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June 30, 2023

Biodiversity under the spotlight: The growing wave of shareholder scrutiny and stewardship pressure

David M. Silk, Sabastian V. Niles, and Carmen X. W. Lu

With biodiversity loss expected to cost the global economy $2.7 trillion annually by 2030, governments and investors are increasingly heeding the calls to action of intergovernmental organizations and nonprofit advocacy groups. The Kunming-Montreal Global Biodiversity Framework adopted at last year’s United Nations Global Biodiversity Conference (COP15) established new global commitments to halt and reverse biodiversity loss by 2030. These commitments include phasing out or reforming subsidies that harm biodiversity and requiring companies and financial institutions to monitor, assess, and disclose risks and impacts on biodiversity through their operations, portfolios, and supply and value chains. The European Sustainability Reporting Standards (ESRS) that will apply to companies reporting under the EU’s Corporate Sustainability Reporting Directive (CSRD) includes proposed disclosures on biodiversity and ecosystem impacts and dependencies, risks, and responsive actions. 

New disclosure standards and coalitions

Recognizing that biodiversity and climate change are intrinsically linked, investors have sought to establish new disclosure standards and coalitions focused on addressing biodiversity and nature loss:

  • The Science Based Targets Network (SBTN), a coalition of nongovernmental organizations and business associations including Ceres, the World Economic Forum, and the UN Global Compact, has released guidance for companies on assessing, identifying, measuring, disclosing, and setting targets covering nature and biodiversity impacts that are material to their business.
  • The Finance for Biodiversity Pledge, a coalition of 126 financial institutions with approximately $20 trillion in assets under management has committed to sharing knowledge, engaging with companies, assessing impacts, and setting targets to protect and restore biodiversity through their finance activities and investments.
  • The Taskforce on Nature-related Financial Disclosures (TNFD) recently released a final draft of its disclosure framework that is expected to be finalized in 2023. TNFD will require companies to assess, measure, report, and act on nature-related risks. TNFD is also launching a pilot program with member companies that will cover three systems: energy, land use (including food, agriculture, and forestry) and the built environment––the value chains for which account for about 90 percent of the pressure on biodiversity.
  • The Global Reporting Initiative (GRI) recently released its exposure draft on new biodiversity standards, which seeks increased disclosure on supply chain and location-specific impacts on biodiversity and introduces new disclosures on the direct drivers of biodiversity loss and the impact of companies and their suppliers on ecosystems and local communities and management responses.
  • The International Sustainability Standards Board recently committed to considering the recommendations of TNFD in scoping its forthcoming climate-related disclosures.

Increasing shareholder engagement and activism

Shareholder activism also continues to grow. At the COP15 summit last year, a coalition of investors led by AXA Investment Managers, BNP Paribas Asset Management, Christian Brothers Investment Services, and Columbia Threadneedle Investments, among others, partnered with Ceres, the Institutional Investors Group on Climate Change (IIGC), and the Finance for Biodiversity Foundation to launch Nature Action 100. That new initiative will seek engagement with companies in sectors deemed to be important to reversing nature loss and identify corporate actions that need to be undertaken to protect and restore nature. The initiative parallels Climate Action 100+, another investor-led initiative that has resulted in significant investor engagement and monitoring of companies’ greenhouse gas emissions in recent years.

The launch of Nation Action 100 follows a landmark campaign launched last year by Ceres and a coalition of investors with $10 trillion under management. The campaign sought to push the biggest corporate water users and polluters to treat water scarcity as a financial risk, including pressing for increased board-level oversight on water issues and the development of time-bound, science-based targets and policies to address adverse impacts on water. 

International Corporate Governance Network statement

The International Corporate Governance Network (ICGN), an investor-led corporate governance and stewardship coalition with $70 trillion in assets under management, also issued a statement last year recommending that investors and companies prioritize certain considerations, including the following:

  • Publicly commit to adopting science-based targets on how investment portfolios/businesses can support the stabilization of biodiversity loss by 2030 and contribute to ecosystems restoration by 2050;
  • Begin the process of understanding biodiversity and natural capital dependencies and impacts, making use of the tools now available and being deployed by leading investment institutions and companies;
  • Integrate financial, natural, and human capital considerations into stewardship activities across asset classes, investment decision-making, company monitoring, engagement, and voting;
  • Ensure that contractual terms in mandates between asset owners and asset managers incorporate stewardship obligations associated with sustainable value creation consistent with biological diversity protection and ecosystem restoration, as described in the ICGN Model Mandate and the Global Investors for Sustainable Development Alliance; and
  • Ensure robust governance procedures and board competence in overseeing how management identifies, monitors, measures, and manages biodiversity dependencies, impacts, risks, and opportunities aligned with company purpose and long-term strategy.

As further evidence of growing shareholder scrutiny in this area, Institutional Shareholder Services (ISS) last year launched a biodiversity impact tool for investors to leverage bottom-up assessments of corporate activities and supply chains in order to measure their portfolios’ biodiversity impacts and comply with evolving nature-related disclosure requirements.

Biodiversity loss is closely intertwined with climate change and has wide-reaching impacts on the economy. Indeed, such loss directly and/or indirectly touches companies across every sector, with impacts most acutely felt by companies with significant reliance on natural resources in their primary businesses as well as those with high dependence on nature in their operations and supply chains. Looking ahead, companies will be well-advised to assess their potential risk profile and prepare to engage with investors and stakeholders on nature and biodiversity-related matters. 

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David M. Silk, Sabastian V. Niles, and Carmen X. W. Lu


David M. Silk is of counsel in Wachtell, Lipton, Rosen & Katz’s Corporate Department. His practice focuses on hostile and negotiated merger and acquisition transactions, private equity transactions, corporate governance including sustainability and ESG matters, proxy contests, restructurings, joint ventures, and securities laws.


Sabastian V. Niles is a partner at Wachtell, Lipton, Rosen & Katz where he focuses on rapid response shareholder and stakeholder activism, proxy fights and preparedness, takeover defense, and corporate governance; risk oversight, including as to ESG, cybersecurity, and crisis situations; U.S. and cross-border mergers, acquisitions, buyouts, investments, divestitures, and strategic partnerships; and other corporate and securities law matters and special situations.


Carmen X. W. Lu is counsel in Wachtell, Lipton, Rosen & Katz’s Corporate Department where she advises public and private companies and boards of directors across industries on ESG and corporate governance matters and evolving market trends, expectations, and practices.