environmental, social and ethical risks across 200+ purchasing categories and 160+ countries.

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