Most companies failing to track impact on biodiversity

Seven out of 10 companies that disclosed their environmental impact to CDP last year did not monitor their impact on biodiversity, and are unprepared for incoming regulations.

In a new report, CDP – which runs the global disclosure system for environmental impacts – also reveals that just 500 out of 18,500 companies that reported their footprint last year had engaged with their suppliers on forests.

This is despite the landmark agreement made at COP15 last year urging large companies and financial institutions to assess and disclose their risks, impacts and dependencies on biodiversity by 2030.

The report also reveals that 70% of companies’ top management positions will not be incentivised to act on deforestation before 2025, while only 3% have water-related incentivisation in place for their chief procurement officer.

CDP said that businesses must engage with their suppliers on nature now, or risk falling foul of wide-ranging regulations that are “likely to be enforced this decade”.

“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,” said Sonya Bhonsle, global head of value chains & regional director corporations at CDP.

“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.”

For climate, the picture is more positive, with 74% of companies reporting board-level oversight on climate change, and 41% of the remaining firms planning to introduce it in the next two years.

However, the report also reveals that just 41% of companies that disclosed to CDP last year reported any of their supply chain emissions, despite their impact being 11.4 times bigger than direct emissions.

One in 10 companies include climate-related requirements in their contracts with suppliers, but under 1% require them to set science-based targets.

“Environmental action is not happening at the speed, scale and scope required to limit global temperature rises to 1.5 °C, with many companies still not acknowledging that their impact on the environment extends far beyond their operations and that of climate change,” Bhonsle continued.

“We need to see environmental leadership from companies right now by tackling their impacts on climate change and nature together, working with their suppliers in an integrated way that includes nature as standard, and incentivising this engagement within their organisation.”