UNDERSTAND BIODIVERSITY RISKS AND IMPACTS
Supply chain mapping: Initial assessment/risk analysis of biodiversity impacts (manufacturing and raw materials) across the supply chain- at least from ‘cradle to gate’ but can also extend beyond ‘gate’ to consumer use and ‘end of life’.
Materiality assessment and prioritisation: Assessing the relative importance of different types of impacts (e.g., which processes/materials have the biggest impact and are also of key importance to the business?)
WHAT ARE RISK AND IMPACT ASSESSMENTS?
Risk Assesment vs. Impact Assesment
Understanding your biodiversity risks and impacts is a crucial first step when developing a biodiversity strategy. What it means in practice depends on what stage of progress you are at in developing your biodiversity strategy and – sometimes – the size of your company and position in the supply chain (see the section ‘Who’ for more information).
To make things easier, this website guides companies toward a range of tools to suit companies of different sizes and at different stages in their journey.
What’s the difference between a risk assessment and an impact assessment? The terms are sometimes used interchangeably, and the same tool often provides both.
Risk assessments are generally concerned about what might be happening with regard to a specific environmental issue. They often use generalised data across a sector or region to predict issues, and are relative, rather than measuring absolute figures. A company can use risk assessments to get an idea of what might be happening and to prioritise locations. In fact, risk assessments are often used for prioritisation before doing in-depth impact assessments.
Impact assessments, on the other hand, quantify a specific impact on biodiversity (or broader nature) for a company or entity. These assessments typically use company-specific data to estimate ‘how much’ of an impact there is. Because they produce a quantified value, they can act as a baseline against which to set targets.
MATERIALITY ASSESSMENT OR ‘SUPPLY CHAIN MAPPING’
Materiality assessments (sometimes called ‘supply chain mapping’) are often completed at a sector level, across multiple materials. These assessments give a broad overview of the environmental risks in your value chains to identify priority issues, materials and value chain nodes. They usually capture a range of drivers of environmental impacts, including pollution, land use, water use, water pollution, and greenhouse gas emissions. While these are often conducted at sector level, they can also be completed by individual companies. Companies will likely find it helpful to assess materiality themselves when materials are missing from the sector level assessment, or if their purchasing practices and source locations vary significantly from sector norms.
Members of The Fashion Pact will be able to access a sector-level materiality assessment in 2022 as part of the Biodiversity Pillar work funded by the Global Environment Facility and co-executed by The Fashion Pact and Conservation International.
While a materiality assessment is useful for an initial estimate of relative risks and high-level prioritisation, it is only a first step towards setting specific, quantified targets. This is because they mainly provide insight into the relative scale of impact for different issues or materials across a sector. To develop quantified targets, you need to be able to account for how much of an impact your company is responsible for. This acts as a baseline against which to set targets.
Quantitative analyses for biodiversity impacts often need to be location specific, since impacts – and appropriate responses to them – vary so much by location. Many tools have been developed to quantify biodiversity impacts and it can be difficult to know which one is appropriate for your company. You can use the tool catalogue to explore and compare between the spatial and non-spatial tools available for assessing biodiversity impacts.
Members of The Fashion Pact will be able to access a spatial sector-level impact assessment for a number of materials in early 2022 as part of Component 1 of the GEF-funded The Fashion Pact Initiative. Watch this space.
Global supply chains extend over many countries, and it is a challenge for companies to actively address all issues in their value chain. It is therefore essential for a company to prioritise which materials, impacts, and locations are subject to target setting and implementation.
While some stakeholders advise undertaking prioritisation as a specific step, there is no specific ‘tool’ or single process. In practice, most analyses provide an element of prioritisation since they all allow you to compare between aspects, whether that be company activity, purchased materials, supply chain node, impact type or location. You can then decide which ones to take forward for target setting or implementation.
At a certain point, a company may wish to undertake a more formal prioritisation to narrow down priority aspects (sometimes called a ‘company materiality assessment’).
When undertaking prioritisation, it is advised that companies take a few considerations into account:
- Scale of activity or purchase volume: Scale of activity or purchase volume of a material will be a significant aspect of prioritisation, since it is a proxy both for business importance and for the leverage a company is likely to have in the area. However, purchase volume and other business considerations should not be given precedence over environmental risk when prioritising where to set targets. It is important to note that purchase volume can be a very poor predictor of impacts to biodiversity when selecting priorities between materials.
- Scale of an issue: How much of an issue is there? For example, how much land, water, etc. is used?
- Severity of the issue: How important is the issue, relative to others? For example, does it impact species or habitats, which are particularly threatened or of particularly high value?
WHY UNDERTAKE RISK AND IMPACT ASSESSMENTS?
It is difficult – if not impossible – to develop a comprehensive biodiversity strategy and take effective action on biodiversity without an understanding of what impacts you have, where your impacts are located and how significant they are.
Conducting risk and impact analyses can help:
- Communicate issues with internal stakeholders to get buy-in and build momentum for action. Visualising your risks and impacts in graphics or images can help
- Identify priority activities, materials, supply chain nodes or locations to take action – this will help achieve the greatest positive change from investment and action
- Address the global ecological crisis by setting targets that are proportionate to the scale and significance of your impact – an essential part of Science Based Targets for Nature
- Communicate with external stakeholders, such as campaigning NGOs, to demonstrate that you understand impacts and are prepared to take appropriate action
WHICH RISKS AND IMPACTS SHOULD A COMPANY ASSESS?
For a materiality assessment, aim to cast the net wide and catch as many potential impacts as possible. A good guide to the impacts you should consider capturing at this stage is provided by the SBTN initial guidance update (see Table 1)4. This provides a typology of impact categories that you can assess and set targets on. You conduct this step across multiple nodes of a supply chain.
Impact analyses does not need to cover all of a company’s material basket or supply chain but can focus on those areas identified as highest priority by the materiality assessment. With many agricultural products, the most significant environmental impacts are often at production phase, but there are also significant impacts during processing. As noted above, the analysis will benefit from being spatial, since many biodiversity impacts vary spatially, and biodiversity is context specific.5
Table 1. Table showing pressure and state categories. Materiality assessment would involve assessing each point of the supply chain for these categories. Impact analysis would be for specific sections (for example, land-based ecosystem).
WHO SHOULD ASSESS RISKS AND IMPACTS?
Materiality assessments are recommended for:
- All companies who are at an early stage of their sustainability journey and want a broad sense of company risks
- Companies that are advanced in their strategy for certain environmental issues, but that need to expand the scope to other areas, including biodiversity
- Larger companies – especially those that are downstream/consumer facing. This is because you are likely to have a broader range of issues and materials, and consequently have a greater need to understand relative priorities
HOW CAN A COMPANY ASSESS RISKS AND IMPACTS?
How you conduct a materiality assessment will depend on the methodology you use. In general, materiality assessments require data on the quantity of the material or activity (e.g., quantity of leather production, land area used by warehouses, volume of cotton processed by suppliers, etc). Others require only very high-level information such as company turn-over and the sector you operate in.
Materiality assessments can sometimes be conducted at sector level, and then refined by an individual company to reflect the materials or activities that are relevant to them.
When conducting a materiality assessment, you might need to converted the data to a specific unit that the chosen tool can recognise. » to « When conducting a materiality assessment, you might need to convert the data to a specific unit that the chosen tool can recognise. For example, you may have access to data on square meters of tanned leather, but the tool might need kilograms of rawhide to be able to estimate relative impact.
As with materiality assessments, the way you conduct an impact assessment will depend on the chosen approach.
Most impact assessments will require data from you as a company (e.g., purchase volume, area occupied by business units, amount of electricity used, spatial locations of sourcing etc.). If you do not have data on sourcing location, you can use publicly available data to predict where materials might be produced (see Section ‘Are there tools that can support traceability?’), but this will result in a less accurate impact assessment.
WHICH STEP OF THE SBTN DOES MATERIALITY AND IMPACT ASSESSMENT RELATE TO?
The steps outlined here help you complete elements of the following SBTN steps:
Step 1- Assess
Step 2- Interpret and prioritise
ARE THERE TOOLS THAT CAN SUPPORT MATERIALITY ASSESSMENTS AND IMPACT ASSESSMENTS?
ENCORE allows you to search for a particular sector and industry, including apparel, and provides a qualitative rating (“very low” to “very high”) of the impacts and dependencies on biodiversity and other natural assets, such as water and soil, associated with that industry. Although ENCORE does not provide detailed results or analyses, it does provide a clear early indication of the main issue areas for a company to help to prioritise and focus for detailed assessments of impacts – the main function of the materiality assessment stage. However, note that the results provided by ENCORE for the apparel sector do not include impacts in the production base, and only captures midstream processing. These therefore need to be extracted separately and integrated so that all upstream impacts and dependencies are included.
EXIOBASE is probably the most well-known and widely used input-output table. The table links monetary trade flows in different industry sectors to average values for material usage, emissions to air/water and the resultant environmental impacts (e.g. the CO2 equivalent from different emissions). It is a useful resource when you have limited information on sourcing locations and other company activities, as it can use company turnover information to get reliable high-level estimates of potential impacts – perfect for prioritising as part of a materiality assessment. However, the tables are not particularly user-friendly and will require some support in their use and interpretation.
EORA is another example of an input-output table similar to EXIOBASE. Academic institutions have free non-commercial access, all other users require a license.
LIFE Impact Index is in some ways an “advanced materiality assessment”. It allows users to input some information about their company for the main drivers of biodiversity loss (land usage, water consumption, waste generation, energy consumption and greenhouse gas emissions), and generates a biodiversity impact index which can be used to focus action. The methodology is certainly robust enough for the materiality phase of your impact assessment but may not be detailed enough for the actual quantification, so it is most appropriate for the first stage. Guidance is clear and it should be reasonably easy for most companies to obtain the information required for the tool. However, reading about the required information before making a final decision on its usage is advisable.
EP&L (Environmental Profit and Loss) tool here refers to the version developed by the luxury fashion brand Kering (there are other version of EP&Ls which have been developed by other organisations). The tool has many benefits. It is built on data from the fashion sector and covers most of the raw materials likely to be of relevance to your company, it uses a combination of different primary and secondary data sources to balance rigour with practicality, and produces results which have the same unit (monetary valuation) so that you can compare across different areas of your business. However, it does not currently have a public-facing tool for general use, so application and use of the tool will require expert guidance. Where possible, conducting an analysis with this tool would be beneficial, but it may require considerable investment to collect input data and complete the analysis.
Global Biodiversity Score, developed by CDC Biodiversité, provides companies with a tool which uses differing levels of information to produce a reliable and robust result focused on the key drivers of biodiversity impact. At its highest level, companies can utilise turnover information, which can then be supplemented with other information (e.g. primary data on greenhouse gas emissions or land use) where available to refine the outputs of the assessment. The tool itself requires a trained user (either from CDC Biodiversité or a trained third party) and a license fee (payable only if results are disclosed). Results are presented using the same unit across different pressures and value chain scopes. It includes two versions – one for “static” impacts which have occurred up to now, and one for the “dynamic” impacts which will be ongoing. This additional feature can be helpful for companies looking to set targets and calculate the efficacy of actions in advance.
Biodiversity Impact Metric (BIM), developed by the Cambridge Institute for Sustainability Leadership with support from The Biodiversity Consultancy and others, provides a flexible framework for assessing land-use impacts on biodiversity. Land use is often the most significant driver of biodiversity impacts for a company and measuring this will capture a significant portion of overall impacts; however, it will likely need supplementing with a methodology which covers other impact drivers (such as pollution and greenhouse gas emissions). The method relies on information related to where you source your raw materials, and how much land is occupied for that production (this can be derived if primary data is not available). However, the methodology requires specialist expertise to implement, as it does not currently have a user-friendly tool. For those willing to invest, and to combine with another approach for non-land use impacts, this method will be able to provide a detailed impact value against which robust targets can be set. Note that due to the biodiversity data layers used by BIM, a license to use the Integrated Biodiversity Assessment Tool (IBAT) is required for use by commercial entities.
The Biodiversity Footprint Calculator (PLANSUP), like many of the tools on this list, is underpinned by the GLOBIO model, but in a more direct way than the others. The Biodiversity Footprint Calculator uses the outputs of the GLOBIO model directly, using a web-based interface that allows you to calculate the biodiversity impact of land use, greenhouse gases or transport, requiring minimal information to conduct a basic assessment. The results are not comprehensive however, and a more detailed assessment may be required for some companies, with support provided via the website in case users wish to do so. The tool is not spatially explicit, so to get disaggregated data for a broad supply chain would require using the tool multiple times which might quickly become impractical; the tool is therefore best suited to assessing impacts of one or a few components of a value chain.
Bioscope, like The Biodiversity Footprint Calculator, provides companies with a free web-based tool for calculating their biodiversity impacts, using easily accessible data for a company, for example – how much did you spend on your most important commodities? Where are your local suppliers located geographically? The tool is based on a LCA methodology, providing impact results across a range of pressures on biodiversity, and presents results via a global map showing the largest biodiversity impacts and what is driving them.
Species Threat Abatement and Restoration (STAR) metric. The STAR metric assesses the potential for reducing global species extinction risk in specific places, based on the human activities and which species are present. STAR has been designed explicitly with target setting in mind – it provides a company “score” which can be used to set targets that will align with global goals for biodiversity, making it clear if you have achieved your contribution towards these global goals. The minimum requirement to derive a STAR score is to know where you are having an impact – the global spatial layer for STAR is broken up into 5 km x 5 km grid cells, so by knowing where you are having an impact, you can calculate a company specific score. This can be further refined by using ground-surveys to confirm the biodiversity found on site, or by identifying what type of threats your company activities are presenting to biodiversity (e.g., land use change). STAR has the added benefit of providing potential scores for restoration activities in the same or different regions. This can help greatly with action planning once targets have been set. STAR reports are available for free during a limited pilot period; following the pilot phase companies will be able to purchase individual site reports or obtain access to the underlying STAR layer via a subscription through the IBAT portal.
Life Cycle Analysis (LCA) approaches, of which there are many different versions, refer to the concept of assessing the overall environmental impact of different products or processes. They can either be incredibly detailed or more high-level, and can rely on primary company data or existing databases to address a number of different environmental impact drivers. For biodiversity, they are a useful tool at assessing the impacts of non-land use pressures (e.g., pollution), and may be best served as a supplement to other methodologies which focus on this key driver (see for example the Biodiversity Impact Metric or Biodiversity Footprint Calculator). Their main drawback is that they usually require prior training, so companies will either need to upskill or seek external consultation. There are multiple methodologies and approaches within the world of LCA, most of which are physically modelled in software applications. Two of the most prominent of these applications include SimaPro and GABI. Both require a paid license and training, but represent the most straightforward and practical way to model an assessment. LCAs should only be recommended to companies who are willing to invest in internal training or external consultation and will likely require additional help to interpret the results in terms of target setting and action planning.
Good Practices for the Collection of Biodiversity Baseline Data is not a tool for conducting an impact assessment, but is a supplement to other tools that require any site-level baseline information collection. This guidance document summarises best practice for any types of biodiversity baseline information, providing an essential resource for any companies looking to conduct their own baseline surveys (e.g., for a verified version of the STAR metric).
Product Biodiversity Footprint is based on an LCA methodology, but with a specific focus on the impacts of individual products, which may be of benefit for some fashion companies. It is similar to other LCA methods in most ways, with the added benefit of including a method for assessing the impact of invasive species and the overexploitation of species.
STBN CROSS REFERENCE
Step 1b – Company level materiality assessment
Step 2 – Interpret and prioritise