Exploring nature-based risk
Nature-based risk emerges from the intricate relationships between businesses and the environment, encompassing various facets of nature that businesses impact and depend upon. From the aesthetic of landscapes to the regulatory status of species and communities, any alteration to nature poses a potential risk.
The shift toward nature-related risk is seen as a transformative opportunity. An independent review of the EPBC Act concluded it was ineffective and unfit for current or future environmental challenges. It also posed that biodiversity offsets, often considered a last resort, lacked the potency required for robust environmental protection. The development of nature-related risk frameworks could be an avenue to identify and implement genuinely positive actions that businesses can embrace.
In terms of organisational project planning, the Taskforce for Nature-Related Financial Disclosures (TNFD) has developed a framework guiding businesses in identifying and disclosing nature-related risks and opportunities, primarily integrated into ESG reporting. Refining the approach to identify nature-based risks during the planning stage of development allows for more effective risk reduction strategies throughout all project stages, aligning with the goals of EPBC Act reforms.
Industry-wide developments underscore the evolving landscape of nature-related risk reporting. The TNFD framework is anticipated to become part of mandated reporting, mirroring the trajectory of mandatory climate disclosures for large entities in Australia from 2024-2025.
However, concerns loom over potential greenwashing via "nature-positive" actions, a challenge awaiting clarification with the release of the draft EPBC Act and its framework. We will not know the extent legislation will manage this until the draft EPBC Act and surrounding framework has been released. The impending clarification that the release of the draft EPBC Act may provide is eagerly awaited, as it could shed light on the authenticity and effectiveness of the legislation and its framework.
Recent research by Professor Martine Maron emphasises that for actions to be genuinely "nature-positive," the mitigation hierarchy must be rigorously applied, extending to all decision-making processes and value chain decisions. This research highlights the historical challenge of the mitigation hierarchy and underscores the imperative to move beyond biodiversity offsetting towards active regeneration of nature.
As the discourse around nature-based risks gains momentum, businesses are presented with an unprecedented opportunity to redefine their processes. Beyond regulatory compliance, a genuine commitment to nature positivity would become the cornerstone of a sustainable and responsible business future.
