Measuring Biodiversity - a view on the extractive sector

The rising call for transparency and accountability from all quarters is forcing us all to pay careful attention to how we impact nature and what the nature of our dependencies are. How to measure and demonstrate that operational footprints and value chains – both up and down stream – are not having deleterious effects on nature and can, as called for by the emerging Global Biodiversity Framework, contribute to the recovery and protection of nature.

We are now acutely aware of the central dependencies we have on nature for our global economies, our health and well-being and a stable climate.?This encompasses not only the ecosystem services derived from nature but the intrinsic values of nature itself.?

Yes, there was TEEB and various other global and national initiatives leading up to the Dasgupta Review which called for the true value of nature to be identified, named, included in accounting etc. but the actual metrics of what this means for the extractive sector have, I think, come from elsewhere.??

We are seeking alignment across the measures of our impacts and dependencies on biodiversity. This requires careful and clear definition of terms but also consistency on the expectations of stakeholders – whether these are government authorities, lenders and investors, and voluntary sector or commodity initiatives or those keeping an eye on performance standards from within civil society.?

What have the extractives sector been doing about this trend and the call on biodiversity and nature measurement and disclosures? ?The extractives sector were early movers in this space – partly due to their visibility and in response to pressures from their stakeholders, but also due to the relative visibility and ease of identification of direct, site-level impacts and how these related to access to finance and social license to operate. ?

The extractive sector is also an early mover in picking up on target-based approaches and committing to net positive impact, net gain or no net loss of biodiversity.?And to do this, they were early adopters of the mitigation hierarchy and in attempting to measure impacts and dependencies on biodiversity … as much to define what the impacts were but also to understand the orders of magnitude of the mitigation and compensations actions required as a response.

If we look across the mining and energy sectors, as a whole, the top performers in the mining sector are?aligned through CEO-led membership of the International Council for Mining & Metals, which requires a No Net Loss commitment to biodiversity and various levels of disclosure. BUT We are yet to see the equivalent in the energy sector, although a few companies are now demonstrating leadership with overt commitments to net positive impact and alignment to the global biodiversity framework.

Over the years there have been a number of initiatives to benchmark the sector.?The Natural Value Initiative – driven by Annelisa Grigg when at FFI - and then by the ICMM and more latterly an equivalent in the Responsible Mining Initiative where mining companies are ranked according to their SD performances.?For the energy sector, it seems the Dow Jones Sustainability Index and Global Benchmarking Alliance are to go tos.

Biodiversity is still absent in many of the smaller and medium sized extractives, but legal frameworks are changing rapidly and many countries are now committed to net positive impact on biodiversity and looking for ways to deliver nature positive.?There are certainly a lot more questions coming in from investor due diligence processes (thinking here of the questions JP Morgan or Blackrock ask, for example).

In my view, much of the progress made on measuring impacts and dependencies on nature grew out of the strength of the performance standard requirements of the International Finance Corporation and other Equator Principle aligned lenders…?Application of the PS6, for example, demands identification and quantification of impacts and dependencies on nature to species level and ecosystem services on the other.?

Accounting methodologies require attention to good baseline data – something we need to give due attention to – and careful identification of metrics and indicators which can be threaded through the entire life of a project into operation and closure/decommissioning as part of monitoring and evaluation programmes that feed back into the successful iterative adaptive management of biodiversity action plans.?

Without the data coming out of the baselines and M&E programmes, measurement and disclosure are impossible.

The business case has become so clear now that perhaps it is not really even needed anymore, however the rise of nature in the WEF Risk report has been encouraging, perhaps a little overdue, but here it is in the top right hand corner.

The Taskforce for Nature-based Financial Disclosures – which has a relationship now with the Science Based Target for nature initiative – is one of the disclosures and measurement frameworks drawing on corporate and investor performance in nature-based exposures.??Progress on defining what this means to a company is starting to come together, with working groups getting to grips with some of the details. But what I worry about is the practical application of the framework and how this is translated from action on the ground to reporting and disclosure, and how this feeds down the system from disclosure to pragmatic clearly defined delivery of nature positive activities and initiatives to operational level throughout the value chain.

What ARE the targets??What are we trying to achieve through these different initiatives and frameworks??Ultimately, they should be nested within the Global Biodiversity Framework to provide the incentives and obligations into national jurisdictional targets, to landscape and ecosystem targets down to localised actions that deal with the direct and indirect impacts and threats to nature.

So, defining metrics and measures of biodiversity and nature and using natural capital accounting is clearly fundamental.?What are the units of measurement and how do they talk to each other??What currencies are needed and how do we maintain the integrity of these so that there is clear connect between what is happening on the ground and what is disclosed … From site to corporate level performance …

Another key factor – the current holy grail of biodiversity measurement – is what units and metrics make sense at different scales, and how these, too, nest within each other to provide opportunity for monitoring and evaluation of data and information and performance.??

As a stakeholder, I am interested in three things.?One: The effort an entity is making towards managing biodiversity Two: the reduction or avoidance of impacts or other threats to nature: Three – a positive change in the state or condition of that nature.??So, a classic state-pressure-response framework.?

Making this efficient, meaningful and valid requires a robust science-based approaches … but how much is needed and what kind of data is sufficient evidence to enable good accounting?

What I’d like to see more of is signs within the reporting and data coming through on fundamentals like ecological intactness, ecological health and resilience, landscape or habitat connectivity, species richness and irreplaceability as part of the values we want to see improving in nature.?

This is about looking after the STOCKS of natural capital that will ensure the resilience in the face of climate change, but also enable the continued FLOWS of services we are dependent on.

I have to mention Nature Positive. Again.

There is also a LOT of talk about nature positive and what this means in terms of nature capital accounting and disclosure.?It is worth emphasising that Nature Positive is NOT a short cut to being able to claim credit for gains in nature because it needs to look at the full influence of a company, and all raw material or value chain aspects of impacts and dependencies on nature.??

For an extractive company, this means knowing more about the provenance and pathways of your materials and supply chains but also where and how in the markets your products are being used. What is the nature capital footprint? … in many ways, this is the equivalent to Scope 3 emissions for nature but has systemic-level commitments to integrating nature into decision making and influence beyond immediate operational practices.

Nature Positive could be a way of describing the stock-based target or it could be a way of framing an entire corporate ESG strategy. It provides an excellent opportunity for framing the same issues in a holistic way, balancing a focus on maximising natural capital stocks (including biodiversity) and a focus on optimising environmental flows (starting with water and climate regulation).

Bottom line is: we need to underpin natural capital accounting with information and data. The currencies we choose may vary, but they need to be consistent and we need them to be clear.