FTSE 100 Biodiversity Report Card: How well is big business scoring?

Climate Change and Sustainability November 10, 2021

RSK company Nature Positive has conducted the first biodiversity audit of FTSE 100 companies and set out some next steps.

The last few months have seen a sustained media and political focus on the challenge of the climate crisis and interrelated biodiversity issues such as deforestation and habitat loss. As COP26 draws to a close, the world can clearly see that human activity is driving the climate crisis and the impact this has on the accelerating levels of ecosystem degradation and biodiversity decline. As the potentially disastrous consequences of these dual catastrophes become clear, the call from people around the globe for meaningful action is growing even louder.

The United Nations has set out a draft post-2020 global biodiversity framework that sets global targets for between 2020 and 2030 to encourage countries around the world to make commitments to reverse the current decline in biodiversity and enable nature to recover. But global action requires global effort and corporations across all sectors are critical parts of the solution.

But how is business responding to this challenge? All businesses depend, to varying degrees, on nature. The biosphere, and the biodiversity within it, are fundamental in providing the direct and indirect ecosystem services throughout the supply chain that are essential for long-term business survival.

Sustainability has become a much more prominent driver for business decisions over recent years, as companies increase their sustainability disclosures in the race to reach net-zero emissions by 2050 at the latest. However, there does not seem to be a consensus on the role biodiversity that has in delivering against these commitments. This is because the negative impacts business and industry have on biodiversity are often indirect or occur at some distance from a company’s operations, which leaves a blind spot, even for those firms with a proactive approach to economic and social, as well as environmental, responsibility.

To shine a spotlight on this issue, Nature Positive, part of the RSK group, has reviewed the publicly available literature relating to the FTSE 100 companies to understand how the UK’s largest companies across different market sectors are addressing the biodiversity question. By giving current examples of best practice in improving the management of biodiversity, it is possible to move the conversation forward and help to reverse negative global trends of biodiversity loss.

The key findings of Nature Positive’s FTSE 100 biodiversity report include that

  • most (64%) of the FTSE 100 companies do at least refer to biodiversity on their website or in their annual report
  • of those companies that mention biodiversity, there is some variation in the depth of analysis: 66% recognise it as a material issue
  • a further 16% of those companies dealt with some aspects of biodiversity, such as their water use or circular economy, in detail without necessarily referring to biodiversity further; the remainder gave no detail and were perhaps using it as a buzzword rather than analysing their impacts or dependencies
  • only 54% of the FTSE 100 companies referred to sustainable sourcing or appeared to have studied the impacts of their supply chains or raw materials
  • information technology is identified as the worst-performing sector because of its narrow interpretation of biodiversity impacts that does not take into account mining and the processing of silicon and germanium for components.

The report notes that 95% of the companies in the financial sector show no evidence of having audited their biodiversity impacts but also acknowledges that the global reach of this sector is likely to be key to raising awareness – if it can be persuaded to act on reversing the current trends of biodiversity loss. Galvanising this sector into action should not be too difficult, given the building societal pressure on businesses to proactively address their impacts on biodiversity. If a business fails to respond to these shifts, then it risks losing consumers and investors as well as damaging its reputation, which will consequently reduce its profits and viability.

So how can businesses help tackle the biodiversity crisis?

Businesses have the potential to be powerful forces in halting and reversing biodiversity loss, and there are clear operational and reputational advantages to adopting a nature-positive framework. Some of the more forward-thinking businesses in the fashion sector are making great strides to address biodiversity in their supply chains and the catering industry is becoming more aware of changing consumer requirements with regards to sustainability and biodiversity credentials.

Nature Positive’s report shows how some companies, such as Coca-Cola HBC SA, have clearly assessed how their operations affect biodiversity and have set improvement targets to mitigate these impacts by 2025. Other companies, particularly in the property and development sectors, for example, Barratt Developments plc, Berkeley Group Holdings plc and Taylor Wimpey plc, are already incorporating audits and making commitments to achieve biodiversity net gains through their operations. In the utilities sector, National Grid plc has set a target to improve the natural environment by 10% on the land it owns while Severn Trent plc has identified biodiversity and the environment as the principal risks to its business and set ambitions to improve more than 5000 ha of land (an area about the size of Gloucester) across their region and to plant 1.3 million trees by 2030.

The report also sets out clear steps to help the FTSE 100 companies (and all businesses) achieve this:

  1. Set an ambitious overarching corporate vision for reducing biodiversity impacts and delivering a nature-positive outcome.
  2. Conduct a biodiversity footprint assessment to understand biodiversity impacts and dependencies throughout the entire value chain.
  3. Interpret and prioritise the impacts and dependencies for the business as a whole, and maximising collaboration across each company’s value chain.
  4. Formulate a biodiversity strategy, including setting meaningful targets for improving performance on biodiversity within the wider corporate social responsibility approach.
  5. Implement the biodiversity strategy by working towards defined goals through actively reducing impacts on biodiversity throughout the supply chain. Follow the mitigation hierarchy of avoid, minimise, restore and offset.
  6. Monitor progress towards targets and aggregate to report against selected indicators.
  7. Review success and adapt procedures, if necessary, in the light of emerging evidence.

Read the full report to find out more.