New data released by climate disclosure organisation CDP shows that only 41% of companies that report to them track value chain emissions, and even fewer are aware of their impact on nature. This percentage is surprisingly low given the wide-ranging emissions rules likely to be enforced this decade.
CDP's report evaluating the 2022 responses showed that nearly 70% of companies that report to them did not assess their value chain’s impact on biodiversity. The tracking of value chains’ impact on nature lags far behind climate disclosure. This is despite the landmark agreement concluded at the United Nations' biodiversity summit COP15 in December, which called on countries to encourage and enable large companies and financial institutions to assess and disclose their risks, impacts, and dependencies on biodiversity by 2030.
Read more: A high percentage of European consumers want carbon labels on products
While corporate disclosure on nature is yet to be made mandatory, many calls have been made for it to be enacted. The supply chain report from CDP underscores that most companies are prioritising climate disclosure over nature. Across 18,500 firms disclosing to CDP in 2022, over 7,000 companies reported engaging their suppliers on climate change, compared to less than 1,000 on water and forests. Even on climate, only one in every 10 companies includes requirements in their contracts with suppliers, and most of these are not yet aligned with the 2015 Paris Agreement climate goals.
For example, under 1% (0.04%) of all companies required their suppliers to set science-based targets, according to CDP. This is a concerning finding and shows that environmental action is not happening at the speed, scale, and scope required to reach the goals of the Paris Agreement.
CDP's report also showed that senior management teams must be more incentivised to address key issues such as water security and deforestation in the supply chain. The report found that 70% of companies' top management positions will only be encouraged to act on deforestation in 2025. Only 3% of companies have water-related incentivisation for their chief procurement officer.
Read more: EU's deforestation regulation: challenges and opportunities for food companies
Overall, companies are not treating their impact on the environment as a whole, with most not engaging suppliers on climate and vital parts of nature, including water security, deforestation, and biodiversity. This is a worrying trend, highlighting the urgent need for companies to act.
Start making a positive impact on nature
In conclusion, companies must assess the impact of their supply chains on nature to be ready for future changes. COP15 made it clear that companies need to prepare for future regulations on nature in the supply chain. Not meeting these regulations can expose them to a wide range of risks. It could mean missing out on opportunities that safeguarding nature will bring. It is time for companies to prioritise nature disclosure alongside climate disclosure and incentivise senior management teams to address key environmental issues in the supply chain.
Measuring and reporting carbon emissions is the first step of the ongoing journey for businesses to give back to nature. Current market trends show consumers are more conscientious of their environmental impact and choose nature-friendly products.
At DGB Group, we aim to offer businesses and investors opportunities to make nature conservation part of their roadmap. We provide transparent and accessible ways to bring nature-based solutions to businesses and investment portfolios.
Talk to our team about how you can integrate nature into your business
