Corporates urged to report biodiversity risks as KPMG identifies growing threat

Less than one quarter (23%) of the world’s largest companies disclose their exposure to biodiversity risks, according to a new survey by KPMG. While some 80% of the world’s largest firms now report on sustainability, KPMG said biodiversity risk is significantly underreported by businesses at risk from such threats across the world. The survey is based on corporate reports from the top 100 companies in 52 countries, so 5,200 in total, and finds that North American firms recorded even lower biodiversity risk disclosures at 13%. In Europe, the reporting figure reached 22%, behind the leader Latin America at 31%. Of the top 250 global companies in the survey, firms in France recorded the highest levels of biodiversity risk disclosures at 64%, followed by Germany on 50%. No Japanese companies reported biodiversity risks. KPMG found mining is the only at-risk sector where a majority (51%) of companies report biodiversity-related risks. Other high-risk sectors include construction, where 25% of firms report biodiversity risks, and oil and gas at 31%. Less than 10% of financial services companies, in the medium-risk category, currently disclose biodiversity-related threats. KPMG’s Adrian King said biodiversity risk reporting is low even among those sectors with the highest reporting levels. “Biodiversity risk disclosure is currently low as many companies currently lack a sophisticated understanding of how biodiversity-related risk could affect their business. They also lack access to tools and methodologies to help them model and disclose the risk impacts,” he said. KPMG said the two UN Sustainable Development Goals (SDGs) on biodiversity are bottom of the corporate priority list of all 17 UN SDGs. Richard Threlfall, head of KPMG IMPACT, said businesses must play their part and recognise the dependency of their supply chains on nature and ecosystems. “It is critical for all businesses to disclose the risks that biodiversity loss poses to their companies, as well as the impact their companies have on ecosystems. Our survey suggests that most companies have a long way to go when it comes to providing a full picture of business risks from biodiversity loss,” he said. KPMG said progress on climate risk reporting since the TaskForce on Climate-related Financial Disclosure came into force could be matched by biodiversity risk disclosures. “Today our concern is climate risk; tomorrow it will be about biodiversity and everything that is beyond carbon,” said Andrew Mitchell, co-founder of the Task Force on Nature-related Financial Disclosures. “In only five short years, attitudes towards the financial risks of climate change in the financial and corporate sectors have changed beyond recognition. The speed with which the world is losing its biodiversity is alarming to say the least. Any business that believes it will remain entirely unaffected is, in my opinion, not facing up to reality,” said KPMG’s Mr King. He advised corporates to get their “heads around biodiversity”. “Understand how your company is contributing to biodiversity loss and what risks it faces from it. You will be asked about this very soon by your investors, lenders, insurers, customers and consumers. You will also likely to be expected to make public disclosures on it sooner than you may think,” he urged. The KPMG survey has tracked growth in sustainability reporting from 12% in 1993 to 80% today. European companies trail the global average at 77%, with no improvement since 2017. The Americas lead the way at 90% while Asia-Pacific-based firms are closing in at 84%. Middle East and African companies record the lowest level of sustainability disclosures at 59% KPMG said 14 of the 52 countries covered in the survey have a sustainability reporting rate running at above 90%. This includes five European countries: Spain (98%), Sweden (98%), France (97%), the UK (94%) and Germany (92%). All of the top 100 companies in Japan and Mexico report on sustainability risks, followed by Malaysia at 99%, India at 98% and the US at 98%. At the other end of the spectrum, several European countries recorded below-average sustainability reporting. These include Portugal (72%), Belgium (72%), Austria (74%), Greece (54%) and Cyprus (23%). Two thirds of companies have set targets to reduce carbon emissions, KPMG said, while 69% have linked their business activities to the UN SDGs in corporate reporting. Among the 5,200 companies surveyed, 43% recognise the risk of climate change in their financial reporting and this rises to 56% for the top 250 companies worldwide. North American companies lead the field with 58% reporting on climate risk, against 41% in Europe, although here the number of companies reporting climate change as a financial risk has risen from 29% in 2017. By country, four European countries feature in the top ten for climate change reporting: France (87%), the UK (69%), the Netherlands (68%) and Spain (63%).

Corporates urged to report biodiversity risks as KPMG identifies growing threat

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