Key takeaways by stakeholder type

Business consideration

Corporate environmental impact disclosed only based on what is perceived as financially material runs the risk of overlooking an unknown portion of a company’s impacts. These impacts will, however, contribute to cumulating and aggregate environmental harm that increases the likelihood of systemic risks, such as large-scale loss of ecosystem goods and services. Not capturing cumulative impacts increases the likelihood of underestimating systemic risks (see Chapter 2).
Collecting information about the absolute environmental impacts of operations helps businesses align with planetary boundaries. It also improves a company’s ability to set meaningful targets and assess progress against these targets (see Chapter 3).
Adopting place-based approaches to data collection and establishing internal systems of information coordination is advised since this type of information is necessary for the assessment of most environmental impacts other than carbon emissions. This is also already becoming a requirement in emerging reporting standards. (see Chapter 4).
Corporate environmental disclosures should reflect scientifically established priorities, such as those represented by the Planetary Boundaries. The Essential Environmental Impact Variables (EEIV) provide a science-based, sector-specific framework to guide and prioritize data collection of information on corporate activities that drive the most essential environmental impacts for each sector (see Chapter 6).
Collecting data according to Essential Environmental Impact Variables (EEIV) will improve the ability of companies to set meaningful targets and assess progress against these targets, but also to make more accurate assessments of nature-related risks and opportunities (see Chapter 2 and 6).
The Earth System Impact score (ESI) provides companies and stakeholders with information about how a company’s local environmental impacts translate into global effects. The ESI score can help businesses identify key areas for improving environmental performance and facilitate the development of strategic plans to enhance sustainability. It can also ensure that the business accounts for the cumulative and cross-scale effects of its operations (see Chapter 7).

Investor consideration

Institutional investors should be aware that disclosures of corporate impact based on materiality assessments (i.e. what is material to a company) run the risk of overlooking an unknown portion of corporate impacts. These impacts will, however, contribute to cumulating and aggregate environmental harm that increases the likelihood of systemic risks materializing, such as largescale loss of ecosystem goods and services. Not capturing them, increases the likelihood of underestimating systemic risks (see Chapter 2).
Institutional investors should therefore, whenever possible, encourage companies to
» collect and disclose information about their absolute environmental performance (Chapter 3), and complement relative performance measures with such information.
» collect and disclose the location of all operations/assets (see Chapter 4).
Institutional investors should support the consideration of environmental materiality as a complement to conventional materiality assessments, with the knowledge that ‘environmentally material’ information will significantly improve the capacity to estimate the full scope of environmental risks and opportunities (see Chapter 2 and 5).
Institutional investors should be aware that corporate disclosures of absolute impacts across a wider scope of environmental dimensions (e.g., guided by EEIVs) will offer unprecedented opportunities to assess a range of nature-related impacts, risks and opportunities. It will also improve comparability, transparency and accountability and is therefore important for fostering trust among stakeholders, including customers, investors and regulatory bodies (see Chapter 5).
One way to consider environmental materiality is by promoting corporate disclosures that mirror scientifically established priorities, such as those represented by the Planetary Boundaries. The Essential Environmental Impact Variables (EEIVs) provide a science-based, sector-specific framework to do so by helping companies prioritize data collection of information on corporate activities that drive the most essential environmental impacts for each sector (see Chapter 6).
The Earth System Impact score (ESI) is one example of a science-based tool to assess the environmental impact and sustainability of assets and investments, based on carbon, water use and land use (see Chapter 7).
The Earth System Impact score (ESI) provides investors with information about how a company’s local environmental impacts translate into global effects. The ESI score could aid investors in their company engagement, by helping businesses and their investors transparently identify key areas for improving environmental performance and facilitating the development of strategic plans to enhance sustainability (see Chapter 7).
By promoting impact measures, such as the Earth System Impact score (ESI), and supporting businesses that integrate such measures into their practices, investors can ensure that investee companies account for the cumulative and cross-scale effects of their operations (see Chapter 7).

Policy and framework developer consideration

Location-specific information about absolute environmental impacts from corporate activities is a necessary ingredient to any meaningful assessment of the current or potential environmental performance of companies and the sustainability of investments. Developers of policy, frameworks or regulation therefore should:
» Ensure that policy, guidelines and frameworks developed for corporate reporting encourage the collection and disclosure of absolute environmental performance information (see Chapter 2).
» Ensure that policy, guidelines and frameworks developed for corporate reporting encourage or demand disclosure of the location of all operations/assets (see Chapter 3).
» Recognize that disclosures of corporate impact that are based on materiality assessments – focusing on what a company itself defines as material – run the risk of overlooking an unknown portion of corporate impacts. These impacts will, however, contribute to cumulating and aggregate environmental harm that increases the likelihood of systemic risks materializing, such as large-scale loss of ecosystem goods and services. Failing to capture these impacts increases the likelihood of underestimating systemic risks (see Chapter 4).
Encouraging companies to disclose absolute impacts across a wider scope of environmental dimensions (e.g., guided by EEIVs) will offer unprecedented opportunities to assess a range of nature-related impacts, risks and opportunities. It will also improve comparability, transparency and accountability and is therefore important for fostering trust among stakeholders, including customers, investors and regulatory bodies (see Chapter 6).
Policies aimed at improving corporate environmental performance to align with globally set climate and nature-related targets must go beyond carbon and ensure that a wider set of environmental impacts are disclosed. These disclosures should mirror scientifically established priorities, such as those represented by the Planetary Boundaries (see Chapter 5).
Policies aimed at improving corporate environmental performance to align with globally set climate and nature-related targets must move away from disclosures based on self-determined environmental priorities. Instead, they should promote science-based evaluation of corporate activities that drive the most essential environmental impacts for each sector. The Essential Environmental Impact Variables (EEIVs) provide such a framework (see Chapter 5).
By promoting impact measures, such as the Earth System Impact Score (ESI), policymakers and regulators can ensure that businesses account for the cumulative and cross-scale effects of their operations (see Chapter 7).