U.K.-based nonprofit ClientEarth has released a report linking global biodiversity decline and potential financial and legal risk for companies in the seafood and agriculture sectors, as well as the institutions that finance them.
Its report, “Legal risks related to biodiversity loss in the seafood and agriculture sectors,” focuses on European Union regulation and provides an overview of applicable laws that may give rise to legal liabilities associated with biodiversity loss and offers concrete steps to mitigate the risks for companies. The report covers biodiversity-related financial risks and impacts, and legal and litigation risks related to biodiversity impacts and dependencies. The litigation risks section includes an overview of relevant E.U. laws, regulations, and reporting requirements.
ClientEarth sees the development of corporate climate change litigation that has advanced in courtrooms globally as a roadmap for where legal action against companies to address biodiversity loss is headed. It said companies in the seafood and agricultural sectors are significantly exposed to legal risk because of their reliance on ecosystem services such as raw materials, clean water, pollination, and a regulated climate to produce goods and services. These dependencies on public resources expose companies to financial risks that may trigger legal action or elevated legal due diligence, according to the group, which focuses on using the law to impact the management of natural resources.
“Unsustainable fishing, overfishing, and fish farming are the leading drivers of marine biodiversity decline and ecosystem services loss. Overfishing leads to impacts on the biodiversity of marine ecosystems by altering the composition of species,” the report said. “Several deadlines to reduce or eliminate illegal, unreported, unregulated (IUU) fishing, one of the main threats to marine ecosystems, have not been met. Fish stocks are further degraded by high levels of by-catch – the incidental capture of non-target species during fishing – and use of unsustainable gear, such as bottom trawling and ghost fishing, which damages marine biodiversity.”
To mitigate these risks, the report suggested seafood companies embed biodiversity considerations into business decision-making processes and engage in a process of due diligence to identify biodiversity impacts, dependencies, and risks. The report also encouraged seafood companies to disclose its processes and other relevant information to its stakeholders to further mitigate potential legal risk.
Similarly, the report recommended financial institutions identify and address environmental risks in their seafood and agriculture-related investment portfolios, along with policies to mitigate their investment exposure to biodiversity-related risks.
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