LARGE COMPANIES in the Nordics widely underestimate the risks biodiversity loss poses to their operations, indicates a report from Danske Bank.
Danske Bank in December revealed that it has assessed how 99 of the largest companies in the region report on biodiversity and set targets for mitigating their physical and transitional risks arising from biodiversity loss.
The assessment revealed that 71 per cent of the companies are exposed to a material biodiversity risk through their reliance or impact on biodiversity. Yet, fewer than 15 per cent of them have adopted a target to reduce their biodiversity impact or restore nature.
“Even though they have a high exposure to biodiversity risk, Nordic companies are not setting biodiversity targets or reporting on their activities or impact,” the report reads (PDF). “Nordic companies do acknowledge to some extent that they have an impact or dependency on biodiversity, as a third of the companies report or describe activities within biodiversity, but these are often very vague.”
Mads Steinmüller, the head of active ownership at Danske Bank and Danica Pension, viewed that the report makes it “abundantly clear” that many companies overlook not only the risks, but also the opportunities of biodiversity.
“Companies that use nature’s resources in one way or another must set objectives for how they can integrate biodiversity into their approach. Not only will this contribute to future-proofing the company, it will, not least, help to reduce biodiversity risk,” he stated in a press release.
Danske Bank examined particularly risks associated with biodiversity loss in forests and oceans.
Its assessment found that although 36 per cent of the companies operate in sectors potentially linked to deforestation, only a few have set targets or report on deforestation. Similarly 65 per cent of the companies operate in sectors that potentially have an impact on oceans, such as food, mining and oil and gas, only seven per cent of them have set a target for minimising their impact on or restoring oceans.
Nordic companies can affect oceans in a variety of ways, including underwater noise that disturbs species that rely on acoustics, physical pollutants like oil spills, agricultural run-off and human waste.
Danske Bank examined the issue because biodiversity-related risks affect the risk profile of companies and therefore investors.
“Biodiversity in crisis and the transition to an economy that preserves and restores biodiversity can affect a company’s value, business model and growth potential,” noted Steinmüller. “We have only one Mother Nature, and for many companies she is their most important supplier, so we all have a vital role to play in terms of preserving biodiversity and ensuring that both companies and investors contribute to increasing biodiversity.”
Aleksi Teivainen – HT