Climate change, biodiversity loss and mandatory reporting – what this means for industry
Glenn Dale, Managing Director - Verterra
Global frameworks for sustainability
In recent years, terms like climate change and global warming have entered the common lexicon with daily media coverage of the potential impacts on the environment, society and global economy. More recently, new terms such as natural capital, the circular economy, nature-based solutions and nature positive have come into common use.
The dual challenges of global warming and global biodiversity loss are now recognised as linked, and frameworks for global action have been agreed.
The Paris Climate Agreement is a legally binding treaty adopted by 196 Parties in 2015 with the aim of limiting global warming to 1.5oC above pre-industrial levels.
The Kunming-Montreal Global Biodiversity Framework was adopted in 2022 in response to the alarming worldwide deterioration of biodiversity at rates unprecedented in human history, threatening both the environment and the global life support systems on which we all depend.
Collectively, both frameworks aim to find pathways on which nature and society can beneficially co-exist.
Evolving legislation
Responsibility for meeting these commitments is increasingly being shared with industry, recognising our collective responsibility for nature repair.
From 1 January 2025, the Australian Sustainability Reporting Standards (ASRS) will require companies with consolidated revenue of $500 million or more; consolidated assets of $1 billion or more; or over 500 employees; to report about climate-related risks and opportunities that could reasonably be expected to affect their cash flows. The ASRS also provides for voluntary reporting by any entity on sustainability-related risks and opportunities.
Similarly, the Taskforce on Nature-related Financial Disclosures (TNFD) provides a voluntary framework for sustainability reporting by corporations that wish to align their environment, social and governance (ESG) credentials with the Global Biodiversity Framework or the International Sustainability Standards Board (ISSB).
Implications
As voluntary adoption and regulatory requirement for sustainability reporting gather momentum, impacts can be expected to flow through value chains of many industries. For example, McDonald’s sources around two-thirds of its annual global beef supply from Australia. If (and when) they make a voluntary pledge or are required by legislation to become nature positive, all players along the supply chain will have to prove they are addressing climate and nature, down to farmers who will need to show they actively engaged in regeneration activity and practice responsible land stewardship. Those that can’t, could lose sales (AFR, 2024).
Challenges and opportunities
The evolving changes in both legislation and social expectations will impose new burdens, but also the opportunity to challenge existing paradigms and create new business models that deliver profits alongside environmental benefits, rather than trading one off against the other, contributing to growth of the economy and regenerating the environment on which we all depend.
Evolving legislation around biodiversity loss and climate change will affect all parties throughout agricultural and other supply chains, presenting both challenges and opportunities to participate in the nature-positive economy.
w: https://verterra.com.au/ | e: glenn.dale@verterra.com.au | 07 3221 1102
