How a world ecological summit in Montreal is working out ways to make corporates contribute
Very serious global discussions are under way in Montreal right now which will seek leadership from governments — and ultimately the private sector — in the fight to protect the world’s land, oceans, rivers and wildlife. And it will require them to go well beyond donations to help save the odd threatened species.
Rather, the COP15 summit – which is a just like those other COPs except it’s about biodiversity, not climate – is keen to mimic the 2015 Paris Agreement on climate by setting biodiversity targets, including the big one: the so-called 30x30 agreement which would have nations sign up to ensure that 30 per cent of the terrestrial and marine habitat is protected by 2030. (Already 100 nations have signed up.)
Translated to Australia, 30 per cent compares with the 19.75 per cent of our landmass protected in the National Reserve System, comprised of more than 13,500 protected areas. Globally, about 16.44 per cent of land is protected, along with 7.74 per cent of the ocean.
A COP15 draft agreement released earlier detailed the problem, saying “more than 70 per cent of the land on the planet has been transformed, more than 60 per cent of the oceans have been impacted and more than 80 per cent of wetlands have been lost, while more than one million species are facing extinction”. Not pretty.
It was a big week for the environment. On Thursday, the federal government announced a new environmental protection agency in an extensive statement detailing the processes around development.
COP15 goes much further, imagining a true transformation of our economic system. The Montreal conference began on Wednesday and runs till December 19, and if you hadn’t heard of it before now, you are not alone: the climate COPs (the most recent being COP27 in Sharm el-Sheikh last month) have sucked the oxygen (so to speak) out of environmental debates over recent years.
But biodiversity’s moment has arrived, with United Nations secretary-general Antonio Guterres telling Montreal delegates “humanity has become a weapon of mass extinction”.
KPMG Australia national lead, natural capital and biodiversity Carolin Leeshaa says we’re at a “nature meets Bloomberg terminals” moment in which companies need to assess the value of nature to profits and figure out how to manage potential risk.
“This is not a nice to have. Virtually all our clients depend on nature, either directly or through their supply chains,” Leeshaa says.
“The World Economic Forum has estimated 50 per cent of global GDP is highly or moderately dependent on nature.
“Nature actually contributes up to $US125 trillion ($184 trillion) to the global economy, and the WEF has identified nature loss and biodiversity degradation as one of the top three global risks humanity faces over the next 10 years.”
We have taken nature for granted but it’s now “an essential business imperative … to make it visible and bring it on to the balance sheet … It’s not about making the whole of Australia into a national park, it’s about moving businesses to more nature-positive production processes and business models”.
Leeshaa and KPMG are, naturally, in the business of making biodiversity front of mind for boards, only too aware that as the Zeitgeist shifts, so must they: like climate change, biodiversity will spawn its own ecosystem of consultants.
Leeshaa says biodiversity and climate are two sides of the same coin: “We cannot reach our ambitious net-zero targets without regenerating our natural resources, we simply cannot get there.”
And just like climate change, corporates are urged to act on nature, not just as good citizens but because it’s good for business: even if you are not growing things, or showing things to tourists, your business some time, somewhere, somehow will be affected by global degradation.
“For example, if you’re a bank or financial institution that is underwriting or lending or insuring industries which have a high dependency on nature and biodiversity – such as food and agriculture but also apparel, construction, mining – you are at risk of spill-over effects to your portfolio (which) could ultimately cascade in a systemic risk for the financial services system as a whole.
“The (international monitor) the Financial Stability Board has identified that nature is 100 per cent connected and interrelated with climate risk, and this represents a risk for the entire financial services stability, not only in Australia, but also globally.”
She wants corporates to pilot the framework being developed globally by the Taskforce on Nature-related Financial Disclosures (another body with which we will have to become familiar).
The federal government is on board. It hired KPMG to brief the peak bodies, including the Business Council of Australia, the National Farmers Federation and the Minerals Council on the framework designed to help companies identify, assess and report on biodiversity loss risk and opportunities.
The government also plans to create a “nature repair market” – a voluntary biodiversity market and certification scheme to run alongside its carbon credit scheme.
In a briefing note to clients, legal firm Allens Linklaters says “the proposal comes at a time of increased scrutiny on corporate responses to biodiversity loss, and growing expectation that companies report on biodiversity loss and nature-related opportunities”.
The note looks at whether failure to disclose or consider nature-related risk could be a breach of directors’ duties under the Corporations Act.
KPMG’s Leeshaa says: “We have a very sophisticated capital markets system in Australia and we’re very used to complexity. I think the penny has dropped. (Given) we have already built transition pathways for net zero, nature is going to be next in line.”
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