Global Companies Struggle to Assess Environmental Impact: Study Reveals Lack of Understanding
A recent study conducted by the World Benchmarking Alliance (WBA) has shed light on the concerning lack of understanding among global companies regarding their impact on nature and their dependencies on it. The data collected from over 800 global companies between 2022 and 2024, including industry giants such as Unilever, Kering, Newmont, and Nestlé, revealed some alarming statistics.
Assessment of Environmental Impact
The study found that a mere 5% of all companies had conducted an assessment of the impact of their operations on nature, while less than 1% had assessed their dependencies on nature. This lack of awareness and accountability is troubling, considering the critical role that nature plays in sustaining businesses and economies worldwide.
Jennifer Black, the nature transformation lead at the World Benchmarking Alliance, emphasized the importance of recognizing the private sector’s role in preserving life on Earth, as outlined in the Global Biodiversity Framework (GBF) agreement at COP15. However, she expressed disappointment in the findings that the majority of large companies continue to take nature for granted, despite its fundamental importance to a healthy economy.
Nature Benchmark and Company Sectors
The study’s findings are part of the WBA’s updated Nature Benchmark, which aims to assess how companies are impacting nature and their efforts in protecting and restoring ecosystems. The research covered various sectors, including household products, apparel, mining, and food. Interestingly, companies in the personal and household products as well as pharmaceuticals and biotechnology categories were found to be more likely to publish sustainability or integrated reports.
Sustainability Reporting
In the personal and household products industry, all companies were found to have published sustainability information, while the figure stood at 96% for the pharmaceuticals and biotechnology segment. This trend indicates a growing recognition among certain industries of the importance of transparency and accountability in sustainability reporting.
Plastic Use and Water Stewardship
The research also delved into companies’ practices regarding plastics, water stewardship, environmental rights, and board-level accountability. Alarmingly, only 19% of companies provided quantitative metrics on plastic use, and a mere 7% disclosed time-bound targets for reducing plastic consumption. While 43% of companies shared qualitative evidence of plastic reduction efforts, such as one-off programs, there is a clear need for more concrete and measurable goals in this area.
With freshwater demand projected to exceed supply by 40% by 2030, the study highlighted the importance of holistic measurement of water stewardship by companies. While 29% of companies reported water use reduction or disclosed sourcing water from water-stressed areas, only 15% shared metrics on discharged pollutants. Moreover, a mere 4% of companies had set targets to reduce pollutants, indicating a significant gap in addressing water pollution.
Indigenous Peoples’ Rights
Only 13% of companies expressed a clear commitment to respecting Indigenous Peoples’ rights, despite the crucial role that Indigenous Peoples and Local Communities (IPLC) play in managing terrestrial protected areas and preserving ecological knowledge. Companies must prioritize respecting IPLC as they navigate their operations and value chains to ensure a sustainable existence worldwide.
Corporate Governance and Sustainability
The study also found that only 2% of companies had board members with relevant expertise in biodiversity or climate, despite 66% assigning sustainability oversight to their boards. Companies that demonstrated robust corporate governance were noted to score significantly better on various sustainability issues. This underscores the importance of integrating environmental expertise at the highest levels of corporate decision-making.
Looking Ahead
As the world grapples with escalating environmental challenges, it is imperative for companies to understand and act on their impacts on nature. From their own operations to their supply chains, companies must prioritize halting and reversing biodiversity loss to ensure a sustainable future for all. Governments, investors, and civil society must also hold the private sector accountable, urging companies to regularly monitor, assess, and disclose their risks, dependencies, and impacts on biodiversity.
In Conclusion
The findings of the WBA study serve as a wake-up call for global companies to reevaluate their approach to environmental impact assessment and sustainability reporting. The lack of awareness and accountability highlighted in the study underscores the urgent need for companies to prioritize nature conservation and integrate environmental considerations into their business practices. Only by acknowledging and addressing their impact on nature can companies contribute to a healthier planet and a thriving economy for future generations.
