Mitigating biodiversity risk in the mining and metals sector
March 21, 2025
More than 55% of the world’s gross domestic product – equivalent to an estimated €55 trillion – is moderately or highly dependent on nature. The United Nations estimates that a global GDP decline of close to €3 trillion could be reached annually by 2030.
Biodiversity loss, in particular, decreases nature’s resilience, threatening ecosystems and the economic activity that depends on them. Because biodiversity helps ensure the resilience of natural capital assets, negative biodiversity impacts, particularly those that are irreversible, reduce the quantity, quality and resilience of ecosystem services.
Consequently, financial markets are increasingly focused on biodiversity risk, with expectations for corporate assessment, disclosure, and action increasing as follows:
In 2020, the World Economic Forum published Nature at Risk: Why the Crisis Engulfing Nature Matters for Business and the Economy. This report brought the potential financial impact from the destabilization of natural systems to the attention of global financial leaders.
In 2022, the Kunming-Montreal Biodiversity Framework was signed by 196 countries. This agreement calls on governments and companies to begin reversing ecosystem degradation and biodiversity loss by 2030.
In 2023, the Taskforce on Nature-Related Financial Disclosures (TNFD) published its initial assessment and reporting guidance.
The EU Corporate Sustainability Reporting Directive will require companies to disclose biodiversity and nature impacts and risks.
Assets under management in biodiversity-thematic funds has risen by 50% in the past year, with greater standardization of science-based investment criteria accelerating this trend.
Biodiversity loss, particularly in ecologically sensitive areas, may also destabilize ecosystem services. This is particularly true for mining sites that may be compromised by environmental impacts such as lowered groundwater levels, water pollution, and habitat degradation.
According to a 2023 Bloomberg New Energy Finance study, “[m]ismanaging nature risk has burned billion-dollar holes in many corporate balance sheets... As the unprecedented decline in nature continues to accelerate, business models and ultimately cash flows, are increasingly vulnerable.”
Among other findings, the study revealed that chemicals producer 3M, plastics manufacturer Formosa and copper and gold miner Freeport-McMoRan each released harmful materials into watercourses proximate to their operations that resulted in over €10 billion in combined legal liabilities, revocation of production permits and obstacles to planned equity transfers.
Fortunately, companies and investments funds are now taking a more proactive approach to protecting biodiversity, including by monitoring, auditing and measuring biodiversity-related targets. We have had the chance to develop a number of these programs for our clients and partners in the mining sector, and suggest the following considerations for companies considering such programs:
Adopting a mitigation hierarchy to ensure effective management of risks while avoiding biodiversity loss, pollution and habitat degradation;
Creating a biodiversity offset management plan to deliver objectives for “no net loss” and net gains in critical habitats;
Tracking and incentivizing biodiversity performance across the supply chain through assessments and on-site audits; and
Implementing replantation and restoration programs to halt and reverse biodiversity loss, deforestation, climate change, and water scarcity.
These measures can be easily integrated into an existing compliance and sustainability program, including trainings, reporting and policies and procedures. We would be happy to provide more information and share business cases that review and model these cases in detail.
CPM
