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Businesses need to be more active in protecting biodiversity

Businesses need to be more active in protecting biodiversity

For the first time, the role of business and the private sector was acknowledged in achieving goals that formed part of the United Nations Convention on Biological Diversity at COP15 last year – but how are businesses in SA tracking their impact and what incentive do they have to make a difference?

‘The reason is fairly simple,” said Barbara Creecy, Minister of Forestry, Fisheries and the Environment (DFFE) on Monday as to why a lack of biodiversity poses a threat to humanity: 

“Nature provides a range of ecosystem services that sustain life on earth and underpin the air we breathe, the water we drink, our food production systems, our health and our living and recreational arrangements.”

Creecy was speaking at an event marking International Biodiversity Day at the Origins Centre at Wits University, hosted by the Endangered Wildlife Trust in partnership with the Department of Forestry, Fisheries and the Environment and the South African National Biodiversity Institute.

The event marked the first time that business and government had met since the historic Kunming-Montreal Global Biodiversity Framework was signed in December 2022 at the UN’s biodiversity conference (COP15) in Montreal, Canada.

Read more in Daily Maverick: Historic moment for nature and humanity as Kunming-Montreal framework adopted at UN biodiversity conference

This framework, adopted by South Africa and 195 other nations as part of the Convention on Biological Diversity, commits SA to implement 23 targets by 2030 and four goals by 2050, with the aim of halting and reversing biodiversity loss.

For the first time in the history of this treaty, parties recognised the role of businesses and financial institutions, with target 15 requiring governments to take policy measures to ensure companies and financial institutions “regularly monitor, assess and transparently disclose their risks, dependencies and impacts on biodiversity…”

Biodiversity performance ratings of JSE-listed companies

Gabi Teren, manager of the National Biodiversity and Business Network at the Endangered Wildlife Trust, released the results of the 2021 Biodiversity Disclosure Project on Monday. It provides biodiversity performance ratings of all 267 JSE-listed companies and 27 state-owned enterprises.

In 2021, 35% of companies (104 of the 294) recognised biodiversity as a material issue – up from 22% the year before, but still very low considering all a company needs to do to get a score is mention biodiversity once in their policies or plans.

The best-performing sectors were the basic materials and consumer staples sectors, with 77% and 54% of companies recognising biodiversity, respectively. Technology was the worst sector, with only 5% of the 19 companies considering biodiversity as a material issue.

In the basic materials sector, mining company Anglo American scored 18 points out of a possible 32 (four points for every eight questions), with their 2021 sustainability report stating, “Our Net Positive Impact target is our commitment to leaving the biodiversity of an area in a better state than when we arrived.”

Warwick Mostert, principal of biodiversity for Anglo American, said during the panel discussion on Monday that companies should not be pushed for a “like-for-like offset” (where impacts on native vegetation are offset in an area with vegetation that is in the same local area), but rather “offset” in a more biologically significant area that needs it more.

“The way we see it is that there are a lot of impacts that we manage inside of our fence or inside of our mining footprint areas, but there are ones that are outside of that where we make a really meaningful contribution,” said Mostert. 

Offsetting

“I’ve always seen this as the inherent difficulty with biodiversity offsetting,” Kate Handley, executive director of the Biodiversity Law Centre, told Daily Maverick.

“How can you really ever replace biodiversity that you are degrading? Biodiversity is so contextual, does it really help to protect it elsewhere?” 

In the consumer staples sector, Woolworths has a score of 12.5 out of a possible 32, continuing to be a JSE leader for its transparent disclosures and monitoring efforts. This is compared to other supermarket giants like Shoprite with a score of seven, Spar with two points and Pick n Pay with zero.

Sanjeev Raghubir, sustainability manager for the Shoprite Group, said during the panel discussion, “We know that as a business, we are directly dependent on ecological services. Yet at the same time, we create impacts on biodiversity through our supply chain and our direct operations.”

Shoprite has a position statement on biodiversity and responsible sourcing and Raghubir explained that the company mainstreams biodiversity by “reducing food waste across our operations, using more sustainable packaging, [and] fighting and adapting to climate change…

“I think we are the retailer with the largest amount of renewable energy consumption at the moment.”

Raghubir added that Shoprite is helping communities to adapt to a changing environment by supporting them with community food gardens and mobile solutions.

Shoprite got the Endangered Wildlife Trust to do a biodiversity footprint assessment last year, where it received an 88% negative footprint and a 12% positive footprint.

Raghubir said from that assessment it was startling to realise how big a biodiversity footprint an organisation operating in an urban area has.

“It’s quite startling that many of the ecosystems that urban environments are in already are severely endangered,” reflected Raghubir.

Just 13% (seven out of 44 companies) in the financial sector recognise biodiversity, with FirstRand and Absa leading the sector ratings by assessing and acknowledging these emerging biodiversity risks – both had a score of 3.5. Institutions like Investec, Discovery and Capitec scored zero.

Madeleine Ronquest, head of environmental and social risk at FirstRand Limited, said during the panel discussion that “what cannot be done is that we just throw money at the problem. That’s not the way commercial banks work. What can be done, though, is that we create finance mechanisms, both through funding that we get from developer funding institutions, as well as capital that we put aside, or where we crowd investors to create sustainability linked bonds.” 

Ronquest said FirstRand had a sustainable bond framework in place which had a section on biodiversity and natural capital projects that would qualify for those bonds.

Holding business accountable – the carrot or the stick

Monday’s panel discussed what provides more of an incentive for companies to report on and reduce their biodiversity impact – the carrot or the stick.

Handley explained that businesses are at risk if biodiversity is depleted, as more than half of the world’s GDP — $44-trillion of economic value generation — is moderately or highly dependent on nature and its services.

“So this is a physical risk,” said Handley, “but business also faces transition risks as new regulation is brought into effect to curb biodiversity loss (like subsidy reforms, taxes and fines) and increasingly, legal risks and risks in terms of direct liability for negative impacts on biodiversity… just look at what happened to the directors of Shell – taken to court by ClientEarth in relation to inadequate climate strategy.” 

Additionally, the DFFE reported that there are more than 418,000 biodiversity-related jobs in South Africa– most of which (more than 250,000) are in the extractive use of biodiversity (such as fisheries and farming) and the others in biodiversity-based tourism, research and restoring and protecting biodiversity.

This number of jobs is still below mining (at 434,000) and tourism, agriculture and manufacturing (1.5 million jobs) – but what’s significant is that for every job dedicated to protecting biodiversity, there are five jobs that depend directly on using biodiversity – which is a massive incentive for businesses to care about biodiversity. 

Anglo American’s Mostert said that companies need a combination of both the carrot and the stick.

Handley said: “I honestly think with the new GBF [Global Biodiversity Framework] and the way this is going to inform biodiversity law and policy going forward, business needs to be more worried about the stick.”

Supportive government policies

Barbara Creecy said during her keynote address on Monday that while businesses can contribute to biodiversity conservation with their practices, it requires the government to draw up supportive policies and ensure environmental regulations are enforced. 

The White Paper on Conservation and Sustainable Use of South Africa’s Biodiversity was adopted by the government in March with the aim of domesticating the global biodiversity framework. Creecy said the white paper called for a change in business practices to reduce biodiversity loss and add net value, or at least ensure no net biodiversity loss.

In terms of the stick, along with policy, Jonathon Hanks, director of sustainability consulting company Incite, said that businesses need to consider two material aspects when it came to biodiversity – financial materiality and impact materiality. Hanks said a company reporting its biodiversity impact had to frame it with language that investors and stakeholders would understand – what environmental or biodiversity issue was going to impact cash flow.

“So they realise it’s not a soft or ‘woke’ issue, it’s an issue that’s material to the financial performance of the company, so then there’s smart allocation of financial capital.”

Impact materiality is the impact on society and the environment. Hanks explained that sometimes the impact of a company’s products or activities was internal (to the company), but sometimes society had to bear the cost. He used the example of Coca-Cola – “they have a huge margin, adding sugar to water, society bears that cost because we all get sick and unhealthy. So we need to internalise that cost with the sugar tax.”

For biodiversity, Hanks said impact materiality was not the number of companies that issued reports. It was not even what was in the report. For impact materiality to be useful, was to understand thresholds.

“I can say I’ve used 50 megalitres of water. But if I’m in a dry area or a wet area, it’s completely different,” said Hanks, emphasising that a company would instead need to consider the impact on the capacity of that area to regenerate water.

“We want companies that move beyond, ‘this is what my greenhouse gas emissions are, to how am I contributing to the overall carbon budget?’ ” DM

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