Executive summary

Over the past decades, humanity has made significant advancements in technology and wellbeing. But these advancements have come at the cost of the world’s ecosystems and climate, and have not rectified but rather deepened social inequalities. As a result, six of the nine planetary boundaries, defined by scientists, have already been crossed, pushing our planet well outside the safe operating space for humanity.

In other words, our activities are undermining the biological life-support systems we depend on for our wellbeing. The consequences are dire. Climate change, the loss or change of biodiversity, and aggravating changes to the water cycle could make large parts of the world uninhabitable, and make business impossible or much more costly. We can still achieve a sustainable planet for all, but globally, our economies and investments can and must be a constructive part of changing our current course.

This report deep-dives into specific aspects of corporate reporting, nature-related risk assessments and sustainable investments that need reconsideration if we are to deliver on sustainability ambitions. It focuses on key hurdles and how to address them to turn the emerging new reporting and data landscape into a powerful engine for change and sustainability. By providing concrete examples, it illustrates how impact analyses can be improved and deployed if the disclosed environmental non-financial information – a necessary input for such analyses – adheres to a few scientifically grounded principles.

The first part of the report makes the case for a solid integration of a wider set of environmental dimensions in non-financial reporting, reflecting planetary boundaries and known drivers of nature degradation and biodiversity change (Chapter 1). Such a move beyond carbon is already visible in a growing number of countries and reflected in several recently developed standards and frameworks, like the Taskforce on Nature-related Financial Disclosures, the European Sustainability Reporting Standards. These reporting recommendations and requirements are a welcome and positive step in the right direction. However, recent scientific insights show that current format risks preventing well-intended reporting efforts from delivering on growing sustainability ambitions.

The report goes on to explain why this is the case by outlining the importance of understanding and acknowledging corporate contributions to cumulative environmental impacts and their direct relevance to nature-related risk assessments (Chapter 2). Such assessments of cumulative aggregate impacts can only be achieved by taking environmental materiality as seriously as financial materiality in corporate disclosures. Certain key features are also necessary to allow accurate assessments of cumulative corporate environmental impacts and risks, namely disclosure of absolute values of environmental pressure (Chapter 3); location-specificity of impacts (Chapter 4); and the combined value of knowing where, what and how much impact occurs (Chapter 5).

Some may argue that corporate reporting should not be the primary data provider for environmental impact assessments. But in a time when widely available environmental monitoring or stringent environmental regulation is lacking in most jurisdictions – this information is essential to assess our joint journey towards or away from planetary limits. Without it, we are all flying blind.

Corporate reporting will always be critical for informing investors of financially material naturerelated risks and opportunities. However, by mainstreaming the inclusion of environmentally material information corporate reports will also provide valuable data to a range of other stakeholders, including public agencies and academic institutions. This can support more reliable analyses of global and local environmental impact and status, informing risk analysis of society, business and investors alike (Chapter 6). The good news is that many companies, particularly in extractive sectors and operating in jurisdictions with strong environmental regulations, are already required to disclose much of the information recommended in this report. Such requirements clearly illustrate the feasibility of an environmental materiality approach existing alongside the conventional reporting.

With improved information about where environmental impacts occur, what the nature of the operations and impact are, and how much pressure these activities put on the environment, a range of scientifically grounded analytical methods and tools become meaningful. Together they can enable the estimation of different types of environmental impact, ranging from impacts on species, to effects on ecosystem goods and services, or on the Earth system as a whole.

The second part of the report therefore moves on to illustrate how the environmental disclosures discussed above can be used as input for scientifically grounded and transparent impact analysis. The Earth System Impact (ESI) score, highlighted in Chapter 7, offers a way for companies and investors to move beyond impact metrics focused primarily on carbon, and delivers a means to understand and communicate the global effect of their local impacts.

The reliability of environmental impact assessments, such as ESI, hinges on capturing not just the most financially materially impacts, but all the cumulating corporate impacts that in aggregate risk pushing society towards planetary limits. If – or rather when – corporate environmental disclosures begin to embrace the key features outlined in part one of the report (location specificity, absolute measures, and other environmentally material information), ESI and various other impact assessment tools will become much more accurate. This can help businesses, investors, and policymakers to significantly improve the reliability of their assessments of a range of naturerelated impacts, risks and opportunities. It will also improve comparability across companies and foster trust among customers, investors, regulatory bodies, and other stakeholders.

While corporate economic activities are a key reason why humanity is crossing planetary boundaries, businesses can also be drivers of positive change and are a fundamental part of transforming societies towards sustainability (Chapter 8). More and more businesses are discovering sustainability as a driver of innovation, competitiveness and value creation. Consequently, there is also a growing interest in, and demand for, more accurate information about companies’ environmental performance. This report shows how businesses and investors can play an increasingly large role in these transformations by reconsidering certain aspects of their practices.

This report is the result of decades of collaborative research combining ecological economics, resilience science, and Earth system science with sustainable finance. While the report acknowledges that social impacts are also critically important for a safe and just world within planetary boundaries, the content predominantly reflects the environmental focus of the underlying research. Insights are rooted in the pioneering efforts of the Beijer Institute of Ecological Economics and the Global Economic Dynamics and the Biosphere Program at the Royal Swedish Academy of Sciences, and of the Stockholm Resilience Centre at Stockholm University.