Businesses have been urged to step up the amount of data they share on biodiversity measures and impacts to fall in line with new regulations set to come into force.
The Carbon Disclosure Project, a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, said that 18,600 companies disclosed data on climate last year – a 42% year-on-year increase. Yet less than half of this amount disclosed on biodiversity, and only 1,000 disclosed information on forests.
Its annual report focused on how larger companies are engaging with suppliers to collect better environmental data and reduce their negative environmental impacts across the value chain.
The number of companies reporting on water security increased 16% in 2022 compared with the previous year but still only just exceeds 4,000.
Disclosures on biodiversity are also far less common than climate-related disclosures. Around 7,700 companies reported via CDP’s biodiversity platform in 2021, just 41% of the number reporting via its climate platform.
The Treaty signed by more than 180 countries at the UN’s biodiversity COP last year includes a commitment for nations to mandate nature-related reporting from larger companies by the end of the decade yet the CDP report suggests many thousands are not ready.
To make nature-related corporate reporting more common ahead of any disclosure mandates, CDP is advocating for businesses to ensure that nature is a board-level priority.
Three-quarters of the businesses reporting on climate to CDP said they incentivized their C-suite to take climate action, compared with just one-quarter being incentivized on forests and 6% being incentivized on water stewardship.
CDP is also calling on businesses to begin more widespread engagement on nature with their suppliers after figures revealed only 30% of the companies reporting on biodiversity assess the impact of their entire value chains.
CDP’s global head of value chains and regional director of corporations Sonya Bhonsle said: “COP15 couldn’t have been clearer in the call to action on corporate reporting on nature. If a company is not preparing for future regulations on nature in the supply chain, they are open to a wide range of risks and could also be missing out on the opportunities that safeguarding nature will bring.
“Quite simply, if a company wants to be in business in the future, they need to start embedding nature into the way that they buy and collaborating with suppliers to drive action in the supply chain.”
According to the World Economic Forum (WEF), $44trn – more than half of global GDP – is exposed to risks from nature loss.
The CDP also called for more detailed disclosures from companies about their wider supply chain emissions.
However, the report noted that 11% of the businesses include climate-related requirements in supplier contracts and a further 36% plan to do so in the next two years. CDP is urging companies to ensure that requirements are clear and science-based and warned that Scope 3 indirect emissions disclosure requirements are set to be tightened in markets, including the UK and the US.
The International Sustainability Standards Board (ISSB) has also said that Scope 3 emissions reporting will be included in its first global standards, due to launch by June this year.