RISK COMMITTEE'S EXPANDING AGENDA:
BIODIVERSITY
By Dr. Donna Hamlin
The latest new topic to add to board attention is biodiversity. If your board has yet added this to the risks to address, it is time to prepare.
Biodiversity encompasses a remarkable range of plants, animals, and microorganisms, along with the ecosystems they reside in. It plays a critical role in delivering essential ecosystem services, including pollination, nutrient recycling, water purification, and climate regulation.It also contributes to culture, economy, support for livelihoods and sustainability, all of which impact on our business's long-term success.
INTERNATIONAL DAY FOR BIOLOGICAL DIVERSITY 2023
The International Day for Biological Diversity serves as the global stage to collaborate on the critical importance of biodiversity for our planet.
The theme for the International Day for Biological Diversity in 2023 is "From Agreement to Action: Build Back Biodiversity." This theme signifies the pressing requirement to go beyond mere commitments and transform them into concrete actions aimed at revitalizing and safeguarding biodiversity. It underscores the significance of effectively implementing the goals outlined in the Convention on Biological Diversity (CBD) and other international agreements, including the Sustainable Development Goals (SDGs), as a means to tackle the ongoing global biodiversity crisis.
Governance Directions Ahead
Biodiversity is both vital to our quality of life and a critical resource for companies across industries.It is now being added to as a business risk as reductions in biodiversity can lead to supply chain disruptions, operational cost increases and limited resources needed.
European governance has taken initiative to address this.
- The EU Biodiversity Strategy for 2030 is the cornerstone of biodiversity protection within the European Union. Some countries, such as France, are spearheading this movement and have already introduced compulsory reporting of corporate biodiversity footprints in individual sectors.
- The EU Commission adopted pioneering proposals for a Nature Restoration Law, aiming to restore 20% of the EU’s land and sea area by 2030, and all ecosystems by 2050. Corporate boards and leaders must proactively consider these changes in their business decisions going forward.
U.S. governance is beginning to address this risk.
At an earlier stage, U.S. boards will need to include biodiversity another topic in their risk management oversight. Today, only 12.8% of companies in the Russell 3000 disclose a biodiversity policy. Early industry companies with disclosures include energy, materials and utility companies.
To get started, risk committees should:
- Assess how this may affect or have impact on supply chains.
- Evaluate how their activities in the marketplace, workplace, and public space (such as government affairs and corporate citizenship) can support biodiversity.
- Consider the focus of attention by major investors regarding biodiversity. P&G and Home Depot shareholders presented proposals on biodiversity which passed with overwhelming support.
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