Nature Action 100 Tool to Assess Corporate Progress
New benchmark provides insight into actions taken in systemically important sectors on reversing nature and biodiversity loss by 2030.
Global investor-led nature and biodiversity initiative Nature Action 100 has published a set of benchmark indicators to assess companies’ nature-related ambition, and measure their progress towards fixed targets.
Based on the initiative’s Investor Expectations for Companies and developed in consultation with investors, the Nature Action 100 Company Benchmark comprises six high-level indicators – ambition, assessment, targets, implementation, governance, and engagement – underpinned by 17 sub-indicators and 50 metrics.
“If these six actions are achieved, it’ll help shift business practices towards activities that support healthy ecosystems and underpin sustainable local livelihoods,” Norah Berk, Senior Programme Manager for Nature at the Institutional Investors Group on Climate Change (IIGCC), told ESG Investor. “The benchmark provides more detailed indicators against each of those six asks. As such, it really helps set out a path for what investors are asking companies to transform in their business practices under the initiative.”
The indicators were developed through comprehensive research by Nature Action 100’s corporate engagement working group, co-led by investor network Ceres and the IIGCC, drawing on best practices grounded in the latest science and data. They are also aligned with nature target-setting and disclosure frameworks, such as the Science Based Targets Network and the Taskforce for Nature-related Financial Disclosures.
“From an IIGCC perspective, we’re definitely hearing more of this thirst from investors to have resources and support to address their impacts on nature and biodiversity,” said Berk. “Nature Action 100 was born out of this lack, to fill the gap with a vehicle through which investors can engage with companies and address nature-related issues – achieving both their targets and wider nature objectives.”
Nature Action 100 members initially targeted the activities of 100 focus companies across eight key sectors.
Meeting investor needs
The creation of the benchmark represents the culmination of Nature Action 100’s work since launch, and results from continuous exchanges with investors and industry participants.
“We kicked off our engagement in September last year, and the benchmark represents an important milestone for us,” Berk explained. “It is aimed at making sure that when investors go into the dialogue with companies, they’re equipped with evidence at their fingertips to help support those engagements. We’ve tried to make the indicators ambitious, but also achievable.”
The development process included extensive consultation with dozens of Nature Action 100 members and experts from organisations and universities globally – including representatives of indigenous peoples and local communities.
“A consistent thread throughout [the development of the benchmark] has been ensuring that the rights, livelihoods and territories of indigenous peoples are respected,” said Berk. “Evidence has shown that they manage areas containing up to 80% of the world’s biodiversity. Their traditional knowledge can be leveraged to solve the biodiversity crisis, and they should meaningfully participate in the development of activities that might impact their rights and livelihoods.”
According to Berk, the benchmark was designed specifically to support the company engagements of the more than 200 investor participants in Nature Action 100. It combines data on nature, people and climate in a single tool tailored to the companies engaged under the initiative.
Conversely, companies can use the assessments to track their progress against investor expectations on nature.
“One of the benefits of the benchmarks is that companies will be able to see how others in their sector are performing, and compare how they are scoring on different indicators – which hopefully can also help facilitate peer-to-peer learning,” Berk suggested.
Companies will be assessed on the quality of their disclosures and actions, with annual reports intended to track progress and provide insight into the actions of systemically important sectors on reversing nature and biodiversity loss by 2030. Nature Action 100 expects to release the first company assessments based on the benchmark later this year.
The assessments will also help investors gain a clearer understanding of the materiality of nature-related financial risks in their portfolios, and of how to manage those to protect the long-term economic interests of clients and beneficiaries.
“Our focus is to make sure that we get more resources out to investors to support their engagements, and that they are connected with other investors or experts that can help them in their dialogues with companies,” said Berk.
Work in progress
Nature risks have begun to gain as much attention as the climate crisis in recent years, both due to their interdependences and trade-offs, but also in response to the passing of the Global Biodiversity Framework in December 2022. Yet, much work remains to be done.
Despite the emergence of nature-focused disclosure frameworks – such as the TNFD – and investor initiatives – such as the PRI’s Spring stewardship initiative – many investors and companies are still at the beginning of their journey when it comes biodiversity.
Some correction to this imbalance, which Nature Action 100 has endeavoured to help fix, has also been seen in the early stages of the 2024 proxy voting season – with a number large firms facing shareholder resolutions on biodiversity issues.
“While climate mitigation has been a major focus of investors’ corporate engagement to date, overall there has been less attention and action on nature and biodiversity, despite also posing clear systemic and individual asset-level financial risks,” said Stephanie Pfeifer, CEO of the IIGCC. “The Nature Action 100 Company Benchmark is therefore a major milestone and will be a valuable tool for investors seeking to better understand and manage these risks, as well as the potential opportunities.”
Estimates from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services have shown that biodiversity is decreasing at unprecedented levels, with species extinction now happening tens to hundreds of times faster than at any other point in human history.
While investors have been holding climate talks for a while, they are now realising that achieving net zero targets will be impossible unless emissions from agriculture, forestry and other land use are also tackled.
“Scientists have been very clear that the biodiversity and climate crises are inextricably interlinked, and investors have been engaging with companies on their climate impacts for many years,” said Berk. “As they progress on their journeys to net zero and implement strategies, it’s becoming increasingly clear that it’s not going to work unless they address impacts on nature and biodiversity.”
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