Recommendations for a standard on biodiversity measurement and valuation

Please note that this consultation is now closed but you can continue to download and refer to the document here. 

Draft V0

25 May 2022

This document is shared as a draft for consultation

Recommended citation: UNEP-WCMC, Capitals Coalition, Arcadis and ICF (2022) Recommendations for a standard on biodiversity measurement and valuation, Consultation Draft. Aligning Accounting Approaches for Nature (Align).

INFORMATION FOR PUBLIC CONSULTATION

Background/Context

We are happy to share the v0 draft of the Recommendations for a standard on biodiversity measurement and valuation. Please note this document is in a draft form and will be revised before final publication.

We would like to invite feedback on this version. The consultation period runs from 13^th June 2022 until 22nd July 2022.

Instructions to Reviewers

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2. If you have any problems during the registration process, please, do get in contact with us: info@capitalscoalition.org
3. You can provide comments directly on the text: You are also invited to include comments at the section level. Given the format of Scribehub you may need to zoom in with your browser settings (Ctrl +) to better view figures. To provide comments, you will need to press the grey bubble icon on the right-hand side of each section heading.  In particular:
   1. Please focus on the recommendations of each section and whether they are complete and ambitious enough, and if they are implementable by business?
   2. For Section 4.2 Methodologies to measure business impacts, we provide a table on ‘good’ and ‘best’ practice for measuring species and ecosystems. Please review Table 7 and note if there are any other considerations that we should include.
   3. For Section 4.3 Technical criteria for measuring biodiversity impacts in different business contexts, we provide a table on ‘good’ and ‘best’ practice for screening and measuring business impacts to biodiversity. Please review Figure 6 and note if there are any other considerations that we should include within these figures.
   4. For Section 7: “Moving towards Accounting” we would like to reviewers to consider whether this sits within the right location within the recommendations and whether the recommendations are clear and resonate.
4. If you are interested in sharing your own experiences of applying natural capital accounting for biodiversity at a corporate level, please do get in touch with us: info@capitalscoalition.org 

SURVEY

We also have a SURVEY to capture practical feedback such as data and training required to implement the recommendations. You can access the SURVEY at: https://ec.europa.eu/eusurvey/runner/AlignSurveyY2 

The objectives of this survey are to: 

• Identify the profile of Align stakeholders and their engagement on biodiversity
• Confirm persistent challenges of the Align Community of Interest members with regard to corporate biodiversity measurement approaches
• Assess the potential of the Align recommendations to address these challenges
• Assess interest in applying the recommendations in a business context (willingness to test the recommendations and provide case studies)
• Identify the needs of businesses to guide the development of our guidance documents

EXECUTIVE SUMMARY

In response to the growing awareness amongst businesses, financial institutions and policymakers of the risks posed by the global decline of biodiversity, a complex landscape of metrics, tools and frameworks has been developed to measure and value the impacts and dependencies of business on biodiversity, as part of wider natural capital assessment and accounting. There is an urgent need to provide an agreed set of principles and technical criteria setting out ‘what’ elements of biodiversity should be measured and valued and ‘how’ this should be done in different decision-making contexts. These recommendations from the Aligning accounting approaches for nature (Align) project have been designed to address this need and support wider reporting, disclosure and target setting initiatives and standards. The recommendations are high level and sector agnostic and will sit alongside sector specific guidance on their practical implementation that is due to be developed in 2023.

Summary of recommendations:

The concept of ‘double materiality’ should be used to prioritise effort and attention. Companies and investors need to focus on activities and associated biodiversity impacts and dependencies that are most relevant or ‘material' to the business. Double materiality is important because considering the societal value of biodiversity alongside business value will provide a more comprehensive view of the relationship between a company and biodiversity, and a more comprehensive understanding of potential risks.

Appropriate measurement methods should be used for the business context. Broadly speaking, measurement can be used to screen risks related to potential impacts and dependencies, and opportunities for mitigation for measuring impacts/performance. Measures will also differ for direct (site), upstream (supply chain) and downstream (product) impacts given the differences in level of spatial information available to businesses, and the level of a business’ influence on impacts and dependencies.

Indicators of ecosystem extent and condition should form the core of assessments of impact and dependencies. Biodiversity is multifaceted and difficult to capture in a single metric (Figure 1). Ecosystem condition gives insight to the capacity of ecosystems to deliver ecosystem services on which business and society depend and allows changes in biodiversity to be effectively valued. For a more comprehensive assessment that captures risks associated with individual species loss, species level measurement should also be considered, including extinction risk and population size. Genetic diversity is also a key aspect of biodiversity, but the application of genetic diversity metrics and tools for measuring business impacts and dependencies is under-developed.

Figure 1. Components of biodiversity and example measurement indicators [1].

Factors to consider in selecting a measurement approach include spatial precision, accuracy, responsiveness to change and feasibility to apply at scale. The extent to which these different factors are addressed within a measurement approach determines which business contexts they are appropriate to use within (Figure 2). ‘Footprinting’ approaches that apply globally modelled pressure-state responses can produce scalable measurements across value chains, and facilitate a comprehensive screening process of biodiversity risks. However, they can lack the accuracy and spatial precision required for robust impact measurement at site level compared to indicators based on direct measurements from surveys and spatial data layers.

Figure 2. Good and best practice measurement criteria for site and supply chains.

Business should measure their dependencies on biodiversity, as well as their impacts for a more complete picture of risks. Some business activities depend directly on biodiversity, and most will depend in some way on the ecosystem services that biodiversity underpins. Measuring biodiversity dependencies involves understanding which ecosystem services are material to the business, and which ecosystem types are most likely to be providing those services across business value chains. This allows an understanding of how current and future trends in the extent and condition of ecosystems may affect business dependencies on ecosystem services and the risks associated with biodiversity loss.

When conducting valuation, the types of biodiversity values assessed, and the values omitted should be made clear to decision makers. The valuation of some benefits to people and business from biodiversity may be difficult to be accurately captured. Decision makers should be conscious of the types of values assessed and omitted and the values of biodiversity assessed should be always considered as minimum estimates. Besides, valuation should be done based on a good understanding of the changes on the state of biodiversity and the context where those are taking place.

The application of formalised accounting approaches to biodiversity is immature but developing and is beneficial to enhance the rigour and value of measurement methods for business decision making. Organising measurements into structured biodiversity accounts (often as part of a broader natural capital account) facilitates accurate tracking of gains and losses over time and is recommended for tracking to no net loss or net gain targets where site level data are available. Accounting involves compiling a comprehensive asset register and developing statements of position and performance, analogous with financial accounting. It requires methodologies that use spatially-explicit data (Figure 3).

Figure 3. The current state of play of accounting within biodiversity measurement and direction of development towards full biodiversity accounting

These recommendations provide scientifically robust criteria for screening and measuring biodiversity performance, and set out a direction of travel towards comprehensive accounting of biodiversity stocks, and valuation of impacts and dependencies. Collective effort between standard setters and tool developers is needed to ensure there is consistency in ‘what’ should be measured and reported by businesses around biodiversity, and the tools and methods that are needed to implement these requirements. This ‘alignment’ can support the transformative corporate action required for a nature positive future.

The Align project will follow-up this document with a suite of guidance briefs that focus on case studies of measurement approaches to support the implementation of the recommendations.

1 INTRODUCTION

1.1 Background

1.1.1 The relationship between business and biodiversity

Biodiversity provides a wide range of values to people and society. Biodiversity is both an integral component of natural capital (the assets derived from nature that give rise to ecosystem service flows), as well as an indicator of the resilience of natural capital stocks such as soil and water. More than half of global economic output is either moderately or highly dependent on nature, but the biodiversity underpinning these ecosystem service dependencies is being lost at an unprecedented rate, with an estimated one million species at risk of extinction, many in the near future [2].

Businesses impact and depend on biodiversity and the ecosystem services it provides. Business impacts can be negative or positive, resulting in both costs and benefits for society, and risks and opportunities for business and financial institutions. As awareness grows of the business risks that biodiversity loss presents, there are increasing drivers for businesses to measure and report on their impacts and dependencies on biodiversity. These include regulations, market forces (consumer pressure), reputation, securing operational efficiencies and ability to access finance.

International agreements, policies and targets, particularly the development of the post-2020 global biodiversity framework, as well as national or regional policy and regulatory developments, are expected to further drive business measurement and disclosure of biodiversity impacts and dependencies. In France, for example corporate biodiversity footprinting are expected to become mandatory under the national Biodiversity Plan [3]. The EU Sustainable Finance Framework requires enhanced environmental disclosures while the EU New Green Deal [4] encourages development of business natural capital accounting approaches. From a disclosure perspective, the Corporate Sustainability Reporting Directive (CSRD) is likely to lead to greater biodiversity disclosures in the European Union. At the global level, the Taskforce on Nature-Related financial Disclosures (TNFD) will set a disclosure framework for nature-related risk and the Science Based Targets Network (SBTN) will encourage companies to set nature-based targets. A common challenge across all these will be determining how to measure and value impacts and dependence on biodiversity, and this is the key challenge that the Align project aims to address.

1.1.2 Developments in biodiversity measurement and valuation

Currently, business measurement and reporting on natural capital in general, and biodiversity in particular, is extremely limited [5]. For many businesses, the quality of disclosed biodiversity information is poor and gives little insight into business risk or performance, focusing on management narratives and little quantitative, non-monetary information [6]. Nevertheless, businesses are increasingly understanding the need for robust and consistent measures of biodiversity impacts and dependencies. There is also a growing demand for quantitative measures from investors and auditors as part of evolving reporting and disclosure frameworks.

Biodiversity measurement methodologies have developed to meet this demand; however, their uptake remains limited to a few front-runner companies. Measures of corporate biodiversity impact and performance are still not broadly agreed upon, and there is a need for a more consistent approach. When faced with a range of different measurement methodologies, it is easy for businesses and financial institutions to become quickly overwhelmed.

There is a need for improved understanding and a set of agreed principles and criteria for biodiversity measurement that can be used in different contexts, are scientifically robust and are fit for purpose. Similarly, clarity is needed on the valuation of biodiversity and its role in underpinning ecosystem services to make clear to business and financial institutions the consequences of biodiversity loss. This relies on robust information on the change of state of biodiversity.

1.1.3 The Aligning accounting approaches for nature (Align) project

To address this need, the European Commission funded Align project – aligning accounting approaches for nature was formed. Led by UNEP-WCMC, the Capitals Coalition, Arcadis, ICF and WCMC Europe, Align is designed to support businesses, financial institutions and other stakeholders in developing standardised natural capital accounting practices, including recommendations for biodiversity measurement and valuation. It has three objectives (Figure 4).

Figure 4: The Align project objectives

The Align recommendations were developed through consultation with 47 technical experts within a Technical Hub and a Community of Practice of over 170 companies and other stakeholders.

1.2 Objectives

This document sets out recommendations for undertaking biodiversity measurement across business contexts and how they can support valuation.

The recommendations do not explicitly favour one named measurement approach over another, but instead specify which type of approach is applicable for specific business applications based on standardised and agreed technical criteria, The recommendations within the document are developed with the intention that they will be adopted by standard setting bodies. In this regard, the Align project aims to ensure integration of credible approaches to measure and value corporate biodiversity impacts and dependence within broader sustainability measurement and disclosure efforts such as the Corporate Sustainability Reporting Directive, International Financial Reporting Standards (IFRS), the Global Reporting Initiative (GRI) revision of its biodiversity indicators, the Taskforce for Nature-Related Financial Disclosures (TNFD) framework, the Science Based Targets Network (SBTN) guidance, and Align’s sister project – Transparent.

1.3 Audience

The recommendations are intended for measurement and disclosure standard setters, developers of biodiversity measurement approaches and users of these approaches. Users could include:

• environmental / sustainability and finance managers within a business.
• consultants who will be supporting businesses to measure, value and report on the biodiversity performance of an organisation, fund, product or parts of an organisation, as well as those who oversee the validation of outcomes.
• third parties, including government regulators and civil society, who wish to understand how companies are managing their impacts and dependence on biodiversity.

The recommendations are applicable to organisations of all types (public, third sector and listed and unlisted private), across all sectors, and of any size (such as small and medium sized enterprises and multinational businesses). Although the project is supported by the EU, the recommendations are also intended to be broadly applicable to all organisations, independent from the country or countries in which they operate.

1.4 Scope of the recommendations

In the context of the Align project, ‘Measurement’ refers to the process of quantifying the amount, extent, and condition of biodiversity and associated ecosystem services in physical terms as a way of assessing performance or risk, whilst valuation is the process of estimating the relative importance, worth, or usefulness of biodiversity to people (or to a business) in a particular context. Valuation may involve qualitative, quantitative or monetary approaches, or a combination of these [7].

The recommendations focus on the measurement and valuation of the state of biodiversity, drivers of biodiversity loss (impact drivers), dependencies on biodiversity, and biodiversity related ecosystem services. The scope of the recommendations is presented in Figure 5 below:

Figure 5: Setting out the scope of the recommendations. Blue boxes and arrows reflect content covered by the Align recommendation, whilst white boxes reflect content out of scope of the recommendations.

The recommendations are not intended to provide a step-by-step approach; however, the sections broadly follow the steps of the Natural Capital Protocol [7] and accompanying Biodiversity Guidance [8] which outlines the full steps of undertaking a biodiversity inclusive natural capital assessment. These recommendations focus on the ‘measure and value’ steps of the Natural Capital Protocol and biodiversity guidance, providing more detailed requirements for credible, decision-useful biodiversity measurement and valuation approaches.

The recommendations do not include the following as they are the subject of existing detailed guidance:

• How to measure drivers of biodiversity loss such as climate change and land-use (guidance is being developed in Transparent, the Global Reporting Initiative, the Science-Based Target Network, and Corporate Sustainability Reporting Directive).
• How to measure and value flow of ecosystem services (guidance already in place within the System of Environmental Economic Accounting – Ecosystem Accounts and the corporate natural capital accounting guidance).
• The translation from measurement to articulation of business risk and opportunity (being developed by the Taskforce for Nature related Financial Disclosure).
• Biodiversity management measures put in place by a company (World Benchmarking Alliance and CDP are developing this).

A broad array of initiatives is underway that relate to biodiversity measurement (Figure 6). These range from initiatives that address broader sustainability measurement and disclosure issues, but include some element of biodiversity measurement (such as the Sustainable Financial Reporting Directive, Corporate Sustainability Reporting Directive of Global Reporting Initiative) to those that are aiming to improve corporate disclosures on nature related risk and opportunity such as the Taskforce for Nature-Related Financial Disclosures, and initiatives specifically aimed at impact measurement for specific sectors such as the Partnership for Biodiversity Accounting Financials (PBAF).

The Align project is connecting with many of these initiatives, either through their involvement in Align’s technical hub, community of practice or advisory board or through representation of the core Align team within the initiatives concerned.

Figure 6: Relationship of Align to other approaches and initiatives.

1.5 Principles

The following guiding principles should underpin any measurement and valuation process: relevance, rigor, replicability and consistency. They are designed to ensure appropriate methods, metrics and data are used to fit the intended business application.

Table 1: Guiding principles for biodiversity measurement (adapted from [7] [9] [10] [11] [12])

These principles should be applied to all business contexts and all levels of maturity of biodiversity assessment.

1.6 Materiality

To prioritise effort and attention, companies and investors need to focus on those activities and associated biodiversity impacts and dependencies that are most relevant or ‘material' to the business. Using a materiality assessment, activities and their associated impact drivers and dependencies on biodiversity can be identified that have the potential to influence a decision made by stakeholders and businesses and therefore that require management attention [7].

For the purposes of these recommendations, materiality is a concept that can be dynamic (change over time) and is dual in nature (also referred to as ‘double materiality’). It encompasses both ‘impact materiality’ (i.e. the level of significance of the entity’s impacts on the environment and people, deriving from its own operations or those linked to its upstream or downstream supply chain) and ‘financial materiality’ (i.e. the likelihood of a biodiversity-related matter to influence an entity’s value). For the purposes of assessing biodiversity from a corporate or financial institution perspective, a biodiversity-related issue will meet the criteria of double materiality if it is material from the impact or financial perspective, or both [13].

Considering societal value alongside business value will provide a more comprehensive view of materiality and the consequences to a company of its relationship with nature. Business impacts on biodiversity stocks may affect the flows of ecosystem services and alter business activities that depend on them. The role of biodiversity in providing ecosystem services may be hidden and its value under-estimated, so may not be initially identified as material to a business [8]. Considering materiality from the perspective of societal impacts is likely to result in the consideration of a broader range of issues within measurement and valuation given growing societal concern about biodiversity loss. Such issues may not manifest as financial materiality, but nonetheless pose risks in the short to medium term. The value of biodiversity to society and business may shift over time, hence there is a need to periodically re-evaluate materiality of an assessment.

Decisions around materiality arise at several stages of biodiversity measurement and valuation:

• Decisions around what aspect of the value chain to focus upon (Section 2: Business Context).
• Decisions on which impact drivers and dependencies to focus on (Section 4: How to measure business impacts and Section 5: How to measure business dependencies).
• Decisions on what aspects of biodiversity state should be measured (Section 3: Indicators and metrics for biodiversity state).

1.7 Format

Format of the recommendations

1. Universal recommendations are provided to help users and developers of measurement approaches move towards more robust and credible biodiversity measurement and valuation.

2. Technical criteria are provided for how to measure biodiversity in different business contexts. These are provided at two-levels:

'Good' practice technical criteria:

• should be followed by every company, independent of sector, size and level of materiality of impacts (technical criteria don’t apply to non-material impacts).
• are scientifically robust and, if adopted across more businesses, will ensure a significant change in how biodiversity is measured (i.e. compared to 'business as usual’).

'Best' practice technical criteria:

• can be followed by any company for all material impacts, but should be followed for highly material impacts.
• represent a ‘direction of travel’ for biodiversity measurement, i.e. where biodiversity measurement should be building towards, even if not currently deemed feasible by businesses just starting out in the process of measuring their impacts and dependencies.
• encompass a more comprehensive and robust assessment than the good practice criteria.

Note these good and best practice criteria are separate from legally prescribed minimum standards (e.g. in permit conditions). However, as these legally imposed measurements are context specific, they are out of scope of the recommendations.

2. BUSINESS CONTEXTS

Biodiversity measurement and valuation takes place in different contexts – different business needs (applications) and scales of operation (organisational focus areas) will require different levels of accuracy, frequency of measurement, boundaries of assessment and will introduce a variety of challenges in terms of data availability and quality. Hence, biodiversity measurement and valuation methodologies need to be able to address the specific challenges of each business context.

In addition to a clear understanding of the business need for measurement, a business should set transparent organisational and value chain boundaries for which it will measure and/or value its impacts and dependencies on biodiversity. This requires consideration of which part of the business and which element of the value chain to address within measurement and, in the case of investors, how to determine the investor’s proportion of the overall impact of an investment.

Within the Align recommendations, two key factors define the business context: (i) the reason for undertaking biodiversity measurement/valuation, and (ii) the level within the organisation that will be subject to this measurement/valuation.

We consider three clusters of business applications from a measurement perspective:

• Screening of risks related to potential impacts and dependencies, and opportunities for mitigation; it requires less detailed measurement approaches and might even have qualitative outcomes; outputs are indicative in nature but sufficient for prioritisation purposes.
• Measuring biodiversity impacts and performance; this requires more precise, quantified figures to understand the change in biodiversity state that is observed or predicted based on a company's activities.
• Measuring changes in the state of biodiversity underpinning business dependencies

Valuing societal and business impacts is the next step.

Within these clusters of business applications, the recommendations define four main organisational focus areas [7] (the recommendations currently cover the first two with potential to cover the latter 2 in future iterations):

• Site or project level: site level usually refers to existing sites while project level usually refers to planned undertakings or initiatives at a specific location; site and project level impacts are directly related to the site or project activities, processes, and incidents and exclude supply chains delivering to the site or project. These are also sometimes known as Direct Operations.
• Supply chain: focus is on the upstream parts of the value chain where primary sectors are active (e.g. extraction of raw materials, agriculture, fisheries, forestry).
• Product level: goods and/or services, including the materials and services used to produce the product and the downstream activities. This level may be considered in future iterations of these recommendations.
• Corporate level: assessment of a corporation or group, including all subsidiaries, business units, divisions, different geographies or markets etc. This requires aggregation of information across the full value chain and may be considered in future iterations of these recommendations.

Business contexts for good and best practice impact measurement criteria are provided in Table 2 with example applications. Information on measuring changes in state of biodiversity underpinning dependencies is given in Section 5, but good/best practice criteria are not provided within the recommendations for this business context.

Table 2: Business contexts for which recommendations are made in terms of technical criteria

3. INDICATORS AND METRICS FOR BIODIVERSITY STATE

3.1 Background

This section identifies the key aspects of biodiversity that must be considered to understand changes in biodiversity state (that is linked to impact drivers and affects dependencies) and how to measure them.

Biodiversity is composed of ecosystems, species, and genes. As such, these are considered the components of biodiversity to be measured. This can be achieved by measuring key variables that act as indicators of the overall state of biodiversity or reflect business impacts on state. Indicators can be simple metrics (a system of standard measurement), or more complex indices (e.g. numerical scales) [14]. Describing the state of biodiversity with a single metric (like the carbon indicator for climate targets and assessments) is unlikely to be possible or credible. Instead, several metrics reflecting the multiple components of biodiversity are needed to understand changes in the state of biodiversity (which may be combined to develop a composite index). The use of multiple metrics will then reflect the multi-dimensional nature of biodiversity and their interconnectedness [15] [16]. For example, understanding what species are present and their abundance, gives insight into the condition or ‘health’ of the ecosystem. The health of the ecosystem, in turn, may drive changes in an individual species’ threat status [17].

Each component of biodiversity will have different aspects that can be measured:

• Ecosystems: There are two aspects to consider for ecosystems – extent and condition. Ecosystem condition (also referred to as integrity) can be assessed through measuring elements including composition of ecological communities, spatial structure of habitat patches and ecosystem functioning.
• Species: There are two aspects to consider for individual species - population size and extinction risk. These provide insight on the health of a single species’ population and its relative resilience to human induced and naturally occurring change.
• Genes: Currently there is one aspect to consider - genetic diversity, which can be a component of both genes and species. Genetic diversity describes the variability in genetic characteristics within a given species and provides an indication of its resilience to change (e.g. the ability of a single species to withstand disease) [18]. This is particularly relevant when considering agrobiodiversity, as higher genetic diversity in crops can support more resilient agro-ecosystems.

Different biodiversity indicators/metrics consider various aspects of biodiversity at distinct geographic scales (e.g. local, regional and/or global biodiversity) [19]. For example, indicators that reflect global extinction risk consider biodiversity at the global level and can reflect how business activities potentially impact total numbers of species globally. At the local level, actual contributions to extinction risk can be measured by looking at the change in a species population size at a particular site.

Figure 1 provides examples of indicators for various aspects of biodiversity, recognising that other indicators will exist for each aspect. It is anticipated that the number of metrics/indicators available is likely to increase as the science and available approaches further develop.

Table 3 describes how a given indicator is relevant to each component and aspect of biodiversity. Examples are provided to describe how the indicator changes over time in response to business activities. Information on the underlying methods for measuring these indicators, and their strengths and limitations are described in Section 4.

Table 3. Criteria describing an indicator’s relevance to the different aspect of biodiversity.

3.2 Universal recommendations

To develop a more holistic understanding of the change in state of biodiversity, businesses can combine indicators that reflect different aspects. For example, combining measurements of changes to the population size of a species with those of ecosystem condition for a given assessment area contributes to understanding changes to the species and ecosystem component of biodiversity respectively.

To ensure a multi-dimensional and holistic approach for measuring corporate impacts and dependencies on biodiversity is achieved, the recommendations for measurement include:

Indicators for ecosystem extent and condition should form the core of measurements of state changes, supplemented with species level indicators for a more complete assessment.

Ecosystem extent and condition should form the foundation of measurement when assessing state. This information should then be supplemented with species-based indicators. There is currently a lack of practical methods for measuring genetic diversity, but genetic diversity should be considered when it is material to do so.

Understanding ecosystem extent and condition is also integral to developing a biodiversity account (see Section 7). If a business were to only look at the effects of their operations on the population size of an indicator species, they may miss important changes in ecosystem condition of the area, which may result in reduced ecosystem service provision. By measuring both it is more likely that correlations between population changes and reductions in overall ecosystem condition can be found and appropriate mitigation methods (e.g. to improve habitat connectivity) can be implemented.

When measuring ecosystems, more robust assessments will be based on defined ecosystem types, and there is often a need to consider their relative significance based on threat and strategic importance

Considering individual ecosystem assets based on a defined ecosystem classification system, such as the IUCN ecosystem typology, leads to the most robust assessment. Some measurement approaches may measure impacts on ecosystem condition at a broader level than specific ecosystem assets and are not disaggregated to individual ecosystem types.

In addition, screening of risks may involve assessing the significance of the ecosystem types potentially impacted by business activities. Criteria for assessing significance include:

• Relative distinctness - ecosystems that are Threatened, rare or declining may be more material that ecosystems that are more common and widespread.
• Strategic significance - ecosystem may be in an area designated as strategically important for nature, or an area managed for conservation (such as a legally designated Protected Area).

Measurement of ecosystem condition requires inclusion of changes in the composition of species, irrespective of the rarity, threat status or value of individual species, compared to an intact reference state.

Often assessments of biodiversity focus only on globally threatened or charismatic species. Consideration of common species, in addition to high-risk species is more reflective of the quality/condition of ecosystems and is important to capture the insurance value of biodiversity underpinning ecosystem services [21]. For this reason, consideration of common as well as threatened species is needed for a complete picture of ecosystem condition.

Measurements of individual species (population size/extinction risk) should focus on material indicator species.

Measurements of species should consider abundance and extinction risk for material species and, where possible, for common species. It is not feasible to measure the state of all individual species impacted by business operations, or that contribute to business dependencies. Selecting individual species should therefore be based on materiality, and a subset of species to monitor as indicator species should be selected based on clear materiality criteria.

Criteria to consider in determining materiality of species include:

• The species is sensitive to company-induced impact drivers, with impacts likely to result in a significant change in its local and/or overall population., and so changes in state can be attributed to company activity over external factors
• The species is legally protected, according to local, national and/or international laws, conventions and action plans
• The taxon is recognised as a priority/threatened species at a local, national and/or international level (e.g. species listed on the IUCN Red List);
• The effective management (or lack thereof) of the species generates significant financial revenues and/or expenses;
• The species plays a critical role in the ecosystem;
• The species plays a significant cultural or economic role (e.g. hunting, harvesting, pollinating services, educational and recreational services) for stakeholders.

Each of these criteria will differ in the data required to assess materiality [22][10].

4. HOW TO MEASURE BUSINESS IMPACTS ON BIODIVERSITY

4.1 Biodiversity impact drivers

4.1.1 Background

This section outlines the concept of impact drivers and how to identify them to enable a better understanding of the link between business activities and changes in biodiversity state. Impact drivers are exerted by business activities (e.g., pollution from emissions or land conversion by agriculture) and result in a change (positive or negative) in the state of biodiversity. These impacts in turn have consequences for business and society.

Impact drivers are also called ‘pressures’ in the Drivers, Pressures, State, Impact, Responses (DPSIR) framework [23] advocated by SBTN and ‘direct drivers of change’ under the Convention for Biological Diversity (CBD)[24], Millennium Assessment and IPBES [25]. Indirect drivers of change, such as the broader underlying causes of the direct drivers like population change and technological innovation (also called ‘Drivers’ in the DPSIR framework), are excluded from these recommendations as they cannot be directly attributed to, or managed by a company.

An impact driver generally has three main characteristics: magnitude (e.g. amount of contaminant, noise intensity), spatial extent of the impact driver (e.g. area of land changed) and temporal extent (e.g. duration of persistence of contaminant). Impact drivers are neutral; they may result in both positive and negative changes in the state of biodiversity and associated impacts on business or society (e.g. impacts on human wellbeing). Several impact drivers, either from one company or combined with those of other organizations, can result in cumulative impacts.

To assess how an impact driver from a specific business activity gives rise to changes in biodiversity, ‘impact pathways’ must be understood. Business impacts on biodiversity may be via direct or indirect ecological pathways (e.g. water emissions and consequent changes in water quality may directly influence algal populations which may then indirectly affect shellfish and human health). Business impacts on biodiversity may also be due to direct company operations or indirect activities through the wider supply chain. Connected to these two different uses of the terms ‘direct’ and ‘indirect’, is the need for a business to show a causal link for which their contribution to a change in biodiversity state can be measured, managed and accounted for. It is often easier to identify a causal link for direct impacts compared to indirect impacts.

Measurement of impact drivers may act as inputs to models that estimate associated changes in biodiversity state, such as ecosystem condition or can be used to interpret or anticipate trends in biodiversity state indicators. Identification of material impacts is also needed to identify relevant parts of the value chain on which to focus for measurement of impact drivers. Guidance and standards already exist or are in development for measuring impact drivers, e.g. Transparent, the GHG Protocol and ISO standards for water [26], hence criteria for measuring impact drivers are not addressed within these recommendations. The recommendations focus on identification and prioritisation of impact drivers based on a materiality assessment.

4.1.2 Universal recommendations

Impact drivers and pathways should reflect those identified through the IPBES assessment and required by national laws

Materiality criteria should guide the scoping or prioritisation process (see Section 4.3). As a minimum the impact drivers considered should reflect those identified through the IPBES global assessment (land and sea use change, climate change, resource exploitation, pollution and invasive alien species) and those required by law. While this forms a useful starting list, it will never be exhaustive. It is important that each practitioner justifies which impact drivers are considered in the measurement approach, why, and what impact it has on the robustness of the assessment. Table 4 sets out the five key impact drivers according to IPBES [25] and highlights some examples of the indicators that could be used to track them. Where data exists, direct physical measurement will be possible. However, where data are unavailable (e.g. a company with a complex supply chain wishes to understand the impact drivers generated by its supply chain activities), turnover value, purchases and volumes of commodities purchased could be used to calculate potential impact drivers using established pressure – revenue models e.g. Exiobase.

Table 4: Impact drivers for consideration [27]

The scope should include impact drivers in all realms (land, freshwater, air and marine). Fragmentation and isolation are further impact drivers highlighted by the Convention for Biological Diversity but these can be seen as the effects of extraction or land use change (see IPBES [25] and recommendations above). Restoration is interpreted in this document as a land/sea use change.

Use a priority filter to identify the most significant impact drivers based on characteristics of the impact driver (spatial extent, frequency and duration, and magnitude) and characteristics of biodiversity (exposure and sensitivity to impact drivers)

To assess the importance of a potential impact driver in influencing the state of biodiversity, five factors can be considered, three of them addressing the impact driver and two of them the biodiversity affected, i.e. species/ecosystems. We recognise that some of the criteria for low, medium and high priority are somewhat arbitrary (e.g. small, medium, large, short). These should be resolved by considering the characteristics of the biodiversity element (e.g. the spatial extent of a habitat and its sensitivity to an impact driver).

Table 5: Factors influencing the priority of impact drivers

4.2 Methodologies to measure business impacts on biodiversity

4.2.1 Background

This section addresses how impacts of business activities on biodiversity can be measured. Measurement of business dependencies on biodiversity are covered in section 5. Corporate measurement of impacts on biodiversity can measure the state of biodiversity and/or flows of ecosystem services. Here, the focus is on measuring the state of biodiversity that underpin the stocks of natural capital, through measuring change in the indicators of state discussed in section 3. This measurement of impacts on stocks is fundamental to assessing and valuing changes in ecosystem service flows.

To accurately achieve this, a typology of methodologies and their associated characteristics is provided below. Accompanying the typology is a set of technical criteria and underlying data requirements for implementation. Adhering to the technical criteria is critical for ensuring the chosen methodology accurately reflects changes to biodiversity state.

Note that individual corporate biodiversity measurement approaches are not described within the recommendations (e.g. Global Biodiversity Score, Biodiversity Impact Metric). This is to ensure the recommendations do not become outdated as available measurement approaches improve. Instead, the methodologies underpinning the available approaches and the technical criteria to ensure robust assessment are described.

Methodologies available to collect data and measure indicators of biodiversity state can be separated into three categories. These categories are not mutually exclusive and can be combined within a measurement approach as follows:

• Primary biodiversity state data: collected in-situ for the purpose of the assessment using ‘on the ground’ surveys or remote sensing, including eDNA and bioacoustics surveys.
• Secondary biodiversity state data: including geospatial data layers that can be overlaid with geographic location data of business activities. These may be produced through different methods, including the outputs of models (e.g species distribution models) or through remote sensing:
  • At the species level, data layers on the ranges of different species (range layers) can be used to predict the species that may be present at different sites or sourcing locations. Each will have differing levels of accuracy depending on factors (e.g. whether species ranges have been refined based on availability of habitat, how wide ranging the species is). Information on the threat status of the species, and the activities that threaten them, can provide an indication of the likely contribution that business activities may be having on driving population trends and threat status.
  • At the ecosystem level, data layers reflecting change in the extent and condition of ecosystems can be applied, including levels of habitat fragmentation and connectivity.
• Modelled pressure-state data: model-based ‘footprinting’ approaches are commonly used for measuring changes in ecosystem condition, or changes in species’ area of habitat.
  • Models quantify how the magnitude of different pressures affects the state of biodiversity. These are referred to as ‘pressure-state’ relationships and within corporate footprinting approaches are often based on global data.
  • Modelling results are applied locally to estimate how company-level pressures will cause changes in ecosystem condition (‘footprint’).
  • There are currently fewer pressure-state models for the marine environment applied in corporate measurement approaches.

Interpretation of the results acquired after using the chosen methodology will depend on the type of data that is collected and used. Primary and secondary data are most likely to describe actual impact to biodiversity state, based on the business activities being assessed.

In the absence of any ground-truthing or use of primary state data, model-based approaches provide only an estimate of impact, or measure of potential impact, rather than measuring actual impact.

4.2.2 Universal recommendations

Methodologies should be selected based on four characteristics of: spatial precision, accuracy of measurement, responsiveness to mitigation and feasibility to apply at scale.

Determining which methodology is most appropriate for assessments should be based on four characteristics described in Table 6 below and illustrated in Figure 7. This is because the requirements for measurement approaches around these characteristics will differ depending on the business context.

Table 6. Four characteristics to consider when determining methodology suitability.

According to Table 6, a company completing a site-level assessment is likely to use in-situ, primary biodiversity state data. This is because the spatial precision, accuracy of measurement and responsiveness to mitigation would all be ‘high’ and it is feasible for the company to collect data on site. Use of the same methodology however, might mean that the feasibility to apply the methodology at scale, would be ‘low’, especially if data is not normalised across sites.

Contrasting this, a supply chain company, assessing impacts across the value chain is likely to choose a methodology with a ‘high’ feasibility to apply at scale. This could be achieved through model-based methodologies relying on sector-average pressure data. In turn, the same model-based methodology may only provide a ‘medium’ responsiveness of measurement to mitigation, and ‘low’ spatial precision, and accuracy.

Technical criteria for applying different methodologies for different business contexts are provided in section 2.

Figure 7. Typology of approaches for the three aspects of biodiversity. Typology is based on the ‘data type’ required (primary or secondary) and the underlying approaches used to measure impact [29] [30]

Good or best practice data collection techniques should be followed to ensure methodology strengths are met.

To ensure the general characteristics of each methodology are met, the data collected must be robust. To achieve robust data collection, technical criteria for ‘good’ and ‘best’ practice are described for species and ecosystems in Table 7 below.

Best practice data collection can help address some of the limitations associated with different methodologies. For example, the accuracy of measurement for the methodology ‘modelled state based on pressure’ could be improved using pressure data with high accuracy (i.e. direct measurement of company level pressure data). Even if this is the case, however, the results provide estimates of changes to biodiversity state that are at the global/regional level, not the location where impacts are being modelled. Although the accuracy will be higher, the spatial precision of the state measure is still low. Spatial precision can be improved in these approaches through refining pressure-state relationships to more specific locations or contexts.

Table 7. Examples of Good and best practice for collecting species and ecosystem data (based on expert opinion).

Assessment of biodiversity impacts should be conducted against a clear and transparent baseline supported by evidence

A key consideration when measuring biodiversity impacts is the need to specify a “starting point” or “benchmark”) from which to compare business activities’ impacts for monitoring change, especially in the context of reporting and disclosure. Baselines represent the known biodiversity at a fixed point in history. The choice of baseline will directly influence the assessment of the impact. A related concept is reference state. This is a previous state of biodiversity for comparison, or a desired state that a company or investor hopes to achieve. Some measurement approaches include a fully ‘intact’ state (i.e absence of human pressures) as a reference state against which the loss of biodiversity is assessed

The choice of baseline will depend on the business context. For example, for screening risks the baseline will often be the situation at the time of the first risk screening. As risk screening can be periodically repeated, the baseline will offer a good basis for assessing how risks have evolved (e.g. due to changes in presence of protected species and/or protected areas). For measuring impacts, baselines often consider the time business activities begin, but there is often a need to account for historic impacts, particularly for land use change that may occur prior to business activities. The selection of baseline needs to be justified (be transparent and supported with sufficient evidence)

The implications of time lags between impact and changes in biodiversity state must be addressed by the methodology used for assessment.

Long time lags may exist between the impact drivers of a business activity and the subsequent changes to biodiversity state. This long-time horizon was highlighted in the 2021 Dasgupta Review [31] as having profound implications for actions to mitigate risks of ecosystem collapse. Similarly, efforts to improve the environment and ability to measure positive impacts from mitigation actions may suffer from recovery time lags. It is important these time lags are acknowledged when using changes in biodiversity state to evaluate biodiversity performance. Some measurement approaches explicitly consider time lags, for example:

• Time integration: Land use-related impacts on biodiversity may take place during a certain period of time and converted land may at some point in time recover to its previous biodiversity state. In life cycle assessment, future impacts on biodiversity are integrated over a predefined time horizon (usually 100 years).
• Dynamic vs static impacts: some approaches differentiate the ’dynamic’ impacts (during the period assessed), (i.e. footprint caused by changes, consumptions or restorations) from ‘static impacts’ (i.e. ‘ecological opportunity cost’, including all the 'persistent' or 'long-lasting' effects which remain over time).

4.3 Technical criteria for measuring biodiversity impacts in different business contexts

To ensure measurement is completed in a scientifically robust way, good practice and best practice criteria are provided for two core business needs: screening risks and opportunities and measuring impacts to biodiversity state (see Section 2 on business context). These differ according to whether the assessment is for site and project level, or for supply chains as shown in Figure 2.

Good practice recommendations should always be implemented, as the criteria provide a foundation for scientifically credible measurement. It is however recommended that best practice be followed for more accurate and robust assessments and this is strongly recommended for highly material impacts.

5. HOW TO MEASURE BUSINESS DEPENDENCIES ON BIODIVERSITY

5.1 Background

Businesses are vulnerable to the operational and systemic risks associated with declines in the state of biodiversity, and measuring business dependences on biodiversity is needed to assess and manage these risks through guiding positive action. Measurement of business dependencies on biodiversity is less evolved than measuring impacts, with fewer established measurement approaches, metrics and tools. It is anticipated that these will evolve over time in response to increasing number of initiatives calling for businesses to measure dependencies as well as impacts. Importantly, while measuring business dependencies may focus on materiality from a business perspective, the dependencies of society on biodiversity and ecosystem services must still be considered when assessing materiality of business impacts on biodiversity.

Businesses may depend on biodiversity directly, for example through wild sourcing of ingredients, or may depend on the ecosystem services that biodiversity underpins. Broadly speaking, the condition of ecosystems relates to their capacity to provide ecosystem services [32]. This is because the biophysical variables describing condition relate to the underlying functions of the ecosystem that provide services. While ecosystems in poor condition may still provide ecosystem goods and services, they may be less resilient to future change [33], and the long-term provision of services may be at risk.

Measuring biodiversity dependencies involves understanding which ecosystem services are material to the business, and which ecosystem types are most likely to be providing those services across business value chains. This allows an understanding of how current and future trends in the extent and condition of ecosystems may affect business dependencies on ecosystem services. Although measuring ecosystem flows may most directly assess the current state of business dependencies, a sole focus on ecosystem service flows when measuring dependencies could lead to poor business decision making, as risks associated with declining capacity of the ecosystem to provide services into the future will be missed.

It is important to note that many impact drivers result from business dependencies on resources from natural systems (e.g. water abstraction leading to a change in condition of wetlands). In some cases, business impacts on biodiversity may feedback directly on their own dependencies, but in many cases business dependencies will be affected by declines in ecosystem condition that occur independently of business activities. Therefore changes in extent and condition that occur independently of impact drivers resulting from business activities should also be considered when measuring dependencies. Further information on valuing changes in ecosystem services is provided in section 6. 

5.2 Universal recommendations

Identification of ecosystem service dependencies should use a structured framework

Established frameworks such as the UN SEEA [22] link specific ‘economic actors’ to specific ecosystem services they depend on. These can inform a list of ecosystem services that businesses within a given sector are likely to depend on for their operations.

Use a prioritisation filter to Identify the materiality of ecosystem service dependencies based on potential loss in production processes and associated financial losses 

To assess materiality of business dependencies on ecosystem services, two factors can be considered in relation to the role of ecosystem services in the production processes of a business’ operations, as shown in Table 8 below:

Table 8. Materiality criteria for ecosystem service dependencies

Ecosystem types supporting dependencies should be identified, and current and future trends in their extent and condition should be assessed 

Structured ecosystem services frameworks list common ecosystem types that support different ecosystem services. These can be used to identify the ecosystems that are most likely to support business dependencies. For example mangrove ecosystems are linked to the service of coastal flood protection [34].

An assessment should be made of how declines in condition of these ecosystems may affect the capacity to supply the specific services that are depended upon. This can guide the selection of ecosystem condition indicators (section 3) that best reflect the functions that supply that service, as well as and understanding of the relative levels of risk associated with declines in condition. For example, increased fragmentation in mangrove ecosystems reduces their capacity to provide coastal hazard defence services

An important element of understanding links between biodiversity state changes and business dependencies in understanding future trends in state, as this indicates the resilience of ecosystem service flows into the future.

In contrast to measuring business impacts on biodiversity state, practical tools for assessing these trends in biodiversity state that are independent of business impacts are limited. Secondary geospatial data layers, such as global layers showing change in ecosystem extent (e.g. showing forest cover change through time) or ecosystem condition (e.g. showing change in intactness of ecological communities through time) as well as the results of future scenario models may be used to understand current and future trends.

6. VALUATION OF IMPACTS AND DEPENDENCIES

While the previous sections focused on how to measure changes in the state of biodiversity, this section focuses on valuation. This involves understanding how changes in the state of biodiversity can affect the delivery of ecosystem services and what should be considered when valuing the costs and benefits resulting from these changes in biodiversity. It is important that all valuations of biodiversity impacts and dependencies are underpinned by robust measurement of the underlying changes in the state of biodiversity, as described in section 3.

Understanding value of biodiversity requires a broad understanding of trade-offs of business decision making, especially when deciding among different management options. For example, in the short term the most financially profitable approaches may favour extractive monocultures such as timber plantations or monoculture crops with little or no biodiversity. However, valuation of the benefits supported by biodiversity can help in adopting a wider range of values. Accounting for the long-term resilience and value of business activities may demonstrate that biodiverse approaches such as nature friendly farming or alternative land uses represent the highest value option for businesses and society.

6.1 Types of value provided by biodiversity

6.1.1 Background

In general, higher ecosystem condition equates to a higher quantity, quality, and resilience of the services they provide, which underpin the benefits to business and society [8]. At times, these changes in biodiversity state are presented immediately and in other circumstances after a time lag.

The value provided by biodiversity can be broken down as follows, with the first three being ‘use values’:

• Direct value: In some instances, biodiversity itself will add value directly to people or business through direct interaction with the natural resource, for example, through providing food, or in tourism based on wildlife watching. The value captured through direct value is under representative of the full value of biodiversity and is supplemented (but not additive) by the other values described here.
• Underpinning (or indirect) value: More commonly, biodiversity has value through its role in the supporting of the delivery of final ecosystem services. Systems such as water cycles, carbon cycles, and crop production, which are essential to support final ecosystem services, rely on the interactions of living things and the functioning of ecosystems. This underpinning value contributes to the resilience of an ecosystem in the long term and the provision of final ecosystem services in the short term. The emergent properties of complex interactions of species and ecosystems can be hard to value and are often absent from current decision-making processes, despite their importance.
• Insurance and options value: Some goods and services can be delivered with relatively low biodiversity, but are vulnerable to change from factors such as pests, diseases, or climatic instability. Biodiversity provides options for delivery of ecosystem services from alternative sources in the future (for example new crop species that might be domesticated for agriculture or new medicines). Biodiversity also provides benefits that are not yet recognized or services that will only become beneficial in the context of future technological or societal innovations due to future changes to the natural environment or changes to the way people live or what they value).
• Non-use value: These include several values, such as bequest value (knowing that future generations will continue to benefit from biodiversity), altruist value (knowing that other people of the same generation can benefit from biodiversity), and existence value (connected to our desire to protect biodiversity irrespective of whether we derive any value from it other than associated with our knowledge of its existence).
• Intrinsic value: Biodiversity has value independent of human use of the goods and services it provides. This value is associated with the moral right of living things to exist. This type of value is non-human centred and consequently, value can be measured and acknowledged but not accurately captured.

6.1.2 Universal recommendations

It should be clear which types of biodiversity values are assessed and which are omitted but require consideration in decision making processes

Many biodiversity valuation approaches focus primarily on assessing flows of ecosystem services from changes in state of biodiversity. The valuation of ecosystem service approach mainly captures the direct value of nature to business and society, and it may be difficult to accurately capture other values from biodiversity. Where this is the case, it is still beneficial to highlight that other additional types of values exist. This should be considered during decision making processes.

Consequently, when estimating biodiversity values, it should be clear which types of values have been assessed and the approach used to capture them (specifying whether these are: direct, underpinning, insurance and option, non-use and/or intrinsic). When any value has not been captured, it should be made explicit that the value from changes in biodiversity are likely to be larger.

Besides, the values captured are not always additive, because trade-offs may have to occur between different uses. For example, a forest cannot provide timber whilst also providing existence or bequest values.

6.2 Approaches to valuation

6.2.1 Background

Consequence of biodiversity impacts on the business.

Business itself may be affected by the changes in biodiversity that result from their own activities. These include any financial costs or benefits that directly affect the business bottom line as a result of their dependencies (see section 5). They could also include less tangible impacts that may affect the bottom line indirectly, such as reputational impacts, delays in permitting, or the relative ease or difficulty of recruiting or retaining employees. Impacts on the business may relate to:

• The cost from fines or legal claims for environmental damages. This may be linked to measured changes in biodiversity (e.g. restoration of environmental accidents).
• The cost from taking positive actions to mitigate adverse impacts on biodiversity (e.g. mitigation hierarchy or no net loss targets) or to comply with environmental regulatory standards (e.g. use of native species in forest plantations).
• The cost and/or revenue from regulatory environmental market mechanisms, whereby companies increasingly need to pay for the use of or impacts to natural capital or get paid for environmental enhancements they provide (e.g. purchasing or selling biodiversity offsets in response to environmental damages).
• The cost of production inputs (e.g. the purchase costs of timber) and any costs relating to the reduction of operations,
• The cost and/or benefit of outputs (e.g. increased cost of eco-tourism permits, increased revenue from nature-based solutions or perceived value of goods and services from customers).

Market based approaches can be used to quantitatively or monetarily value the consequences of impacts on the business. For example, in the case of setting a biodiversity target, the cost of implementing all measures required to reach the target, including measures to avoid, minimize, restore, and compensate impacts, as well as to monitor them. Businesses may also wish to qualitatively assess material biodiversity risks that may arise in the future, for example through changing social attitudes.

Consequences of business impacts on society & consequence of business dependencies

Generally, valuing impacts on society and business through their dependencies relies on understanding how biodiversity underpins the value that society and business gets from nature through ecosystem services. When assessing insurance and option values, having a long-term perspective is needed to capture changes to happen in the long run. Alternatively, the cost of maintaining biodiversity to ensure the provision of benefits in the future can be used.

When accounting for the benefits provided by nature, to avoid double counting, the final ecosystem services which provide benefits to people directly should be included (for example the pollination benefits provided by pollinators would be covered in the final ecosystem service of food provision from crops) and a mapping exercise to link changes in ecosystem services to changes in benefits can be used

The approach to estimate the values of impacts to society and business through dependencies consists of three steps [35]:

1. Identifications of relevant changes on ecosystem service

An initial screening should be developed to provide a preliminary qualitative assessment of which ecosystem services are likely to be affected from changes in quality and quantity of biodiversity (as per the measurement guidance of this document) and the likely importance of these changes. This screening could be done by building a checklist to identify and provide a qualitative assessment of the potential ecosystem services affected and the magnitude of the changes in ecosystem services. All ecosystem services should be considered when conducting the screening as a means to identify those impacted, as well as where uncertainties and evidence gaps exist.

2. Quantification of relevant changes on ecosystem services

The quantitative assessment focuses on those ecosystem services likely to experience significant changes identified in the preliminary screening. The aim is to measure the relative change in the provision of different ecosystem services resulting from the changes in state of biodiversity, as measured in Section 6, based on the extent and condition of ecosystem assets. This connection is embodied in the concept of ecosystem capacity [22]. When assessing the changes in ecosystem service provision the trade-offs or complimentary nature of different services should be considered.

3. Valuation of relevant changes on ecosystem services.

The valuation consists of assessing the impact on human welfare resulting from the changes in the provision of ecosystem services. These benefits can be valued in qualitative, quantitative, or monetary terms, each requiring a different valuation technique. A hybrid approach that combines two or all three approaches may also be appropriate.

• Qualitative valuation techniques are used to inform the potential scale of costs and/or benefits expressed through qualitative, non-numerical terms (e.g. high/medium/low decrease in recreational benefits). Qualitative methods may be required to ensure that a full range of benefits are considered, especially intrinsic values and when the full range of benefits cannot be fully accounted for in quantitative or monetary valuations. Qualitative valuation should be done ensuring highly collaborative and participatory process to capture a wider range of value subsets [36]. Where possible it is good practice to report material unmeasured benefits.
• Quantitative valuation techniques, in turn, focus on numerical data which are used as indicators for these costs and/or benefits (e.g. number of people that experience a decrease in recreational benefits). Quantitative valuation can take the form of an assessment of the physical flow of ecosystem services from a habitat. Quantitative valuation is convenient to assess those benefits that are inherently or intrinsically valuable and quantifiable but that cannot be well captured in monetary terms.
• Monetary valuation techniques translate quantitative estimates of costs and/or benefits into a single readily understood unit (e.g. recreational value lost in USD), allowing for simple assessments of trade-offs between biodiversity values as well as other environmental, social and economic considerations. Economic valuation techniques should be applied to estimate the possible monetary values attributed to ecosystem services. Economic valuation should be an extension of quantitative valuation, where reliable monetary valuation metrics exist. Table 7.1 in the Natural Capital Protocol Biodiversity Supplement gives an overview to the types of monetary valuation, their benefits and limitations as well as examples of use.

6.2.2 Universal recommendations

Changes to biodiversity (ecosystems and species) that affect value should be identified and underpin the valuation

The multitude of biodiversity components (e.g. species, ecosystems, genes) upon which business might have impacts and/or dependencies, can lead to it being undervalued.

An assessment should identify all relevant changes in biodiversity state, focusing on ecosystem extent and condition and supplemented with species-level indicators (as indicated in Section 6) as a basis to conduct valuation relating to material topics. For example, abstraction of water may have impacts on species in downstream wetland areas, and these impacts should be captured and assessed as an input for valuation. Assessing the changes on biodiversity state should underpin the valuation.

Information about location and context where changes in biodiversity take place is required

The location and context of biodiversity changes will have an impact on the level of benefits provided by ecosystems. The location of biodiversity loss may affect the ecosystem functions and therefore delivery of specific ecosystem services. Furthermore, the proximity of the impacted ecosystem to people as beneficiaries of the services will impact the scale of benefits that are provided. Equally losses of individuals of species at a certain location may only be meaningful due to national, regional or global extinction risk. Understanding this will help to understand the scarcity of species in context and will also highlight opportunities for collaboration with other actors at a larger scale.

Local context may also highlight when certain sites hold a higher level of non-use value, for example sites, species or individuals with a high spiritual value.

The valuation should assess final ecosystem services, not intermediate ecosystem services

When accounting for the benefits provided by nature, to avoid double counting, the final ecosystem services which provide benefits to people directly should be included. Care should be taken to ensure that the supporting services are not ignored completely. Losses in intermediate or supporting services can indicate a time-lagged risk of final services loss and should still be carefully monitored.

To address the limitations of only valuing final benefits, it is important to identify where the condition of biodiversity stocks has been overlooked in estimated values, and to consider the importance of biodiversity for continuing to provide benefits to the business in the future.

Monetary valuation should not be used when irreversible change is expected, when values may be inaccurate, when morally inappropriate and where large-scale change in biodiversity is taking place

Monetary valuation should not be used when:

1. An irreversible change is expected. The timeframe of the assessment should be appropriate to identify the presence of thresholds or tipping points. In the presence of tipping and/or irreversible points, monetary valuation can only provide a minimum estimate of the future loss of benefits but will not be able to capture the full spectrum of values, such as intrinsic or optional values. When tipping points and thresholds exist, a precautionary approach should be adopted and a registry of the gap in physical units to the threshold or tipping points should be used (instead of monetary valuation).
2. Values cannot be estimated to a reasonable level of accuracy.
3. It can be considered morally inappropriate (e.g. placing a monetary value on intrinsic or culturally valuable areas to the surrounding communities).[37]
4. A large-scale change in biodiversity is taking place (e.g. when a large proportion of a remaining population or habitat is affected).

Biodiversity values should be considered a minimum estimate and a precautionary approach adopted

Biodiversity’s intrinsic value is independent of any use of goods and services by people and therefore will be overlooked when focusing on ecosystem service flows. Equally many use and non-use values will continue to be underappreciated due to limitations in scientific understanding of the relationships between biodiversity and delivery of goods and services. Consequently, a precautionary approach should be adopted and the values of biodiversity identified should be always considered minimum estimates, taking into account other information and in consultation with stakeholders.

Where tipping points are expected, a precautionary approach to valuation is required

Tipping points are a set of conditions in which an ecosystem can no longer cope with environmental change and, so, suddenly shifts from one state to another, preventing it to return to its former state. When tipping points are identified and are likely to happen, a precautionary approach should be used and any biodiversity loss should be avoided, as consequences could be irreversible and have significant implications for a range of activities and livelihoods. Restoration is not only costly but once tipping points are reached cannot return ecosystems back to their original state [31].

Qualitative and quantitative factors should be used to acknowledge intrinsic values

Intrinsic values are hard to capture within the total economic value approach of the ecosystem services framework due to their non-economic and relational nature. Qualitative and quantitative approaches can be used to acknowledge the existence of these intrinsic values [38], such as measurements of biodiversity foot-printing or measurement of individual species. Using indicators or a classification that reflects the integrity or threat level, such as IUCN Red List species status, can be used. Local and global context should also be considered when acknowledging these intrinsic values.

7. MOVING TOWARDS ACCOUNTING

This section sets out how biodiversity impacts and dependencies can start to be organised into an accounting format to track performance against targets and over time. It outlines technical recommendations and a direction of travel from individual measurements of performance to compiling robust corporate biodiversity accounts, either as a separate exercise or as part of a broader effort to develop corporate natural capital accounts. It recognises that the term ‘accounting’ is currently interpreted in very different ways and the use of accounts is currently limited in the context of biodiversity measurements.

7.1 Background

Accounting – the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations [39] - can be used to organise measurements of biodiversity or natural capital stocks and ecosystem flows. They can be monetary or non-monetary or combine elements of both (see Figure 8), although, it is important to recognise that not all values of biodiversity can – or should – be expressed in monetary value. Biodiversity measurement organised via an accounting framework enables the provision of standardised, comparable and high-quality information both for screening of biodiversity risks and for understanding biodiversity impact and dependencies. Accounting can be used for both internal management of biodiversity and disclosure of corporate biodiversity performance to stakeholders.[40]

Figure 8. Accounting approaches to organise measurements of biodiversity or natural capital stocks and ecosystem flows.

Several different forms of accounting for nature have evolved:

• Ecosystem accounting: Ecosystem accounting as described by the UN System of Environmental-Economic Accounting – Ecosystem Accounting (SEEA EA) [22] is designed to record physical stocks and flows in environmental assets and changes in those stocks and flows over time. It is a spatially-based, integrated statistical framework for organizing biophysical information about ecosystems, measuring ecosystem services, tracking changes in ecosystem extent and condition, valuing ecosystem services and assets and linking this information to measures of economic and human activity. Five different accounts are used to measure different aspects of ecosystems and their relationship to the economy in physical (1, 2 and 4 in Figure 11) and monetary terms (5 and 6 in Figure 11). The approach can also focus on specific issues or geographic areas that are of particular interest to decision makers e.g. water, biodiversity or protected areas. Although designed initially for policy makers, concepts, methods and data used for national ecosystem accounting can be both relevant and useful for corporate ecosystem accounting. Accounting for species is still being developed within ecosystem accounting.
• Corporate natural capital accounting [41]: Such approaches extend beyond consideration of biodiversity to measure broader changes in the stocks of natural capital (1, 2 and 4 in Figure 11) and the value of associated ecosystem services (5 and 6 in Figure 11). It results in the development of a natural capital balance sheet showing the organisations dependency on natural capital assets and an income statement showing the positive and negative impacts of the organisation on natural capital [42]. As yet, the physical and monetary value of biodiversity is not addressed in detail within such approaches [43].
• Corporate biodiversity accounting: the systematic process of identifying, measuring, recording, summarising and reporting the biophysical state of ecosystem and material species assets [44] (1, 2 and 3 in Figure 11) and the periodic and accumulated [45] net changes to those assets [46]. This approach differs from those above in that it uses recording rules adapted from double-entry bookkeeping (DEBK) [47] from financial accounting and focuses on biodiversity state measures (species abundance in addition to ecosystem extent and condition) [10].

Although designed for different purposes e.g. national accounting to inform policy making, these accounting frameworks share similarities. All approaches measure and connect data on assets and can be used to understand benefit flows to people. They:

• Account for the state of ecosystem assets (extent and condition)
• Require an ecosystem asset register or impact inventory
• Employ measurement techniques that use spatially explicit data
• Measure net change applying the principle of ecological equivalency (like-for-like)
• Compile statements of periodic and accumulated changes

The approaches differ in the scope of assets considered (ecosystems only versus inclusion of abiotic natural capital) and their treatment of monetary valuation metrics (exchange values are favoured in SEEA-EA, a range of value types are useful in natural capital accounting/ for business).

Few organisations are currently using accounting in the context of biodiversity, and understanding of corporate biodiversity accounting is relatively limited, hence, there is a need to build understanding and capacity to undertake accounting over time. In the first instance, starting to apply accounting elements in the context of biodiversity measurement could lead to greater transparency and uptake of such approaches. This ‘accounting’ journey is outlined in Figure 3.

Accounting will become increasingly important in the context of more stringent policy and disclosure requirements anticipated through implementation of the Post 2020 Global Biodiversity Framework and developments such as the Corporate Sustainability Reporting Directive and the Taskforce on Nature-related Financial Disclosure.

To get to a point where biodiversity measurement approaches can be organised within an accounting framework, additional considerations are needed on the measurement methodologies used. These are set out in the recommendations below which focus on physical measurement rather than monetary valuation. Developing biodiversity accounts, can however, provide the building blocks on which monetary values can be based.

7.2 Universal recommendations

The following recommendations are relevant for both corporate biodiversity accounting and the integration of biodiversity into corporate natural capital accounting. These represent suggestions for how measurement approaches could be structured to enable biodiversity accounting rather than requirements.

If companies wish to track and disclose progress to quantified targets such as no net loss or net gain of biodiversity at a site level, a full corporate biodiversity accounting approach is recommended.

It is possible to account for impacts at the corporate level and in the supply chain using the consolidated results of biodiversity accounting or biodiversity inclusive natural capital accounting applied at the site level. However, this is currently rare in the market-place. Accounting at the supply chain level in particular is challenging and currently only partial accounting is practical. Until such time as the market supports more comprehensive accounting, models and estimates can help fill data gaps. Companies with complex supply chains or investors can apply elements of an accounting approach to measurement methods to enhance the value of efforts to track and disclose progress to targets.

A biodiversity asset register should be developed and maintained as a basis for measurement

For full accounting, an asset register should be developed that compiles details of the assets or impacts being measured within the selected organisational and value chain boundaries and organised in line with relevant classification systems (e.g. IUCN Global Ecosystem Typology [48] - IUCN GET). This should include:

• For ecosystems: location (GIS / GPS), size / extent (hectares), a score assessing the type and condition of the ecosystem (e.g. the intactness or degree of functioning of the ecosystem; see section 3, information sources and basis for ecosystem condition scoring, and any other relevant information (e.g. threat level derived from the IUCN Red List of Ecosystems [49]).
• For species: scientific and common names, basis for materiality assessment (see section 5.2), threat level as defined by the IUCN Red List or National listings, current and target habitat [50] or population sizes and information sources. Where species population data are unavailable, habitat extent and condition can be used as a proxy.

For partial accounting, where this granularity may not currently be possible (e.g. in certain supply chains), a broader level ecosystem typology can be applied for larger areas but these are not considered as assets in an accounting context. Within this there should be provision for estimation of the state of spatially explicit assets.

If undertaken in support of a natural capital assessment, the asset register should be consistent with any similar natural capital inventory/ register and make the relationship of the biodiversity data to the natural capital data clear. It is important that different accounting approaches are based upon consistent and credible typologies, for example, established ecosystem service typologies

Measurement techniques should use spatially explicit data where possible and modelled data should be ground-truthed

Spatially explicit data are required for full accounting. Modelled state based on pressure can be used within biodiversity accounting only where they can directly be linked to assets. The use of location specific data is supported by the Natural Capital Protocol [7], BS 8632 [42] and the Taskforce for Nature-related Financial Disclosures.

Accessing data may be challenging for companies with complex supply chains, hence, estimations of the state of assets at the level of the asset register using modelled state based on pressures may be helpful. However, in such approaches, responses are often not asset-specific (low spatial specificity) and state information may be missed when using pressures as input (low accuracy). To enable full accounting, they will need to be ground truthed; that is, verified based on direct site level measurement. Where such estimations are used, their limitations must be acknowledged.

Accounts should address the state of all ecosystems as a foundation and, where possible, address all material (in business and societal terms) species

Measurements should address ecosystems (extent and condition) as a foundation for biodiversity accounting and/or impacts on material taxa [10] / species (abundance) as set out in Section 3 identified through a materiality assessment.

Statements of performance and position must be compiled

A statement of position represents the accumulated [51] or overall, residual state of the asset. It is the balance between accumulated negative footprint (total losses in condition compared to reference state), and accumulated positive footprint (residual or remaining condition of the ecosystem compared to the maximum potential). It should be noted that a business may not be responsible for all accumulated impacts, hence it is important to set a baseline (e.g. year of property acquisition) from which subsequent changes in the state of biodiversity should, where possible [52], be directly attributed to the company’s decisions.

A statement of performance shows the net changes to the state of biodiversity, ecosystem services or impact drivers on biodiversity over a defined period of time e.g. a year and is equivalent to an income statement in financial accounting. The period over which performance is assessed may be annual or may be a longer period depending on the nature of the decisions to be informed and the biodiversity assets under review.

Individual species or ecosystem accounts should be compiled to underpin the statements of performance and position based on the asset register or impact inventory above. For each impact (negative or positive), a change recorded in one account will always have an equal and opposite effect in at least one other account, so that accounts are complete, accurate and credible. This is termed double entry book-keeping (DEBK).

Table 9 shows how loss and gains are defined in the context of biodiversity accounting.

Table 9: Defining positive and negative impacts in the context of biodiversity accounting

Statements of performance and position can be aggregated for ecosystems to give a total biodiversity footprint and overall gain/ loss in surface area equivalents respectively for the project, or company. The total biodiversity footprint can be broken down into a negative and positive footprint. For species, biodiversity footprint and gains/ losses must be considered on a species-by-species basis (i.e. individual statements of position cannot be summed).

Biodiversity accounting, using recording rules for accounting events adapted from DEBK [53] in financial accounting, connects the statement of position and performance and enables the consolidation of both the positive and negative changes in the state of biodiversity stocks (e.g. using conversion tables to translate various metrics into surface area equivalents such as Ha eq.), using different sets of metrics. In DEBK each transaction has an equal and opposite impact recorded within two distinct ‘accounts’. By doing this, it overcomes the challenges of aggregation posed by the lack of a single or universal biodiversity performance metric.

Accounting should be based on the concept of ecological equivalence

No two components of biodiversity are identical. This is recognized by the concept of ecological equivalence or the ‘like-for-like’’ principle. It is important to ensure that the principle of ecological equivalency underpins calculations of losses (negative impacts), gains (positive impacts) and net impact accounting. Corporate biodiversity accounting requires measurement of net changes for ecologically equivalent biodiversity assets (i.e. each species or ecosystem types must be considered in turn).

To allow consolidation, the same condition rating method should be used for ecologically equivalent ecosystem types

There are many different ways of measuring ecosystem condition (see technical criteria set out in section 3). For ecosystem assets, a biodiversity footprint may be calculated using different condition assessment or rating methods to score the integrity of different ecosystem types. The resulting metric will be the same (e.g. surface area equivalents regardless of the assessment/ rating method used). However, selecting different condition/integrity-rating methods will lead to different ecosystem impact results, hence, companies should:

• Use the most generally accepted or recognized method applicable within the jurisdiction (e.g. a country) where the impact occurs are; and
• Use the same method for ecologically equivalent, or like-for-like, ecosystem types.

Consolidation should be undertaken separately for individual species.

If species assets are part of the accounts, consolidation should be undertaken separately for individual species using either population (e.g. number of breeding pairs) or habitat size (surface area) metrics.

Asset linked impacts and impacts that cannot be linked to assets should be accounted for separately and transparently to avoid double counting, cumulative impacts are excluded [10]

Company impacts on biodiversity can be (a) directly linked to a specific ecosystem asset and (b) involve impact drivers to which change in a specific ecosystem asset cannot be attributed. Both should be accounted for, but separately disclosed.

Identifying the share of indirect impacts attributable to a business’ activities can be complex. Complete transparency regarding the modelling and apportionment methods used should be used in accounting for estimates relating to impact drivers to which change in a specific ecosystem asset cannot be attributed e.g. greenhouse gas emissions.

Accounting results and underlying methods should be transparently presented, integrate datasets and reflect appropriate accounting periods

Biodiversity impacts must be accounted for consistently across business reporting periods and be designed to prevent companies from selecting the time periods of their assessments and choosing periods when impacts are lower than usual.

The following information should be disclosed to enable the user of the information to understand its limitations and value [10]:

• Position and performance statements
• The value chain boundary (i.e. direct operations, downstream and/or upstream) (see section 4.2)
• The accounting period and date of preparation of the accounts
• The baseline and any baseline restatements based on enhanced understanding of the situation or new data (rationale and impact)
• The aspects addressed within the accounts (e.g. ecosystem extent and condition, species, ecosystem services)
• An asset register
• Explanations of major changes in the accounts (e.g. significant losses or gains)
• Data gaps or quality and implications for decision making
• Methods used (e.g. condition scoring, rationale for apportionment of responsibility for indirect impacts).

7.3 Technical criteria for accounting for biodiversity

This section builds on the Universal recommendations for accounting above. Recognising that biodiversity accounting is in its infancy, instead of providing good and best practice criteria, we set out criteria for partial implementation of biodiversity accounting and full implementation, in line with the ‘journey towards accounting’ presented above. This recognises the need to balance accuracy and cost-effective measurement to generate biodiversity information for decision making.

Although some measurement approaches may not yet enable full corporate biodiversity accounting, they are nonetheless helpful to provide a practical step forward in understanding a company’s relationship with biodiversity. We recommend that companies with good access to site-based data work towards full biodiversity accounting particularly where they are setting quantitative targets linked to, for example, no net loss, net gain or nature-positive commitments). For those with more challenging access to data, taking steps towards partial accounting is recommended.

Table 10: Good and best practice criteria for the use of measurement approaches within an accounting framework

Ultimately, it is hoped that companies with complex value chains will simply be able to consolidate accounting results from each supplier and site and that investors will be able to measure their impact based on their proportion of consolidated corporate results prepared in accordance with best practice above. However, the market is not yet in a position where this is likely to occur in the short or even medium term, hence other approaches are required for to address impacts throughout the value chain in the short to medium term. Accounting frameworks are nonetheless useful for all measurement approaches to bring greater rigour to the measurement approach.

8. GLOSSARY

9. ACKNOWLEDGMENTS

These recommendations are based on the contributions of the following organisations:

UNEP-WCMC

Capitals Coalition

Arcadis

ICF

Global Balance

Joël Houdet 

CDC Biodiversité

CREM

PRé Sustainability

Ecoacsa

eftec

Input and review was also provided by members of the Align project Technical Hub and Community of Practice

10. ENDNOTES

[1] Note that bottom row of the figure provides commonly used indicators that are suitable for each aspect of biodiversity. This is not an exhaustive list and is not meant to favour one indicator over another. It is also anticipated that the commonly used indicators will grow and change with time as the science further develops.

[2] IPBES (2019) Summary for policymakers of the global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. IPBES secretariat, Bonn, Germany. 56 pages. https://doi.org/10.5281/zenodo.3553579

[3] Comité interministériel biodiversité (2018) Plan biodiversité. Available at: https://www.ecologique-solidaire.gouv.fr/sites/default/files/2018.07.04_PlanBiodiversite.pdf

[4] European Commission (2019) The European Green Deal. Communication from the Commission to the European Parliament, The European Council, The Council, The European Economic and Social Committee and the Committee of the Regions.

[5] Leaders Arena (2021) Biodiversity Reporting Study. Available at: https://54672270-a3a8-4c2f-8ed8-f933153cc32e.usrfiles.com/ugd/546722_c27aa824437d4587af9b6e42783099da.pdf

[6] Ecogain (2022) Ecogain Biodiversity Index. Ranking Biodiversity in Business. Available at: https://www.ecogain.se/biodiversity-index?fbclid=IwAR1U7eQ2QtugAV7jF7p8PGcuCkv-a9nS1qkWxNxqHddxq4eYwgvfUjBAQ2I

[7] Capitals Coalition (2016). Natural Capital Protocol. https://capitalscoalition.org/capitals-approach/natural-capital-protocol/

[8] Capitals Coalition and Cambridge Conservation Initiative (2020) Integrating biodiversity into natural capital assessments. https://capitalscoalition.org/guide_supplement/biodiversity-4/

[9] European Business @ Biodiversity Platform (2019) Assessment of biodiversity measurement approaches for businesses and financial institutions. Update report 2.

[10] Endangered Wildlife Trust (2020). The Biological Diversity Protocol (BD Protocol). National Biodiversity and Business Network - South Africa, 123p. Available at: https://www.nbbnbdp.org/bd-protocol.html

[11] CDSB (2021) CDSB Framework. Application guidance for biodiversity related disclosures. https://www.cdsb.net/biodiversity

[12] SBTN (2020) Science Based Targets for Nature. Initial guidance for business. https://sciencebasedtargetsnetwork.org/wp-content/uploads/2020/09/SBTN-initial-guidance-for-business.pdf

[13] EFRAG (2022) [Draft] European sustainability Reporting Standard 1 General provisions.

[14] Biodiversity Indicators Partnership. (2011) Guidance for national biodiversity indicator development and use. UNEP World Conservation Monitoring Centre, Cambridge, UK. 40pp.

[15] Nicholson et al. 2021. Scientific foundations for an ecosystem goal, milestones and indicators for the post-2020 global biodiversity framework. Nature Ecology & Evolution.

[16] Soto-Navarro et al. 2021. Towards a multidimensional biodiversity index for national application. Nature Sustainability.

[17] Czúcz, et al. 2019. Discussion paper 2.3: Proposed typology of condition variables for ecosystem accounting and criteria for selection of condition variables. UN SEEA EEA Technical Committee.

[18] It should be noted that the use of eDNA, although measuring genetic diversity, provides a snapshot on species composition and can be used as an indicator for species composition at this point in time. Studies on use of eDNA for understanding changes to population genetics is ongoing, however, common use of eDNA as an indicator of genetic diversity is under development and not yet available for corporates (Adams, et al. 2022. eDNA reflects common haplotypic variation. https://doi.org/10.1101/2022.02.26.481856 (pre-print publication)).

[19] Purvis, A. (2020). A single apex target for biodiversity would be bad news for both nature and people. Nature Ecology & Evolution, 4(6), 768-769.

[20] Cambridge Institute for Sustainability Leadership (CISL). Healthy ecosystem metric framework: biodiversity impact.

[21] Winfree, R., W. Fox, J., Williams, N. M., Reilly, J. R., & Cariveau, D. P. (2015). Abundance of common species, not species richness, drives delivery of a real‐world ecosystem service. Ecology letters, 18(7), 626-635.

[22] United Nations et al. (2021). System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA). White cover publication, pre-edited text subject to official editing. https://seea.un.org/ecosystem-accounting

[23] EEA. 1999. Technical report No 25/1999. Environmental indicators: Typology and overview.

[24] Secretariat of the Convention on Biological Diversity, Netherlands Commission for Environmental Assessment (2006). Biodiversity in Impact Assessment, Background Document to CBD Decision VIII/28: Voluntary Guidelines on Biodiversity-Inclusive Impact Assessment, Montreal, Canada.

[25] IPBES (2019): Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. E. S. Brondizio, J. Settele, S. Díaz, and H. T. Ngo (editors). IPBES secretariat, Bonn, Germany. 1148 pages. https://doi.org/10.5281/zenodo.3831673

[26] ISO (2017) ISO Water. https://www.iso.org/files/live/sites/isoorg/files/store/en/PUB100293.pdf

[27] EU B@B Platform (2022) Biodiversity data. Update Report 4.

[28] Exposure and sensitivity are factors determining the vulnerability of a species or ecosystem.

[29] General characteristics of methodology are true if best available data is used and technical criteria described in Table 9 are met.

[30] Note that measuring flows of ecosystem services is outside the scope of the recommendations.

[31] Dasgupta, P. (2021), The Economics of Biodiversity: The Dasgupta Review. London: HM Treasury.

[32] Czúcz, B., Keith, H., Maes, J., Driver, A., Jackson, B., Nicholson, E., ... & Obst, C. (2021). Selection criteria for ecosystem condition indicators. Ecological Indicators, 133, 108376.

[33] Chambers, J. C., Allen, C. R., & Cushman, S. A. (2019). Operationalizing ecological resilience concepts for managing species and ecosystems at risk. Frontiers in Ecology and Evolution, 7, 241.

[34] Lee, S. Y., Primavera, J. H., Dahdouh‐Guebas, F., McKee, K., Bosire, J. O., Cannicci, S., ... & Record, S. (2014). Ecological role and services of tropical mangrove ecosystems: a reassessment. Global ecology and biogeography, 23(7), 726-743.

[35] Defra (2007). An introductory guide to valuing ecosystem services. London. https://www.gov.uk/government/publications/an-introductory-guide-to-valuing-ecosystem-services

[36] Díaz et al. (2015) The IPBES Conceptual Framework - connecting nature and people. Current Opinion in Environmental Sustainability, 14: 1–16.

[37] Synder, R., Williams, D., & Peterson, G. (2003). Culture loss and sense of place in resource valuation: Economics, anthropology and indigenous cultures. In: In: Jentoft, S.; Minde, H.; Nilsen, R., eds. Indigenous peoples: resource management and global rights. Delft, The Netherlands: Eburon Academic Publishers: 107-123. https://www.fs. usda.gov/treesearch/pubs/23838

[38] IPBES, 2015. The IPBES Conceptual Framework - connecting nature and people. Current Opinion in Environmental Sustainability, 14: 1–16.

[39] Needles, Belverd E.; Powers, Marian (2013). Principles of Financial Accounting. Financial Accounting Series (12 ed.). Cengage Learning. ISBN-10: 1133940560.

[40] Feger, Clément and Mermet, Laurent (2021) Advances in accounting for biodiversity and ecosystems: A typology focusing upon the environmental results imperative. Accounting Auditing Control Volume 27, Issue 1, January 2021, pages 13 to 50.

[41] Approaches such as the British Standards institute BS 8632 and Natural Capital Protocol.

[42] BSI (2021) BS 8632 - Natural capital accounting for organizations. Standard not publicly available but webinar viewable at https://www.bsigroup.com/en-GB/our-services/events/webinars/2020/bs-8632/.

[43] Dickie, I., Koshy, A., ten Kate, K., and von Hase, A. (2018). Biodiversity Net Gain in Corporate Natural Capital Accounting: a Resource Paper. Business and Biodiversity Offsets Programme (BBOP). Forest Trends, 2018, Washington, D.C.

[44] Natural capital includes biodiversity stocks, amongst others such as water, soils and non-renewable resources.

[45] Accumulated changes are the residual state of biodiversity assets at a point in time.

[46] Based on Finisdore et al. (in prep) - definition of Stock-based Corporate Natural Capital Accounting.

[47] A process adapted from financial accounting. In financial accounting this means that every financial transaction entered into an account has an equal and opposite effect in at least one other account. These transactions are summarized in the preparation of financial statements, including the Statement of Financial Position (or Balance Sheet) and Statement of Financial Performance (or income Statement). DEBK thus enables businesses to record both periodic and accumulated changes in transactions of a financial nature and to aggregate individual financial events at the company level. Source: Trotman M. Gibbins Financial accounting: An integrated approach 2nd edition 2003 Thomson Nelson Australia.

[48] Keith, D.A., Ferrer-Paris, J.R., Nicholson, E. and Kingsford, R.T. (eds.) (2020). The IUCN Global Ecosystem Typology 2.0: Descriptive profiles for biomes and ecosystem functional groups. Gland, Switzerland: IUCN.

[49] A tool to assess the conservation status of ecosystems. It is based on scientific criteria for performing evidence-based analyses of the risk of ecosystem collapse. These include changes in geographical distribution, and the degradation of the key processes and components of ecosystems.

[50] Where species abundance data is unavailable, habitat extent can be used as a proxy.

[51] The accumulated net change in a biodiversity asset, such as an ecosystem type, is equal to its current area adjusted for its condition. It shows the residual state of biodiversity assets at a point in time. This residual state is measured by multiplying the extent of an ecosystem asset by its current condition / integrity score over the maximum condition / integrity score (as per the relevant metric used). All biodiversity state measurement approaches (e.g. MSA.km2) measure condition or integrity as per a reference or pristine state.

[52] In some cases, changes in the state of biodiversity may not be directly attributable to the company, such as external pollution, beyond the control of the company, negatively affecting biodiversity within the company’s location.

[53] Capitals Coalition (2022) Time to take stock. https://capitalscoalition.org/publication/time-to-take-stock/