May 20, 2025
Nearly one million animal and plant species are threatened with extinction around the world, many within the next few decades. Biodiversity loss will have serious impacts, both on the environment and on the economy. According to a 2020 report from the World Economic Forum (WEF), more than one-half of the global GDP, or about $44 trillion, relies to some extent on maintaining biodiversity in nature. While biodiversity is clearly a significant concern, it’s a topic that may be missing from your strategy or disclosures.
That’s not surprising, as biodiversity is only beginning to emerge in sustainability reporting. Only one-third of S&P 500 firms disclosed a biodiversity policy in 2023, up from 18% in 2022. Among Russell 3000 companies, only 13% of companies disclosed such a policy, up from 6% in 2022. These are Conference Board data points as published a January 2024 article by the Harvard Law School Forum on Corporate Governance.
In September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) issued its final recommendations for nature-related/biodiversity disclosures for companies and financial institutions. TNFD sought to build a network of early adopters, and more than 400 organizations (with the majority from Europe and Asia) answered the call. TNFD is hoping to secure more commitments leading up to the COP30 climate summit in November 2025 in Brazil. In January 2025, TNFD received a $500,000 investment from the Rockefeller Foundation to help scale its engagement and adoption efforts.
Unlike with the Task Force on Climate-related Financial Disclosures (TCFD) framework and the Sustainability Accounting Standards Board (SASB) sector-specific standards, interest in TNFD has been more muted. For many companies, biodiversity and TNFD disclosures remain under consideration, but not in the forefront. With new EU reporting requirements, biodiversity is likely to get another push toward becoming a more pressing and material topic for large- and medium-size companies and their supply chains.
TNFD provides a structure for companies to identify, assess and disclose the risks and opportunities associated with their interactions with nature. Its LEAP framework (Locate, Evaluate, Assess and Prepare) helps companies understand what their interactions mean for long-term risk and resilience.
To implement the LEAP framework, a company conducts an initial analysis of its facilities. This analysis includes the following steps:
- Locate the places where your facilities are in proximity to protected sites, key biodiversity areas and endangered or threatened species in the region.
- Evaluate the dependencies and impacts your facilities have with these environments and ecosystems.
- Assess material risks and opportunities.
- Prepare to develop strategies and targets while providing disclosures with optimal transparency.
Determining where biodiversity lands among your company’s sustainability priorities requires a materiality assessment, or, at the very least, an update of your existing assessment. Through this process, companies can gain an understanding of what matters most to stakeholders and what your organization can most readily achieve based on your capabilities and needs. My colleague Andrea Shea wrote an insightful blog post on this topic (and for the honors students, I wrote another post on double materiality assessments in 2024).
TNFD’s disclosure recommendations are closely aligned to the disclosure framework developed by TCFD, incorporating the same four conceptual pillars:
- Governance: The governance processes, controls and procedures the organization uses to monitor and manage nature-related issues.
- Strategy: The approach the organization uses to manage nature-related issues.
- Risk & Impact Management: The process used by the organization to identify, assess, prioritize and monitor nature-related dependencies, impacts, risks and opportunities.
- Metrics & Targets: The metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities.
How material is biodiversity to your business? Is now the time to find out for sure and begin charting a path for operational progress and disclosure? Let Dix & Eaton be your guide. Contact me to get the conversation started.
