The link between finance and biodiversity is complicated, controversial, nebulous, and exciting. My research team is supporting the development of how companies disclose the impact that their operations have on biodiversity (in other words, impact from the inside of the company outward onto the natural world or inside-out) as well as the impact that biodiversity has on the company (in other words, impact from outside of the company (the natural world) inward or outside-in).
I feel fortunate to be having intimate exposure to the inner workings of how companies will approach this. For a while now, some bright minds and household names have been working on topics such as environmental economic accounting and natural capital accounting. These approaches chip away at the tall task of determining how to take our current understanding of value in the corporate and financial world, often arrived at through the measures developed by GAAP or the IFRS, and widen their applicability to include the benefits and harms of human activity on the natural world. A tall order.
Beginning our project immediately after the UN Biodiversity Conference (December 2022) has added to the excitement of working on such a cutting edge topic. At the moment, biodiversity is getting a degree of attention that it has always been worthy of receiving, but short of experiencing. Because carbon, and more broadly climate change disclosures that are not specific to biodiversity, have received the bulk of the finance and corporate spheres’ attention over the last decade, there exists very little in the way of publications, expertise, and common understanding of how our economic activities should be relating to biodiversity.
This gap gives our team an enormous opportunity to add value. After all, starting from nothing means there is really only up to go. However, the flip side of this exciting opportunity is the heavy lift of putting in the due diligence to become experts where few experts exist. As we look to support a topic that is just entering existence, our client has supported us with the resources they use and are aware of to further along corporate biodiversity disclosures. While grateful for their collaboration, the degree of resources available confirmed our anticipated greatest challenge entering this research project: limited knowledge and data to build off of.