2024 was a tough year for those of us working in ESG. Extraneous! Socialist! Greenwash! are just a few of the epithets thrown at efforts to make corporate business models more sustainable, while politically inspired greenlash in the United States has raised fears that a whole host of environmental, social and governance initiatives could be scaled back. And this against a backdrop of rising global temperatures, unremitting depletion of nature and increasing social and geo-political strife.  

We may have been cheered by the increasing breadth and rigour of corporate reporting requirements in key jurisdictions like the EU, but what difference, we may wonder, will this make in the face of universal aspirations for consumption-based economic growth? What if critics of ESG are, at least in a sense, right? Not because tackling climate change, protecting nature and addressing social inequality aren’t critically important - of course they are - but because from a global perspective, corporate reporting on these issues is making not an iota of difference in the face of commercial realities and ever-expanding human needs and wants. Is enhanced non-financial reporting merely one of many manifestations of fiddling while the planet burns?  

“What happens in the next five years will determine the future of life on Earth”

Take biodiversity. “Over the past 50 years (1970–2020), the average size of monitored wildlife populations has shrunk by 73%,” WWF reported without apparent irony in its 2024 Living Planet Report published in October. WWF’s mission is “to stop the degradation of the planet’s natural environment” but it has been powerless to do so in the face of ever-growing human hunger for land and natural resources and ever more pervasive pollution caused by human activities, including from greenhouse gas emissions. WWF now warns that “what happens in the next five years will determine the future of life on Earth”. 

What should our collective response be to WWF’s apocalyptic warning of impending doom? Will it be any more effective than our muddled efforts to heed the IPCC’s warning that global greenhouse gas emissions needed to be cut in half by 2030 to stand a chance of limiting global warming to 1.5°C? That was in April 2022. 

Since then, far from falling, global emissions have continued to rise and demand for fossil fuels, including coal and oil, the principal source of those emissions, has reached record highs. This despite the massive growth in world-wide renewable energy capacity, the widespread adoption of national and corporate net zero pledges, carbon pricing, and almost daily news reports of deadly weather and other disasters catalysed by climate change. The energy transition may be unstoppable but for now at least, new renewable energy capacity is being swallowed up to meet growing demand rather than to replace existing supply. 

At the corporate level, climate-related reporting and target setting by businesses using frameworks such as TCFD (Task Force on Climate-related Financial Disclosures), IFRS S2 (International Sustainability Standards Board Climate-related Disclosures) and SBTi (Science-based Targets Initiative) has certainly encouraged companies to find ways of reducing their own operational Scope 1 and 2 emissions. Some have set more distant targets to reduce upstream and downstream Scope 3. But outside of the car industry, few have so far been inspired to make fundamental transformations to their core strategy on the basis of having identified significant new climate-related risks or opportunities. Hardly surprising perhaps, when even oil and gas companies can claim, with some justification, that demand for their products looks set to continue and that their business models remain resilient even under more stringent climate scenarios. 

The need for fundamental change

Which makes one wonder, if nine years after the signing of the Paris Climate Change Agreement we have been unable to rein in our consumption of fossil fuels, what hope do we have of finding a fairer, more realistic and sustainable way of managing the world’s other resources in line with the goals and targets of the Kunming-Montreal Global Biodiversity Framework while also supplying our growing needs, particularly for food? After all, “the global food system is the single biggest contributor to biodiversity loss, deforestation, drought, freshwater pollution and the collapse of aquatic wildlife”.

Research by the World Resources Institute (WRI) puts this in context. It finds – unsurprisingly - that on current “business as usual” trends, not only will we fail to protect what is left of nature, but that feeding all of the world’s growing population will require vast amounts of additional agricultural land: 600 million hectares by 2050 (compared to 2010) – an area nearly twice the size of India. At the same time, increased demand for wood (for use in construction and as biofuel) could require an additional area of land roughly the size of the continental United States while increased urbanization would eat up a further 80 million hectares, more than three times the size of the United Kingdom.  

One doesn’t need to be a radical revolutionary or a right-wing reactionary to think that this is untenable or, as WWF puts it, “To halt and reverse the loss of nature will require fundamental changes in our societies and economies … [and] will also require new approaches to conservation, recognizing that looking after nature isn’t optional but is critical to everybody’s well-being.”

The scale of the challenge

To illustrate the scale of the challenge faced by countries in trying to halt and reverse the loss of nature while meeting the needs of their growing populations one can look at the example of land use in one of the most nature-depleted countries in the world - the UK. Although the UK as a whole is relatively densely populated, built-up areas take up only a small proportion of land, consolidated on the map (below) in an area less than the size of Wales. But feeding the UK population requires an area almost twice the size of the rest of the UK landmass – half of it overseas as depicted in the hexagonal shapes to the right. Feed and pastures for beef, lamb and dairy cattle take up the vast majority of that space. Hardly surprising therefore that the UK government may be struggling to earmark sufficient “spare” terrestrial land for conservation and restoration to fulfil its obligations under key targets of the Global Biodiversity Framework.

Land use in the UK consolidated and shown as a proportion of the whole together with additional area of overseas land used to feed UK population (UK National Food Strategy The Plan, page 90, figure 9.3)

Can corporate reporting drive change?

Against this backdrop, what difference can corporate reporting of “biodiversity dependencies, impacts, risks and opportunities” in accordance with the recommendations of the Task Force on Nature-related Financial Disclosures (TNFD) or corporate target-setting for nature as proposed by the Science Based Targets Network (SBTN) really make? Will a science-based target for “No conversion of natural ecosystems” by a modest subset of companies have any material impact on the amount of additional land needed for agriculture and other human activities in the coming decades? And what over-arching risks do companies really face from their exposure to nature and “ecosystem services” if our demand for metals, meat, coffee, timber and other commodities continues unabated? 

That is not to say that companies should not be doing everything they can to minimise their negative impacts on nature or that they shouldn’t identify and report on specific nature-related risks to their operations and business models, including from dependencies on “ecosystem services” such as the availability of fresh water. 

TNFD, SBTN, and of course CSRD (the EU’s Corporate Sustainability Reporting Directive which includes a requirement for companies to report on biodiversity impacts, risks and opportunities), can play an important role in focusing the attention of companies, their investors and their other stakeholders on these issues.  But, as with global warming, they will only become effective drivers of change if a critical mass of companies perceives real fundamental nature-related risks to their business models and are able to see clear commercial upside from new business opportunities. 

Nature: a political and consumer priority?

WRI, in the “Global Land Squeeze” report cited earlier, identifies a range of solutions for managing the global demand for more and more land for food, wood and living space under four headings: “Produce, Protect, Reduce, Restore”. A key requirement is to use land more efficiently – to boost agricultural yields, particularly of low-productivity pasture for livestock. Other measures WRI proposes include a shift to more sustainable diets, phasing out crop-based biofuels, reducing food waste and increasing urban density. 

Implementing these types of measures will require decisive leadership from governments and regulators that understand the importance of protecting and restoring nature. And it will require a radical shift from all of us in our preferences and behaviours as consumers and users of “ecosystem services”. 

As we begin 2025, we are at a fork in the road. The optimistic path would see governments integrating biodiversity in decision-making at every level as agreed under the Global Biodiversity Framework’s Target 14 and developing credible strategies and action plans to meet the framework’s other Goals and Targets. This includes, under Target 15, requiring companies to assess, disclose and reduce biodiversity-related risks and negative impacts. TNFD and SBTN could play a pivotal role. 

On the other hand, the political backlash against environmental rules and regulations, which looks set to be greatly magnified under the new administration in the US, means that nature is still a long way from taking its place alongside other critical issues like the economy, cost of living and, of course, climate change as the political and consumer priority it urgently needs to be. As WWF has warned, this could have catastrophic consequences for the future of life on Earth. 

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.