As we previously discussed, the International Sustainability Standards Board (ISSB) recently issued Request for Information Consultation on Agenda Priorities, to seek feedback on its priorities for its next two-year work plan. The document is open for comment until September 1, 2023.

The ISSB has identified four potential projects in particular: “three sustainability-related research projects—1) biodiversity, ecosystems and ecosystem services; 2) human capital; 3) human rights—and a fourth project researching integration in reporting.” We already looked at the potential projects relating to human rights and human capital. This is how it sums up the item related to biodiversity, ecosystems and ecosystem services (BEES):

• (The three) are intrinsically linked. Biodiversity is a foundational characteristic of natural systems and it is a proxy for functional, productive and resilient ecosystems which are then able to provide the ecosystem services3 upon which life on earth relies. Examples of ecosystem services are, among others, climate regulation (for example, through carbon sequestration), provision of raw materials and water, pollination, and pest and flood control. Humans are essential components of this global system, being beneficiaries of ecosystem services and one of the main contributors to the changes and maintenance of BEES. For example, indigenous people play a critical role in the maintenance and stewardship of BEES because they manage or hold tenure over 25% of the world’s land surface, intersecting about 40% of all terrestrial protected areas and ecologically intact landscapes and supporting about 80% of global biodiversity. Therefore, BEES is intrinsically connected to other environmental topics, such as climate change, as well as to socioeconomic topics.
• Changes in BEES are likely to contribute to entities’ sustainability-related risks and opportunities: all human activities—including economic activities—rely on BEES and, in turn, the effective preservation, conservation and restoration of BEES depends on people. When a species or a natural resource is reduced or lost, ecosystem health is altered; its functioning is degraded, and so are the related ecosystem services; and risks for entities may arise. For example, physical risks for business may arise from the decline of pollinators, which can affect the supply of critical raw materials such as crops. This can disrupt operations and lead to loss of revenue. The regulatory landscape relating to BEES is evolving, often intersecting the climate agenda, and this brings potential transition risks for businesses: for example, the Kunming-Montreal Global Biodiversity Framework establishes global goals and targets aimed at increasing the extent of global protected areas that might require significant shifts in both terrestrial and marine supply chains.

A research project in this area might include research to develop a framework of definitions and categories of BEES and other nature-related subtopics, in the context of business and sustainability-related disclosures, aligned with academic and other third-party sources working in the field; to understand the sustainability-related risks and opportunities related to each identified subtopic and the related information material to investors, including risks and opportunities associated with specific business models, economic activities and other common features that characterize participation in an industry; and to understand existing subtopic-specific practices, tools and metrics used to measure and disclose material information about sustainability-related risks and opportunities for each subtopic. Potential subtopics include water (including freshwater and marine resources and ecosystems use), land-use and land-use change (including deforestation), pollution (including emissions into air, water and soil); resource exploitation (including material sourcing and circular economy); and invasive non-native species.

The document doesn’t use the phrase “tragedy of the commons” (the phenomenon by which common resources become depleted due to the self-interest-maximizing behaviour of users), but this is what the references to alteration of ecosystem health and so on amount to; one might see the proposal as one of pushing companies to clarify the way in which their particular brand of capitalism is bad for the planet. As such, some vested interests might not be in a rush to encourage the ISSB’s efforts in this regard. Regulatory and legal concessions for corporations often amount to financing losses while allowing privatization of gains; greater disclosure of BEES would provide endless further examples of how that’s the case. For example, on the aforementioned topic of water, a depressing recent New York Times piece looked at shortages in the southern US, identifying the central problem in the following terms:

• …(water) isn’t allocated by market price but inefficiently through a muddle of irrigation rights that were mostly awarded on a first-come-first-serve basis. This water is so cheap that there is little attempt to conserve or develop technical innovations to use less water.
• Many of the shortages would disappear if water were rationed the way goods normally are in a market economy, by price….

Perhaps the ISSB’s work will lead to better acknowledgment of such imbalances. Perhaps one day there’ll even be an appropriate accounting for them…

The opinions expressed are solely those of the author.