In Pursuit of Impact: Choosing Zebras Over Unicorns
Addressing data availability, comparability, and accuracy challenges
The world has made significant progress in protecting global biodiversity through agreements such as the COP15 landmark agreement and the UN Treaty on high seas protection. Despite these breakthroughs, data providers, companies, and investors face new challenges in reporting non-financial information.
As a member of the TNFD Forum, impak attended the TNFD Nature Data Labs held alongside the COP15 talks in December 2022. A deep dive into sector-specific challenges and opportunities in biodiversity revealed the complexity of measuring biodiversity impacts. While addressing climate change, biodiversity considerations must also be integrated into climate reporting frameworks, which has only recently begun.
This article aims to inform investors about the challenges posed by a global biodiversity framework. The TNFD Nature Data Labs emphasized the importance of data availability, accuracy, and actionability. Collaborative efforts among ecologists, data scientists, financial sector data providers, companies, and investors are crucial for making data useful. Domestic regulations can enhance existing frameworks by mandating biodiversity impact disclosures, although some global regulators have been hesitant to act.
Different industries face varying challenges regarding data availability and accuracy. Some sectors, such as mining, energy, agriculture, and farming, may possess considerable biodiversity data, but it can be outdated, inconsistent, or unreliable. Balancing localized field data with standardized metrics for scalability and comparability poses additional difficulties. Sector-wide collaboration is needed to develop harmonized metrics, standards, and data collection practices.
Indigenous and local knowledge should be further integrated into business decisions. Standard setters are working to harmonize and define guidelines for reporting nature-related metrics, with the TNFD framework expected to provide clarity and guidance on biodiversity reporting by the third quarter of 2023. The International Sustainability Standards Board (ISSB) plans to incorporate nature in its disclosure standards next year.
To make biodiversity data easily accessible and actionable, stakeholders must collaborate on the following recommendations:
Although data accuracy, comparability, and availability are major barriers for investment in biodiversity, corporate interest in funding biodiversity-related projects is growing. This capital influx is primarily driven by CSR pledges and reputational risk mitigation, which can influence companies’ cost of capital and bottom lines. The right market incentives can create a societal shift that favors nature, regardless of the motivations behind biodiversity pledges.
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