Half a Year After the COP Agreement on Nature, Companies Are Increasingly Looking at Their Biodiversity Impact

Preserving natural systems is just as important as reducing emissions, said Jennifer Motles, chief sustainability officer at tobacco company Philip Morris International.

Data is vital to accurate reporting of PMI’s natural impact and helps to convince investors and the public that companies are improving, Motles said. “There is a lot of skepticism about tobacco change and sustainability, so it needs to be accompanied by lots of data,” she said. 

The agriculture-heavy nature of PMI’s business, which entails large-scale production of paper as well as growing tobacco, mean the company’s efforts focus on preserving biodiversity by halting deforestation, preventing soil degradation and ensuring water stewardship, Motles said. The company now uses geospatial data to map its land usage, allowing it to work out where intervention is needed and to gauge the effectiveness of that intervention. 

Mining company Anglo American has meanwhile turned to new tech from startup NatureMetrics to help gauge its impact on the natural world. NatureMetrics uses samples of water or soil to measure the number of species and their abundance at a given site, cross-checking the samples against open-source databases of DNA compiled by academic institutions, said Katie Critchlow, CEO of the startup. 

Anglo-American is looking to roll out NatureMetrics’ technology across all its sites by 2025, and said the DNA-focused tech should help it achieve a net positive impact on global sustainability.  

“Noninvasive monitoring throughout the entire operational life cycle of a mine can track the nature of impacts on biodiversity at the site and enable the company to minimize those effects and more effectively monitor rehabilitation of an environment,” the miner said.

Ensuring sustainable agriculture is an “existential issue” for cognac distiller Rémy Cointreau, Chief Executive Eric Vallat said, as his company last month launched an environmental-credit program that aims to boost regenerative agriculture. The project—formulated alongside LVMH Moët Hennessy Louis Vuitton, soil-health ratings agency Genesis and conservation group World Wide Fund for Nature—claims to go beyond carbon credits to account for the overall health of the environment.

However, Anglo-American, PMI and Rémy Cointreau are among the few companies analyzing their effect on nature. “Not enough companies are actually measuring their corporate biodiversity impact,” said Steve Kennedy, associate professor in business sustainability at the Rotterdam School of Management. 

Companies themselves can be directly and severely affected by the degradation of natural systems, Kennedy said. He pointed to changes such as desertification of previously fertile land, or the loss of coral systems to ocean acidification, and the dead zones created in North American waterways such as the Gulf of Mexico or Lake Erie by nitrogen from agricultural runoff.

“It’s also about the long-term survival of the company, especially if it’s anything to do with direct sourcing, be that forestry, fisheries, or agricultural firms,” he said. “It’s highly integral to their business models.”

Indeed, the collapse of natural systems could wipe $2.7 trillion a year from the global economy by 2030, according to the World Bank.

Yet assessing impact on the natural world remains trickier than measuring greenhouse gases. Emissions can be calculated in metric tons, and companies use shared rules that enable comparisons between businesses, even if reporting remains patchy and partly based on estimates. 

Biodiversity impact, on the other hand, remains a more nebulous concept, with widespread uncertainty about what to measure and how to measure it. The methods companies use, which measure things such as the abundance of a given species in a given site, can hide some important dynamics that offer clues to the relative health of the ecosystem, Kennedy said.

While biodiversity impact remains difficult to assess, more complete data can help, said Zoe Balmforth, co-founder of biodiversity-data startup Pivotal. The company uses methods including detailed drone surveys to help clients gauge their impact on the environment.

“Imagine you’re a big brand with a really big agricultural supply chain,” said Balmforth, a former ecologist. “Let’s say you have a target that 50% of your supply chain will be under regenerative agriculture by 2030…. You have no way of knowing currently whether those regenerative agricultural actions have any benefit for biodiversity.”

Pivotal aims to provide a platform that accurately tells a company whether their actions across different sites are helping or hurting biodiversity, said fellow co-founder Cameron Frayling.

“There is actually an incredible lack of coherent biodiversity data,” Frayling added.

Governments between now and 2030 will introduce laws and policy measures requiring large companies and banks to disclose and reduce the damage done to ecosystems from their operations, supply chains and portfolios, according to agreements reached by countries at the United Nations’ COP15 conference on biodiversity, held in Montreal in December.

And companies will soon have a final framework on which to base their voluntary biodiversity reporting. The U.N.-backed Taskforce on Nature-Related Financial Disclosure, which aims to help businesses assess and report natural risk, is expected to publish its final version in September.

In the coming months, meanwhile, more than a dozen large firms including pharma company GSK and Gucci owner Kering will submit information on how they use water and land, with a view to establishing a set of targets that will attest to the quality of companies’ nature plans. 

Many companies welcome the even playing field that mandatory reporting would entail. 

“Regulation is helping bring clarity on how to report on the quality of data and the robustness of the data,” PMI’s Motles said.

“When you don’t have standards, when you don’t have frameworks, then it becomes a little bit of a mood exercise.”

Write to Joshua Kirby at joshua.kirby@wsj.com