Corporate sustainability reporting has become a common practice for companies from around the world as means for managing and communicating their sustainability performance. The Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines are the most commonly used framework for reporting, with over 1,000 organizations from 60 countries having published reports over time using these Guidelines.
Understanding biodiversity Similar to global warming, diminishing biodiversity is one of the trends with the potential to fundamentally alter the living conditions on earth. However, it is also one of the most complex and difficult environmental problems to understand and one with consequences that are very difficult to model or predict. Unlike climate change, there is not a single cause such as GHG gas emissions that can become the rallying point for change.
In reporting, biodiversity also remains one of the most underserved areas amongst all environmental topics. From our observations, many companies are uncertain how to evaluate their biodiversity impact, much less report on it.
Some sectors — such as mining and oil & gas — have been dealing with the issue directly for many years and have relatively well-established approaches to managing and reporting biodiveristy performance at the site level. However, many companies in sectors seemingly more ‘distant’ from biodiversity — such as retailers — may not have a clear understanding of the indirect impacts that their supply chain management decisions can have on land usage patterns or environmental pollution that impacts biodiversity. Similarly, many may not be aware of the potential implications of their product use and disposal on biodiversity.
As such, reporting on a topic that is crucial to maintaining stable environmental and social conditions and, ultimately stable market conditions for organizations to operate, often remains limited in depth and frequency.
In 2005-2006 with the support of the Dutch Ministry of Foreign Affairs, the GRI initiated a multi-stakeholder process to develop a Biodiversity Resource Document to assist organizations in understanding biodiversity and provide ideas about how to approach reporting on it (1). One of the key issues that emerged from these discussions was the importance of understanding biodiversity as being about the stability and health of ecosystems rather than just protection of certain plant/animal species. The health of these regional or planetary systems, in turn, directly feeds into the health of our societies. Good reporting should place biodiversity strategies and performance in the context of ecosystem health, and relate them to the broader international framework of the Convention on Biological Diversity which defines internationally accepted goals and expectations.
A second key point was that companies should look at biodiversity impacts occurring across their entire value chain (e.g. from suppliers to users of the end products) and consider where the company can have an influence. As a simple example, a company that produces detergents that use phosphates will likely have limited direct impacts on biodiversity. However, one of the key raw materials comes directly from mining operations, which may indeed have very significant impacts on biodiversity. Similarly, an electric utility based in an urban area may have little direct impact from its generation plant. However, SO2 emissions may contribute to acid rain that damages nature reserves.
The Resource Document is now available from the GRI website. For COP-9, it can provide a useful part of the tool kit for private sector on organizations on how to engage the issue of biodiversity, and, more broadly, can support all types of organizations in understanding biodiversity reporting. We also hope that the document can stimulate dialogue around the types of performance indicators that can be used to desribe biodiversity performance and will serve as a foundation for GRI’s ongoing development of biodiversity performance indicators.
Building a common language Reporting is a practice with two important contributions to make to sustainable development as recognized by the 2002 Final Implementation Plan of the World Summit on Sustainable Development.
First, reporting is a tool for objective communication with stakeholders about the key sustainability issues facing an organization. It allows a comparable and objective basis for setting expectations and assessing performance, and a common language for discussing complex issues.
Stakeholder groups interested in biodiversity range from communities or groups associated with the biodiversity and ecosystems around specific sites, to investors concerned about whether poor biodiversity performance could become a risk to a company’s license to operate. In both cases, stakeholders seek material and comparable disclosures on direct and indirect impacts that let them understand whether things are getting better or worse. Further, without such information, markets cannot, systematically, incorporate biodiversity into account in decision-making.
Second, reporting also serves as an internal management tool. The process of reporting supports (or often catalyzes) an internal process of engagement between different parts of the organization regarding its sustainability vision, goals, and responsibilities. Reporting becomes a means for systematically learning about the risks and opportunities associated with issues or external trends and then internalizing them into routine management processes. This pertains to both individual issues as well as learning about how different sustainability issues are interlinked. A food company, for example, might question how climate change will affect agricultural production in areas that are traditional suppliers of produce and how it will respond as a consequence of initiating a reporting process.
Reporting is a key part of the toolkit that should be used by any organization in its engagement on sustainability. It sits within a broader cycle of defining principles, planning and implementing strategy, engaging with stakeholders, and tracking results. The GRI has worked with other initiatives and standards bodies such as the UN Global Compact to help ensure that the various tools available to business will support an integrated approach.
Through providing a set of common indicators, the GRI helps give companies concrete reference points for understanding and approaching their performance measurement. Perhaps even more importantly, the GRI, as an institution, offers a global process by which all stakeholders (business, civil society, investors, etc.) can work together to develop a consensus on which indicators are the right ones.
This multi-stakeholder collaboration under the GRI to develop indicators has been underway since 1997 and the GRI released the third generation of its Sustainability Reporting Guidelines (“G3”) in October 2006. These included updated biodiversity indicators as well as new indicators on climate change. These will continue to be updated over time as we collectively learn more about biodiversity and how we should track it.
Looking ahead There is a huge public focus on the problem of global warming that has resulted in growing discussion and concern about the state of the planet. As companies pursue their own discussions of climate change, they should also see it in the broader context of other environmental issues, particularly biodiversity.
Global warming and the resulting changes to the earth’s climate are predicted to have major impacts on the distribution of species and ecosystems. The risks that polar bears face as arctic ice thins has increasingly captured the public’s imagination, but this is just one change amongst many that warmer temperatures will bring.
As companies look at climate change and their reporting on the issue, they should clearly place a strong focus on actions that will reduce GHG emissions. At the same time, climate change also invites a wider consideration of the long-term physical changes that are occurring to the ecosystems around the planet and the company’s relationship to these.
Used effectively, reporting should be a tool that will help a company better understand and manage the issues and work together with stakeholders to find effective solutions to the organizational challenges posed by climate change and biodiversity loss.
Sean Gilbert is Director, Technical Development and Sandra Vijn was, at the time of writing, Research Coordinator,
the Global Reporting Initiative Secretariat.
(1)
http://www.globalreporting.org/Services/ResearchLibrary/GRIPublications/