Explore the resources below to assist in completing this action.
Biodiversity Guidance action 1.2.3
1.2.3 Prepare yourself for a natural capital assessment
A key step to framing your natural capital assessment is to identify the Business Application or the intended use of the results of the assessment. Framing a natural capital assessment to incorporate biodiversity will focus the selection of the Business Applications. The Aligning Biodiversity Measures for Business collaboration sets out eight Business Applications specifically for biodiversity assessments (EU Business @ Biodiversity Platform 2019) based on work on the development and use of biodiversity indicators in business by the International Union for the Conservation of Nature (Addison et al. 2018). Table 1.3 lists how these biodiversity-inclusive Business Applications map to the applications listed in the Protocol, with examples of the types of decisions that can be informed when biodiversity is included in an assessment.
Business Applications (table 3.4 in the Protocol) | Business Applications from Aligning Measures (EU Business @ Biodiversity Platform 2019) | Relevance of Business Application to your biodiversity-inclusive natural capital assessment |
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Assess risk and opportunities | BA7: Screening and assessment of biodiversity risks and opportunities | Assessing business risk, for example for due diligence assessments as part of mergers and acquisitions, or assessments undertaken by investors to differentiate between investment options, either based on the biodiversity performance or return on investment of different companies. This might also be undertaken by financial institutions to assess biodiversity risk and inform pricing credit. Assessing business opportunities related to nature restoration, for example investing in nature-based solutions. |
Compare options | BA4: Comparing options | Comparing the impact and dependency of different business options on biodiversity, including economic considerations. |
Assess impacts on stakeholders | BA1: Assessment of current biodiversity performance | Demonstrating to stakeholders that your company is doing well in terms of biodiversity performance, or simply to know the company’s current performance in relation to biodiversity. |
| BA3: Tracking progress to targets | Setting targets which are important to specific stakeholder groups, or relate to fulfilling stakeholder expectations. |
Estimate total value and/or net impact | BA1: Assessment of current biodiversity performance | Knowing the current net biodiversity impact of your company. |
| BA2: Assessment of future biodiversity performance | Assessing future biodiversity performance as a result of, for instance, positive impact actions (e.g., restoration actions and/or actions that reduce pressures on biodiversity) or changes in your activities. |
| BA5: Assessment/rating of biodiversity performance by third parties, using external data | Comparing company biodiversity performance across a sector, based on criteria and external data by a third party. |
| BA6: Certification by third parties | Third-party certification based on auditing of a clearly established methodological approach. |
| BA3: Tracking progress to targets | Periodic tracking of targets on biodiversity performance. |
Communicate internally and/or externally | BA8: Biodiversity accounting for internal reporting and/or external disclosure | Compiling consistent, comparable, and regularly produced data using an accounting approach framework, such as the Biological Diversity Protocol. |
| BA1 to BA7 | Communicating the findings of your assessment. |
The results of a natural capital assessment can also inform the setting of corporate biodiversity targets. This might include commitments to “no net loss” and “net gain” of biodiversity (box 1.3), and/or commitments in response to regulatory drivers, such as the targets in the EU Biodiversity Strategy for 2030 (European Commission 2020). There are also a number of other global biodiversity target-setting initiatives (table 1.4).
Understanding alignment and contributions to these targets could be the objective of your natural capital assessment. By not incorporating biodiversity commitments within your natural capital assessment objective, you may miss a strategic opportunity to clearly demonstrate the value of your net contributions to biodiversity to both your business and to society, and/or miss potential risks associated with links to other environmental issues such as climate or water.
Biodiversity target | Description |
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Science Based Targets for Nature | Targets which define and promote best practice for businesses by responding to five Earth systems; climate, fresh water, land, ocean, and biodiversity (SBTN 2020). Interim guidance on science based targets for nature, including biodiversity, will be launched in late 2020. |
Global Apex Goal for Nature | A proposal for a clear, science-based Global Apex Goal that is measurable, communicable, and provides the direction and the destination that the global community must embrace and converge towards: Zero Net Loss of Nature from 2020, Net Positive by 2030, Full Recovery by 2050 (Apex Goal 2020). This draft goal is supported by 14 conservation and business organizations. |
CBD post-2020 biodiversity framework | The Convention on Biological Diversity’s post-2020 global biodiversity framework will replace the Aichi Targets to provide a pathway towards achieving the 2050 Vision of “Living in harmony with Nature” (CBD 2020c). |
UN Sustainable Development Goals (14 and 15) | SDG Goals 14 and 15 focus on the protection of biodiversity and ecosystems within the marine and terrestrial environments (UN 2015). |
See the Application Guidance for more information on setting biodiversity targets as part of your natural capital assessment.
Financial institutions have a key role in achieving biodiversity targets, as they can catalyze behavior changes and influence economic pathways, and business models and practices. A report from the UN Environment Programme, released in 2020, addresses biodiversity-related target setting by the finance sector (UNEP et al. 2020).
Box 1.3: Potential Business Application for a biodiversity-inclusive natural capital assessment—tracking progress towards “no net loss” and “net gain” commitments.The concepts of “no net loss” and “net gain” rely on the mitigation hierarchy to ensure preventative mitigation measures, principally avoidance, are prioritized to achieve these goals (CSBI 2015). This hierarchy has most often been applied to manage the biodiversity impact of development projects, including extractive and infrastructure projects, but has also been considered for managing the impacts of many business operations, including those along a supply chain. For companies already adopting the mitigation hierarchy, a biodiversity-inclusive natural capital assessment can strengthen the business case for action by clearly demonstrating the value of biodiversity at all stages of its implementation.
The mitigation hierarchy consists of four stages comprising a sequence of actions, in order of priority, to anticipate and mitigate impacts on biodiversity:
- Avoid biodiversity impacts during business operations, by first anticipating the potential impacts of a business activity, then putting in place measures to prevent these adverse impacts. This may include, for example, selecting alternative raw materials that do not have negative impacts upon biodiversity, developing in alternative locations to avoid sites of high biodiversity value, or working with suppliers so they avoid non-sustainable practices.
- Minimize any impacts where they cannot be immediately avoided. This could include for example measures to maintain habitat connectivity at the site level.
- Restore biodiversity that has been impacted at the site level, for example through reforestation or the enhancement of important habitats.
- Offset impacts in areas not affected by the project, when residual impacts occur on-site. This could include protection of habitat off-site that is under threat, or the restoration of habitat previously impacted, for example, restoring coastal saltmarsh to offset impacts of a coastal development. Note that offsetting should be used as the lowest priority step in the mitigation hierarchy and with caution, as it often cannot substitute for the complexity of biodiversity at the original site. This has led to criticism of offsets as a “license to trash” creating potential for reputational damage to businesses that rely heavily on offsetting.
After planning and implementing the mitigation hierarchy, “no net loss” refers to the point at which project-related impacts on biodiversity are balanced by mitigation measures, so that no net loss remains. Where gains are greater than losses, “net gain” targets are achieved.
The concepts of “no net loss” and “net gain” rely on the mitigation hierarchy to ensure preventative mitigation measures, principally avoidance, are prioritized to achieve these goals (CSBI 2015). This hierarchy has most often been applied to manage the biodiversity impact of development projects, including extractive and infrastructure projects, but has also been considered for managing the impacts of many business operations, including those along a supply chain. For companies already adopting the mitigation hierarchy, a biodiversity-inclusive natural capital assessment can strengthen the business case for action by clearly demonstrating the value of biodiversity at all stages of its implementation.
The mitigation hierarchy consists of four stages comprising a sequence of actions, in order of priority, to anticipate and mitigate impacts on biodiversity:
- Avoid biodiversity impacts during business operations, by first anticipating the potential impacts of a business activity, then putting in place measures to prevent these adverse impacts. This may include, for example, selecting alternative raw materials that do not have negative impacts upon biodiversity, developing in alternative locations to avoid sites of high biodiversity value, or working with suppliers so they avoid non-sustainable practices.
- Minimize any impacts where they cannot be immediately avoided. This could include for example measures to maintain habitat connectivity at the site level.
- Restore biodiversity that has been impacted at the site level, for example through reforestation or the enhancement of important habitats.
- Offset impacts in areas not affected by the project, when residual impacts occur on-site. This could include protection of habitat off-site that is under threat, or the restoration of habitat previously impacted, for example, restoring coastal saltmarsh to offset impacts of a coastal development. Note that offsetting should be used as the lowest priority step in the mitigation hierarchy and with caution, as it often cannot substitute for the complexity of biodiversity at the original site. This has led to criticism of offsets as a “license to trash” creating potential for reputational damage to businesses that rely heavily on offsetting.
After planning and implementing the mitigation hierarchy, “no net loss” refers to the point at which project-related impacts on biodiversity are balanced by mitigation measures, so that no net loss remains. Where gains are greater than losses, “net gain” targets are achieved.
The relationships between biodiversity, natural capital, and risks and opportunities for business may be quite complex. However it is important that the role of biodiversity is explicitly considered within a natural capital assessment.