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DAIDARAPOSIE

JAPANTable of Contents
Introduction .......................................................................................................................1
1. Background ........................................................................................................................ 1
2. Objectives .......................................................................................................................... 2
3. Subject of the guidelines ................................................................................................... 2
4. Structure of the guidelines ................................................................................................ 2
5. Revision of the guidelines .................................................................................................. 3

Part 1: Business Activities and Biodiversity .................................................................. 4
Chapter 1: What is biodiversity and Its current status .............................................................. 4
1. What is biodiversity ...........................................................................................................4
2. International and national status of biodiversity .............................................................. 7
3. Role of business ............................................................................................................... 11
Chapter 2: New National and International Goals and Strategies ........................................... 12
1. International goals and strategies (Kunming-Montreal Biodiversity Framework)........... 12
2. National targets and strategies (National Biodiversity Strategy 2023-2030) .................. 13
3. Other frameworks ........................................................................................................... 14
4. Biodiversity and related sector ........................................................................................ 16
5. Relationship between carbon neutral, circular economy, and biodiversity .................... 17
Chapter 3: Relationship between Business Activities and Biodiversity ................................... 18
1. Basic concept of the relationship between business activities and biodiversity ............. 18
2. Basic relationships and references .................................................................................. 20

Part 2: Processes for Consideration of Biodiversity ................................................... 23
Chapter 1: Principles and Responsibilities Related to Biodiversity and Business Activities..... 23
Chapter 2: Basic Processes for Consideration of Biodiversity ................................................. 24
1. Basic process for consideration of biodiversity ................................................................. 24
2. Details of each step ........................................................................................................... 26
Chapter 3 Basic Approach by Industry and Business ............................................................... 34
1. Basic approach by industry and business .......................................................................... 34
2. Basic concept for financial institutions .............................................................................. 40
3. Collaboration with local governments .............................................................................. 40

Part 3 Impact Assessment, Strategy and Goal Setting and Information Disclosure ..... 42
Chapter 1 Impact Assessment ................................................................................................. 42
1. Basic concept of impact assessment and analysis based on data and indicators ............ 42
2. Identification of risks and opportunities for business activities ...................................... 46
Chapter 2: Setting Strategies and Goals .................................................................................. 47
1. Setting strategies and targets for biodiversity................................................................. 47
2. How to set biodiversity targets........................................................................................ 47
3. Key points for setting goals ............................................................................................. 48
4. A step-by-step approach to goal setting .......................................................................... 48
5. Relationship between strategy and goal setting ............................................................. 50
6. Goal setting based on SBTs for Nature ............................................................................ 52
Chapter 3 Information Disclosure ........................................................................................... 54
1. Basic concept of information disclosure .......................................................................... 54
2. Channel of information disclosure .................................................................................. 54
3. Framework of information disclosure ............................................................................. 55
4. A step-by-step approach to information disclosure ........................................................ 57
5. Information disclosure in line with the TNFD .................................................................. 58
6. Others .............................................................................................................................. 63
Chapter 4 Case Studies ............................................................................................................ 65

Part 4 Collection of Q&A ............................................................................................ 74
1. Q&A for Practitioners ...................................................................................................... 74
2. Q&A for Practitioners (SMEs) .......................................................................................... 77
3. Q&A for Financial Institutions ......................................................................................... 78ii

Introduction
1. BackgroundThe environment the Earth and the biodiversity have been created over a long history of diverse life,
including human being. Our lives are supported by the ecosystems based on biodiversity, such as food andwater supplies and climate stability. However, due to the impact of human activities over the past 100 years,
the rate of species extinction has skyrocketed extraordinary in the history of the Earth, and the biodiversity of
the Earth is in a critical condition.
Businesses depend and have a significant impact on ecosystems through their business activities.
Furthermore, by connecting with consumers through their products and services, they play an important rolein the conservation of biodiversity.
Therefore, for example, the Basic Environment Law states that business operators "have the responsibility
to take necessary measures for the proper conservation of the natural environment" 1 , and the Basic Act on
Biodiversity states, "In conducting business activities, businesses shall endeavor to reduce the impact of theirbusiness activities on biodiversity and to make sustainable use of biodiversity by taking into account the impactof their business activities on biodiversity, and by cooperating with other businesses and other relevant parties.
2

In the international community, for example, the Conference of the Parties to the Convention on Biological
Diversity3 (CBD COP) has continued to adopt resolutions related to private sector participation from its 8th to15th sessions. As a result, COP15, held in December 2022, decided on the Kunming-Montreal Biodiversity
Framework as a global biodiversity framework by 2030 for the post-Aichi targets. The framework has higher
quantitative targets than the Aichi Targets, and targets related to social and economic activities have beenenhanced and strengthened. In addition, the "G7 Nature Compact 2030" agreed on a global goal called "Nature
Positive". This goal is to "halt and reverse biodiversity loss by 2030 in order to put nature on a recovery track.
Thus, all companies around the world will be required to work toward achieving these targets by 2030.
In addition to these international initiatives, public- and private-sector-led initiatives such as SBTs for Nature(Science Based Targets for Nature) and TNFD (Task Force on Nature-related Financial Disclosures) are also being
developed.
In addition, based on the "Nature Consensus” agreed upon by the G7 in 2021, Japan has set a "30by30 4 "target. Expectations for biodiversity conservation in the private sector are increasing, and the creation offrameworks and incentives to promote efforts to achieve this goal are under consideration.

2. Objectives
These Guidelines have been prepared to assist companies in their efforts to conserve biodiversity andsustainably use of natural capital and sustainable management (hereinafter referred to as "biodiversity
conservation").

1 Source: Basic Environment Law (Law No. 91 of 1993, last revised in 2021, Law No. 36)

Article 8, original text: "Business operators, in conducting their business activities, shall, in accordance with thebasic principles, be responsible for taking necessary measures to prevent pollution, including the disposal ofsmoke, sewage, and waste generated thereby, and to properly preserve the natural environment.
2 Source: Basic Act on Biodiversity (Act No. 58 of 2008)
Article 6 original text "Business operators shall, in conducting their business activities in accordance with the
Basic Principles, endeavor to reduce the impact of their business activities on biodiversity and to use biodiversity
in a sustainable manner by understanding the impact of their business activities on biodiversity, and by
conducting business activities in consideration of biodiversity in cooperation with other business operators andother relevant persons. In addition, they shall endeavor to reduce the impact of their business activities on
biodiversity and to promote sustainable use of biodiversity by conducting their business activities in considerationof biodiversity in cooperation with other businesses and other relevant parties.
3 The Conference of the Parties of the Convention on Biological Diversity
4 30by30 (Thirty by Thirty) is a goal that seeks to effectively conserve at least 30% of land and sea as healthy
ecosystems by 2030 with the goal of "stopping and reversing biodiversity loss by 2030 to put nature on a recovery
track.

1

Many businesses are now analyzing and evaluating the dependence, impact, risks and opportunities of
biodiversity by industry, and are beginning to address these issues as part of their business. However, among
the various domestic and international trends mentioned above, many businesses are unsure of how muchresources to allocate to such analyses and what methodologies are most effective.
Therefore, these Guidelines provide basic guidance for businesses to address biodiversity conservation
flexibly and effectively as a management issue, taking current domestic and international trends into account.
In terms of law, these Guidelines are measures taken by the government based on Article 19 of the Basic Act
on Biodiversity (promotion of business activities that take consideration of biodiversity).

3. Subject of the guidelines
These guidelines are primarily for businesses 5 . Businesses in this context are not limited to so-calledbusiness companies, but also include financial institutions.
Although the relationship between business activities and biodiversity/natural capital varies depending on
the business, it is expected that the relationship between business activities and biodiversity is similar in thesame industry. Therefore, it is expected that business associations, which unify companies, will play animportant role in creating action plans considering the characteristics of the industry, and capacity building of
their members based on these guidelines.
These guidelines cover not only official frameworks and targets such as international goals and national
strategies, but also domestic and international standards such as ISO 14001 (Environmental Management
System) and voluntary frameworks such as TNFD and SBTs for Nature. The common parts are described in an
integrated manner as much as possible.
In addition, it is not limited to the relationship with the company's own business activities, but also includes
the upstream and downstream of supply chains, such as raw material procurement, consumption, and use.
These Guidelines are not based on legal regulations, but rather provide basic guidelines for businesses toeffectively integrate biodiversity and natural capital into their business management, while considering their
responsibilities under the Basic Act on Biodiversity and other relevant laws. On the other hand, in recent years,
in addition to voluntary frameworks such as TNFD and SBTs for Nature, various frameworks and regulations
such as the European Due Diligence Directive and Taxonomy Regulation are being developed. Although theseguidelines refer to such related initiatives and regulations as much as possible, it is necessary for each businessto follow up them individually.
Please refer to website of the Ministry of the Environment for more information on biodiversity and business
management, including these guidelines, as it will be updated accordingly.

4. Structure of the guidelines
These guidelines consist of the following four parts.

Part 1: Business Activities and Biodiversity
Since some companies may not necessarily recognize the relationship between business andbiodiversity/natural capital, Part 1 shows their relationship with business activities (dependence, impact, risks,
opportunities, etc.). It aims to help executives to aware that biodiversity and natural capital have a significant
impact on business management.

Part 2: Processes for Consideration of Biodiversity.
Part 2 explains the basic process of integrating biodiversity and natural capital into business activities(management) based on domestic and international trends. It is intended to help not only ESG/CSR
professionals but also those in charge of business planning to know the process of integrating biodiversity into
their business strategies.

Part 3: Impact Assessment, Strategy and Goal Setting and Information Disclosure.
Part 3 describes the concept and methods of "impact assessment" of the relationship between businessactivities and biodiversity, and "strategy and target setting" based on the results of impact assessment, which

5

In these guidelines, "business operator" is used as a concept that includes large corporations, small and medium-sizedenterprises, various types of corporate businesses such as partnerships, and sole proprietorships.

2

are considered to be important for the basic process explained in Part 2, as well as "information disclosure,"
which has recently been attracting attention from the perspective of ESG investment and financing. It aims toprovide quantification methods to representatives in these areas.

Part 4: Q&A
This part contains frequently asked questions and answers regarding consideration of biodiversity. It
consists of three chapters: "Chapter 1: Q&A for Practitioners," "Chapter 2: Q&A for Practitioners (SMEs)," and"Chapter 3: Q&A for Financial Institutions.
The following documents are also available.
(1) Executive Summary
To take effective actions as a business, awareness and decision-making at the executive level are necessary.
These guidelines have an Executive Summary, which can be downloaded from website of the Ministry of theEnvironment.

5. Revision of these Guidelines
These guidelines are based on the "Guidelines for Private Sector Engagement in Biodiversity (for Businesses)(2nd Edition)" (2017), which was revised and published by the Nature Conservation Bureau of the Ministry of
the Environment of Japan considering the domestic and international trends of biodiversity.
The "Committee on the Revision of the Guidelines for Private Sector Engagement in Biodiversity" examined
the revision of the Guidelines and responding to the latest domestic and international trends. It also includes
details on "target setting," which has become a challenge for companies to consider taking actions forbiodiversity, and "information disclosure" linked to financial information, which has become a prominent trend
in recent years.

◼

List of Committee Members (in alphabetical order, as of August 2022)

Megumi Sakuramoto

Executive ESG Analyst, Asset Management One Co., Ltd.

Minoru Matsubara

Executive Officer, Resona Asset Management Co., Ltd.

Naoki Adachi

CEO, Response Ability, Inc.

Naoki Kachi

Professor, Tokyo Metropolitan University

Norihiro Itsubo

Professor, Tokyo City University

Takao Aiba

Chairperson of the Planning Subcommittee, Keidanren Committee on Nature
Conservation

Yasushi Hibi

President, Conservation International Japan

Yumie Kabashima

Manager, AEON Co.

◼

Date and agenda of the Committee on the Revision of Guidelines for Private Sector Engagement in
Biodiversity (3rd Edition).
1st review
2nd review
3rd review
4th review
5th review
6th review
Public Comment
Publication

Date
August 24, 2021
October 15, 2021
December 13, 2021
February 4, 2022
August 5, 2022
January 27, 2023
February 10-28, 2023
March 31, 2023

3

AgendaDirection of the revision
Discussion of the outline
Discussion of Part 3-4
Discussion of the draft
Discussion of the draft
Discussion of the final draft
Public comment
Publication of guidelines in Japanese (3rd edition)

Part 1: Business Activities and Biodiversity
In "Chapter 1: What is Biodiversity and Its Current Status,” the guidelines explain basic concepts related tobiodiversity and its status in Japan and other countries.
Chapter 2, "New National and International Goals and Strategies," introduces national and international
goals and frameworks for the future, including those currently under consideration, such as the TNFD
Framework.
Furthermore, "Chapter 3: Relationship between Business Activities and Biodiversity," shows the general
concept of why biodiversity-sensitive business is necessary and how your company's business activities relate
to biodiversity.

Chapter 1: What is biodiversity and its current status?
1. What is biodiversity?
1. Biodiversity
It refers to the varieties among all living things on earth, from animals such as humans to microorganisms
such as plants and fungi.
Convention on Biological Diversity defines diversity at three levels.
Ecosystem diversity: Various types of ecosystems such as tidal flats, coral reefs, forests, wetlands, and rivers
are formed in each region.
Species diversity: A variety of animals, plants, fungi, and bacteria live and grow in the area.
Genetic diversity: variations at the genetic level within species or population.
Biodiversity fosters ecosystems, increases natural resilience, and decreases risks to the ecosystem services(see below) that we depend on.
The richer the biodiversity, the more resilient the planet. It is like a diversified business portfolio thatmitigates risks and uncertainty and increases resilience in business operations.
Conserving biodiversity is directly linked to reducing business risks in areas such as raw material procurement.
In addition, it is an opportunity to create new business since it has not been adequately addressed.

42. Ecosystem services
It refers to the flow of benefits from ecosystems to humans (e.g., timber, fiber, pollination, water regulation,
climate regulation, recreation, mental health benefits, etc.).
◼

Relationship between biodiversity and natural capital stocks flows, and values6◼

Classification of ecosystem services

6 Source: Some additions to Integrating Biodiversity Into Natural Capital Assessments (2020, Capital Coalition)53. Natural capital
It refers to the stock of natural resources, including forests, soil, water, air, biological resources, and mineral
resources.
◼ The difference between biodiversity and natural capital
Natural capital, as described above, represents the stock of all resources in nature, both living and nonliving.
Biodiversity, on the other hand, represents the varieties among the various levels of nature, such as ecosystems,
and species and genes that make up natural capital.
Biodiversity provides resilience against natural disasters such as floods and droughts. It also supports
fundamental processes of carbon and water cycles and soil formation and keeps natural capital healthy andstable.
◼ Natural capital as the foundation of the economy and society7
Natural capital is the foundation of the economy and society. It has been pointed out that natural capital has
a strong relationship with climate change. Therefore, conservation of biodiversity and natural capital areessential not only for sustainable business activities but also for combatting climate change.

7 Figure provided by MS&AD InterRisk Research Institute, Inc. Source: Stockholm Resilience Center, Stockholm

University, produced by Azote.

6

2. International and national status of biodiversity(1) International Situation
The world's forest area has decreased by 178 million hectares in the 30 years from 1990 to 2020. 8 In addition,
as of March 2023, more than 42,100 species are threatened with extinction. That is approximately 27% of the150,388 animal, plant, and other species assessed by the International Union for Conservation of Nature(IUCN).9
Furthermore, according to the IPBES Global Assessment Report, nature and its important contributions topeople (biodiversity and ecosystem functions and services) are deteriorating globally. Natural degradation
includes the deterioration of "ecosystem extent and condition" and increased “risk of species extinction" (seefigure below). The direct and indirect factors causing these natural changes have accelerated over the past 50
years, and then affect biodiversity on a global scale.
What are direct and indirect factors?
✓

Direct factors: factors that directly cause changes in nature (land/sea use change, direct harvesting, climate change, pollution,
invasive alien species)✓

Indirect factors: root causes of the above direct factors, such as population (e.g., demographics), sociocultural (e.g.,
consumption patterns), economic (e.g., trade), technology, institutions, governance, conflict and epidemics◼

Examples of global natural degradation, the direct factors and root causes

8 Source: World Forest Resource Assessment (FRA) 2020 Main Report, 2020, Food and Agriculture Organizationof the United Nations (FAO).
9 Source: THE IUCN RED LIST OF THREATENED SPECIES WEBSITE

7

The Global Biodiversity Outlook 5 (GBO5), released by the Secretariat of the Convention on Biological Diversity
in September 2020, concluded that while considerable progress has been made on most of the Aichi Targets,none of the 20 individual targets have been fully achieved including business-related targets. This is because
the national targets set by each country generally fall far short of the Aichi Targets in terms of scope andambition. Less than a quarter (23%) of the national targets are aligned with the Aichi Targets, and only about atenth (10%) are aligned with the Aichi Targets and likely to be achieved. The information in the country reports
indicates gaps in both the level of ambition of countries' commitments to the Aichi Targets and the actions toreach these commitments.
◼

Assessment of progress towards the Aichi Biodiversity Targets (target 4)10

◼ Dasgupta Review
In February 2021, Professor Persa Dasgupta of Cambridge University published a final report entitled Neutral
and Global Review of the Economics of Biodiversity (Dasgupta Review) at the request of the HM(UK) Treasury.
Dasgupta Review11
This review points out that while our economy, livelihoods, and well-being all depend
on nature, human demand greatly exceeds nature's ability to supply the goods andservices that we depend on (human demand is approximately 1.6 times higher than the
supply capacity of nature [in 2020]).
He then notes that in addition to behavior change, a comprehensive economic
indicator including natural capital, as opposed to GDP is required to establish asustainable relationship with nature.

10 Source: GLOBAL BIODIVERSITY OVERVIEW, 5th EDITION (2020, SECRETARIAT OF THE CONVENTION ON BIOLOGICAL

DIVERSITY)
11 Source: THE ECONOMICS OF BIODIVERSITY: THE DASGUPTA REVIEW (2021, DASGUPTA, P, LONDON: HM TREASURY)

8

◼

Biodiversity loss as global risks
Biodiversity loss is regarded as one of the most serious crises and a threat to the foundation of our lives.
According to "Global Risks Report 2023" by the World Economic Forum, in chapter 2 (Global Risks 2033),
climate change, biodiversity, and other environmental issues ranked high, with biodiversity loss andecosystem collapse in fourth place and the natural resource crises in sixth.
◼

Global risks ranked by severity over the long term (10 years)12◼ Definition of Nature Positive
Nature Positive is the concept of "halting and reversing biodiversity loss by 2030 " referred to in "G7 2030
Nature Compact" published in May 2021.
G7 2030 Nature Compact
A. “We, the G7 Leaders, commit to the global mission to halt and reverse biodiversity loss by 2030”
C. “Global system-wide change is required: our world must not only become net zero, but also nature
positive, for the benefit of both people and the planet, with a focus on promoting sustainable andinclusive development.”
PILLAR TWO / Investing in nature and driving a nature positive economy“We will work to dramatically increase investment in nature from all sources, and to ensure nature isaccounted for, and mainstreamed, in economic and financial decision-making”

The National Biodiversity Strategy 2023-2030, approved by the Cabinet in March 2023, defines "Nature
Positive" as "halting and reversing biodiversity loss to put nature on a recovery track”. The concept has
become more important as it was referred to in the Kunming-Montreal Biodiversity Framework.
◼

About "Nature Positive Economy"
Although there is no clear definition of nature positive economy, its importance has already been
agreed upon in the "G7 2030 Nature Compact" mentioned earlier. It is to regard the economy as "a way ofmanagement related to the act of producing, distributing, and consuming things necessary for humans,"
and the nature positive economy is regarded as the economy in which these acts (management)
contribute to or do not hinder "halting and reversing the loss of biodiversity, for instance.
These guidelines provide basic concepts on the management of the company for nature positive, which
is an important part of the nature positive economy.
◼ Economic Impact
According to “The Future of Nature and Business” by the World Economic Forum, while more than half ofthe global GDP (about $44 trillion) is potentially threatened by natural losses, investment in and transition toa nature positive economy could provide annual business opportunities worth $10 trillion that could create
395 million jobs by 2030.

12 Source: THE GLOBAL RISKS REPORT 2023 18TH EDITION (2023, WORLD ECONOMIC FORUM)

9

World Economic Forum: The Future of Nature and Business13
According to a World Economic Forum report, more than half of the global GDP ($44 trillion) is
potentially threatened by the loss of nature. The threats emerging from the three systems(food, land,and ocean use; infrastructure and the built environment; and energy and extractive) endanger around
80% of the threatened or near-threatened species. Fundamental reforms are required to stop them.

◼ Trends on Standardization (ISO TC331)
In addition to the renewal of the ISO 14001 environmental management system, the establishment of a newinternational technical committee dedicated to biodiversity was proposed by the French Standards Associationin February 2020. Then TC (Technical Committee)331 (secretariat: France) was established in August 2020. The
1st and 2nd plenary meetings of ISO/TC331 were held on 28 June-2 July 2021 and 4-8 April 2022 accordingly.
Japan attended as a Participating Member and established a National Committee on TC331 to consider national
actions.

(2) National status
In the "Japan Biodiversity Outlook 3 (JBO3)" published by the Ministry of the Environment in March 2021,
the "four crises* " of biodiversity in Japan continue to have a significant impact on biodiversity loss andecosystem services are degrading. The report states that previous efforts mitigated biodiversity loss, but it is
not yet in recovery.
*) Four crises of biodiversity in JapanThe crises of biodiversity in Japan are categorized into the following four types of crises in the National Biodiversity Strategy.
First crisis: Crisis due to development and other human activities
Second crisis: Crisis due to reduced effort for nature
Third crisis: Crisis caused by species introduced by humans (exotic species, etc.)
Fourth crisis: Crisis due to global environmental change

In addition, results of the review of the National Biodiversity Strategy 2012-2020 published by the Ministryof the Environment showed that 5 of 13 national targets for achieving the Aichi Targets were achieved, but theremaining targets were not achieved and further efforts were needed.

13 Source: THE FUTURE OF NATURE AND BUSINESS (2020, WORLD ECONOMIC FORUM)

10◼

Results of the review of the National Biodiversity Strategy 2012-202014

3. Role of Business◼ Portfolio of actions to reduce loss and restore biodiversity.
As shown in the figure below, biodiversity loss is expected to continue under a "business as usual" scenario.
On the other hand, it is estimated that the loss can be halted and reversed if various action areas (conservation,
restoration, climate change mitigation, reduction of consumption, sustainable production, and other measures(e.g., addressing pollution and exotic species)) are combined. Businesses can contribute to nature's positive
economy by promoting the above-mentioned efforts. The concrete actions would be determined after
analyzing and evaluating how their business activities affect biodiversity and what kind of natural capital they
depend on. Details are described in Part 2 and Part 3.
◼ A portfolio of actions to reduce loss and restore biodiversity. 15

14 SOURCE: RESULTS OF INSPECTION OF THE IMPLEMENTATION STATUS OF THE NATIONAL BIODIVERSITY STRATEGY 2012-2020 (2021, MINISTRY OF THE ENVIRONMENT)
15 Source: GLOBAL BIODIVERSITY OVERVIEW, 5TH EDITION (2020, SECRETARIAT OF THE CONVENTION ON BIOLOGICAL
DIVERSITY)

11

Chapter 2: New National and International Goals and Strategies
1. International targets and strategies (Kunming-Montreal Biodiversity Framework)
The Kunming-Montreal Biodiversity Framework, adopted at CBD-COP15 (15th Conference of the Parties to
the Convention on Biological Diversity) held in Montreal, Canada in December 2022, has a 2050 vision of "aworld of living in harmony with nature" and a 2030 mission to "take urgent action to halt and reverse
biodiversity loss to put nature on a path to recovery”. To achieve these visions and missions, the 2050 Global
Goals and 2030 Global Targets were established.
The Kunming-Montreal Biodiversity Framework has increased the number of quantitative targets comparedto the Aichi Targets and strengthened social and economic targets. In addition, the "Review Mechanism," amechanism for monitoring and evaluating the progress of the new framework, was adopted at the same time
to make it more effective than the previous framework.
In terms of business, the following goal and targets are set up: "Biodiversity is sustainably used and managed
and nature’s contributions to people, including ecosystem functions and services, are valued, maintained andenhanced " in Goal B, “Ensure and enable that by 2030 at least 30 per cent of terrestrial and inland water areas,
and of marine and coastal areas, especially areas of particular importance for biodiversity and ecosystem
functions and services, are effectively conserved and managed through ecologically representative, wellconnected and equitably governed systems of protected areas and other effective area-based conservation
measures” in Target 3, , “Take legal, administrative or policy measures to encourage and enable business, andin particular to ensure that large and transnational companies and financial institution” in Target 15, , “reducing
the rates of introduction and establishment of other known or potential invasive alien species by at least 50
per cent by 2030” in Target 6, and “Ensure that areas under agriculture, aquaculture, fisheries and forestry are
managed sustainably,…contributing to the resilience and long-term efficiency and productivity of theseproduction systems, and to food security” in Target 10.
◼

Structure of the Kunming-Montreal Biodiversity Framework16

Further details are available in the CBD's document on the Kunming-Montreal biodiversity framework(CBD/COP/15/L25 Kunming-Montreal global biodiversity framework). Indicators of these goals and targets

16 Source: Ministry of the Environment website

12are described in the Monitoring framework for the Kunming-Montreal Biodiversity Framework.
(CBD/COP/15/L26 Monitoring framework for the Kunming-Montreal global biodiversity framework)
In the new National Biodiversity Strategy, indicators and targets are developed to achieve goals (see below).

2. National goals and strategies (National Biodiversity Strategy 2023-2030)(1) Outline of the National Biodiversity Strategy 2023-2030[Objectives]
To protect and utilize biodiversity and natural capital (the foundation of global sustainability and humansecurity) in line with "Kunming-Montreal Biodiversity Framework[Structure]It has five basic strategies to achieve nature positive by 2030 in which each strategy sets 3 target
states and several target actions. Indicators to measure the achievement of each target are established, andrelevant programs and projects are linked. It enables to organize of the entire strategy and managing its
progress effectively.
[Notes]-It emphasizes an integrated response to the "two crises" of biodiversity loss and the climate crisis and afundamental transformation of society after the COVID-19 pandemic.
-It highlights ensuring a healthy ecosystem and maintaining and restoring nature through actions to achievetargets such as 30by30.
-It promotes socio-economic activities that protect and utilize natural capital (activities that include naturesensitive actions and/or evaluation of ecosystems, serving as a driving force for nature positive).
◼

Structure of the National Biodiversity Strategy 2023-203017

17 NATIONAL BIODIVERSITY STRATEGY 2023-2030" (2023, MINISTRY OF THE ENVIRONMENT)

13

3. Other frameworks
In addition to the national and international goals and strategies by the public sector mentioned above, avariety of initiatives and frameworks are being developed by the public and private sectors. The following is an
overview of some examples of these frameworks. internationally recognized frameworks include
TNFD(Taskforce on Nature-related Financial Disclosures), SBTs(Science-Based Targets) for Nature, and due
diligence, which are also described in Part 2 and Part 3.
(1) Japan Conference for 2030 Global Biodiversity Framework (J-GBF)
The Japan Council for the 2030 Biodiversity Framework (J-GBF) was established in November 2021 to promote
the participation and cooperation of all sectors in Japan, including the national and local governments,
businesses, citizens, NGOs, and youth, to achieve international and national targets such as 30by30, to promote
efforts for the conservation and sustainable use of biodiversity (Secretariat: Ministry of the Environment). Under
the J-GBF, the "Business Forum" and "Regional Cooperation Forum" have been established to share information
among member organizations and at international conferences.
(2) Keidanren Committee on Nature Conservation/ Keidanren Nature Conservation Fund
The Keidanren Committee on Nature Conservation was established in 1992 as a part of Keidanren, together
with the Keidanren Nature Conservation Fund. It has been engaged in activities in collaboration with various
stakeholders, including support for nature conservation projects of national and international NGOs through theFund, awareness raising sharing information to companies, and advocacy to facilitate actions on biodiversity
through business. In 2018, Keidanren published the " Declaration of Biodiversity by Keidanren and Action Policy(Revised Edition)" with the aim of further mainstreaming biodiversity under the Aichi Targets. In 2020, Keidanren
invited companies to endorse the Declaration and the Action Guidelines, then compile them into the "Keidanren
Initiative for Biodiversity Conservation" together with examples of corporate technologies, products, andservices that contribute to biodiversity conservation, and disseminate them internationally.
(3) Japan Business Initiative for Conservation and Sustainable Use of Biodiversity (JBIB)
Established in 2008, this initiative is comprised of companies that are highly committed to biodiversity
conservation and its sustainable use. The objectives of JBIB include accelerating research, actions, dialogue,
collaboration sharing information related to biodiversity. In addition to providing training for members, it also
develops standards and guidelines for sustainable land use, water management, raw material procurement, etc.,
among members, and publishes these standards and guidelines.
(4)30by30 Alliance
It was established to promote all-Japan efforts to achieve 30by30. Companies, local governments, andorganizations voluntarily participate (Secretariat: Ministry of the Environment). The conditions for participation
are either "aiming for registration of their property or land in the international Other Effective area-based
Conservation Measures (OECM) database" or "supporting the management of protected areas and areas thathave been (or are expected to be) registered in the international OECM database".

14

(5) International frameworks
Framework Namesummary

remarks

CDP (Carbon Disclosure
Project)

International NGO in the environmental field. They sendquestionnaires to companies, compile the results, and analyze
and evaluate their environmental efforts on a common
indicator. It works to achieve a sustainable economy bydisclosing the responses of companies.

The CDP Climate Change
Questionnaire includes questions on
biodiversity

CDSB Framework
Application guidance forbiodiversity-related
disclosures

A part of the CDSB Framework Application Guidance,developed by the Climate Disclosure Standards Board (CDSB).
It aims to extend the TCFD recommendations and its coreelements to nature.

-

Corporate Sustainability
Reporting Directive (CSRD)

Sustainability disclosure rules in the EU for large-scalecompanies about their business activities-

International Sustainability
Standards Board (ISSB)The IFRS Foundation, the founding body of International
Financial Reporting Standards (IFRS), established a board to
set international sustainability standards at COP26.

International standards for climatechange disclosure are expected to be
developed by the end of 2022

Nature Capital Protocol

Framework published by the Capitals Coalition in 2014 tofigure out the direct and indirect dependence of corporate
activities on natural capital

As of 2022, the Capitals Coalition isconducting a project called
Transparent, to develop amethodology for applying natural
capital accounting to management
accounting and published the firstdraft in July 2021.

OECD Due Diligence
Guidance for Responsible
Business Conduct

A non-legally binding recommendation to multinational
companies on responsible business conduct that is based on
the OECD Guidelines for Multinational Enterprises. It
recommends companies conduct risk-based due diligence to
avoid and address negative impacts associated with theirbusiness operations and supply chains.

-

SBTs for Nature (ScienceBased Targets for Nature)

Measurable, practical, time-bound goals, based on the latest
available science, that enable companies for theinterconnected terrestrial, freshwater, and marine systems inthe value chain, to act within the limits of the Earth and inline with social and sustainability goals

Initial guidance for companies was
published in September 2020. A
methodology for setting SBTs for
Nature is being developed to publish
specific guidance in 2023onwards.

Sustainable Finance
Disclosure Regulation(SFDR)

It regulates sustainability disclosures related to financial
institutions and financial instruments in the EU.

TNFD (Taskforce on Naturerelated Financial Disclosure)An international organization that establishes a framework forthe assessment and disclosure of risks and opportunities
related to natural capital and biodiversity for businessactivities.

Corporate Sustainability
Reporting Directive (CSRD)

It regulates sustainability disclosure for large companies
about their business activities in the EU.

Corporate Sustainability
Due Diligence Directive Proposal

It requires companies to identify and, where necessary,
prevent or mitigate the negative effects of their activities onhuman rights and the environment, such as child labour andLabor exploitation, pollution and biodiversity loss.

Proposal published in February 2022.

EU Deforestation
Regulation - Proposal

To halt global deforestation, companies are required to
conduct due diligence on their supply chains.

In December 2022, a provisional
agreement on the draft regulation
was concluded by the European
Council and the European Parliament.

15

A draft framework will be distributed
in 2022, and following pilot projects
involving companies andconsultations with regulators, data
producers, etc., the framework will be
published in 2023-

4. Biodiversity and related sector
Efforts in other sectors than biodiversity have positive and/or negative impacts on biodiversity as follows.
SectorSummary

Relationship with biodiversity

Marinewaste

plastic

It is a generic term for various problems caused bymarine plastic wastes (drifted matters, marine
debris on surface water and deep-sea sediments),
such as deterioration of the marine environment
including ecosystems, degradation of coastal
ecosystems, adverse effects on the landscape,maritime navigation problems, and impacts on
fisheries and tourism.

In addition to the accidental ingestion of plastic bags andfishing nets by marine animals, in recent years there has
been concern about the impact of microplastics (plastic
waste smaller than 5 mm) on the marine ecosystem.

ClimateissueschangeThe problem of climate change, also known as the"climate crisis," is an unavoidable and urgent issue
that is linked to every single one of lives on theearth. Globally, we have observed a rise in averagetemperatures, melting of snow and ice, and a risein sea level. In Japan, we also have observed a risein average temperatures, heavy rainfall, damage
caused by cyclones, and the impact on agriculture
and ecosystems.

Climate change affects ecosystems. For example, it ispredicted that up to about 20% of species in terrestrial
ecosystems are likely to face very high extinction risks if
temperatures rise by 2°C, and about 50% of them are likely
to be extinction risk if temperatures rise by 5°C.

Just Transition

It means greening the economy fairly andinclusively for all stakeholders, creating
opportunities for decent work, and leaving no one
behind.

The concept of "fair transition" needs to be respected in
the transition to a nature-positive world.

GenderGender refers to socially and culturally constructedcharacteristics of women, men, and others. It
includes the roles of women and men, and/or theirinterrelationships constructed by social norms andother factors in a particular society, for instance.

Gender-based disparities in ownership and use rights posea risk to biodiversity as the natural environment andnatural capital might not be managed properly. Equal rights
and opportunities for natural capital, regardless of gender,and stable use and conservation of natural capital lead tothe preservation of biodiversity.

Circular Economy

The increasing demand for resources, energy, andfood, and increased waste such as plastics, arebecoming more serious throughout the world. The
economic concept of using resources sustainably,
instead of linear economy, is called circular
economy.

Loss of biodiversity due to large-scale resource extraction
can be avoided by promoting a circular economy.

Food security

It is achieved when all people have physical, socialand economic access to sufficient, safe andnutritious food to meet their dietary needs for an
active and healthy life at all times.

Food production and agriculture highly depend on
biodiversity, such as pollination, soil formation andmaintenance, nutrient cycle, climate regulation, watersupply, and pest control.

Human rights,
Indigenous peoples

Human rights are "the right of all people to life andliberty and the and the pursuit of happiness" or"the right of human beings to live as humanbeings, a right that they are born with.

It contributes to the conservation and sustainable use of
biological diversity where traditional knowledge,
technologies, and practices by indigenous peoples andlocal communities, as well as the use of biologicalresources, are respected and encouraged.

Regarding the rights of indigenous peoples, theUnited Nations Declaration on the Rights ofIndigenous Peoples was adopted in 2007.
One Health

The concept is that humans, animals, and theenvironment (ecosystems)are interconnected. The
stakeholders responsible for human and animal
health and environmental conservation should
build close cooperative relationships and work tosolve cross-sectoral issues.

16

The concept of the impact of biodiversity conservation onhuman health is being developed.

5. Relationship between carbon neutral, circular economy, and biodiversity
Climate change problems, such as the torrential rains, became more frequent globally, and are referred toas the "climate crisis”. Furthermore, economic activities and consumer behaviors of overproduction,
consumption, and disposal lead loss of biodiversity, and bring the global environment to its limits.
There is an interrelationship between climate change, circular economy, and biodiversity.
For example, from the perspective of resource recycling, over-production and over-consumption impair
material cycles. It also causes climate change problems, depletion of natural resources, and loss of
biodiversity due to overconsumption of fossil fuels and large-scale resource extraction etc.. Therefore,
reduced consumption of natural resources contributes to mitigating climate change and biodiversity loss.
In relation to climate change (or decarbonization) for example, about 20% of species on terrestrial
ecosystems are likely to face very high extinction risks if temperatures rise by 2°C, and about 50% are likely to
be in very high extinction risks if temperatures rise by 5°C.18 Conversely, we can avoid such risks of extinction
if we halt global warming.
Some actions on climate change mitigation have a positive impact on biodiversity, while others have anegative impact. Promoting business management that enhances corporate value and realizes a sustainable
society at the same time, considering carbon neutral, circular economy, and biodiversity in an integrated
manner, enables companies to respond to environmental requirements/needs efficiently and effectively.
In doing so, the concepts of NbS (Nature based Solution) and NCP (Nature Contribution to People)
attracted attention recently. They design business activities to be more sensitive to biodiversity, andecosystem conservation which brings various benefits, such as climate change mitigation, disaster risk
management, and community development, Co-benefits help to start and continue these business activities.
◼

Relationship between carbon neutral, circular economy, and nature positive19

18 Source: IPCC SIXTH ASSESSMENT REPORT (AR6) WG2 REPORT, 2022, INTERGOVERNMENTAL PANEL ON CLIMATECHANGE (IPCC)
19 Source: STUDY GROUP ON BASIC MATTERS FOR THE SIXTH BASIC ENVIRONMENT PLAN, SECOND DOCUMENT:ENVIRONMENTAL, ECONOMIC, AND SOCIAL SITUATION AND DIRECTION OF ENVIRONMENTAL POLICY DEVELOPMENT (2023,
MINISTRY OF THE ENVIRONMENT).

17

IPBES, IPCC: Scientific outcome of the IPBES-IPCC co-sponsored workshop on biodiversity and climate change20
The workshop report refers to the following linkages between biodiversity and climate change and requires an integrated solution.
Mitigating global warming and protecting biodiversity are interrelated, and achieving them is essential to the sustainable andequitable benefit among people.
Many actions on terrestrial and marine for ecosystem protection, sustainable management and restoration generate co-benefits forclimate mitigation/adaptation and biodiversity goals. On the other hand, it is important to keep in mind that there may be negative
impacts (trade-offs) between actions on biodiversity conservation and climate change mitigation.
◼

Relationships between climate change mitigation and biodiversity conservation
The following figures show the impacts between climate change mitigation and biodiversity conservation. The blue line
represents positive impacts (synergies) and the orange line represents negative impacts (trade-offs).
✓
Example of positive impacts: land protection is important to address biodiversity loss and generate co-benefits ofclimate change mitigation and adaptation.
✓
Examples of adverse effects: actions for climate change mitigation to increase carbon storage through biomass,
such as large-scale forestation and crop cultivation for biomass energy production, may have negative impacts on
biodiversity.

Chapter 3: Relationship between Business Activities and Biodiversity
1. Basic concept of the relationship between business activities and biodiversity
We receive benefits from ecosystems that are based on biodiversity and have impacts on it. For example,
the figure below shows how we receive benefits and have impacts from/on ecosystems, focusing on businessactivities.

20 BIODIVERSITY AND CLIMATE CHANGE IPBES-IPCC JOINT WORKSHOP REPORT: TRANSLATION AND COMMENTARY by

IGES, 2021, Institute for Global Environmental Strategies (IGES)

18

◼

Relationship between Business Activities and Biodiversity21

The benefits and impacts of biodiversity that we have are not limited to the supply of raw materials. Where
we conduct our business activities, we may affect biodiversity in the process of developing or using land. Also,
depending on where we procure from, the impact on biodiversity varies greatly. Furthermore, the products
and services itself can also have an impact on biodiversity.
On the other hand, the technologies, products and services owned by businesses may have an innovativeand positive impact on biodiversity conservation. Furthermore, they may be involved in - ecosystems based on
biodiversity through investments in these activities or through social activities.
As mentioned in Chapter 1, biodiversity is the foundation of the economy, society, and the environment, andit has a significant impact on business activities if actions are not taken to address biodiversity loss. On theother hand, the transition to nature is expected to have great economic potential. This means that biodiversity
is not only a risk but a business opportunity for companies to have an advantage over their competitors by
being pioneers and influential in the market.
⚫ More than half of the global GDP ($44 trillion) is potentially threatened by the loss of nature. (The
Future of Nature and Business by World Economic Forum)⚫ Transition to a nature -positive economy could provide annual business opportunities worth $10 trillion.
(ibid)
When adopting the concept of nature positivity into your business activities, you need to recognize how yourbusiness activities affect or depend on biodiversity, and how they are linked to business risks/opportunities,
then determine the importance to the business. (Further details are available in Part 2).
At the same time, it would be necessary to show a story about biodiversity and natural capital toshareholders, investors, and other stakeholders. Therefore, the International Sustainability Standards Board(ISSB) proposes to follow the Guidance for Biodiversity-related Disclosures22 in disclosing sustainability-related
financial information.
Business management that takes biodiversity and natural capital into account is required by financial
institutions internationally. On the other hand, according to a survey by the Keidanren Council for Nature
Conservation, private companies in Japan have difficulties making progress in their actions such as "difficulty
in setting targets, indicators, quantification, and economic evaluation," "difficulty to link actions on nature tobusiness profits," and "low relevance to their core business." 23

21 Source: Biodiversity Private Sector Engagement Case Studies (2020, Ministry of the Environment)
22 The official name of the guidance is "CDSB Framework application guidance for biodiversity-related

disclosures".
23 Source: QUESTIONNAIRE ON BIODIVERSITY - SURVEY ON THE RELATIONSHIP BETWEEN NATURE'S BLESSINGS AND
BUSINESS ACTIVITIES (2020, KEIDANREN COUNCIL FOR NATURE CONSERVATION)

19

However, our business activities depend on and influence ecosystems based on biodiversity at many stagesof business operations. If we look at our supply chain, based on an understanding of the processes to create
value for the products, we certainly utilize natural capital in the form of raw materials.
Therefore, to understand the impact on biodiversity, it is necessary to get a picture of the supply chain, but
it is currently difficult to understand the entire supply chain of a company in detail. Therefore, it may benecessary to roughly identify processes and commodities that highly depend on, and have a large impact on
biodiversity, and then to understand the supply chain in detail. (Further details are available in Part 2).

2. Basic relationships and references
When considering biodiversity-sensitive business, it is necessary to focus particularly on relationships
between business activities and biodiversity, as well as the impact on business. In particular, it is necessary tounderstand the following concepts.
◼ Business and Biodiversity
The TNFD defines “dependencies” as ecosystem services that an organization relies on for
their business processes to function, such as a clean and regular water supply. In addition, TNFD described
the impact on the nature of the business risks and opportunities as follows.
“Organizations also have impacts on environmental assets and ecosystem services that may be positive or
negative. Short-term impacts on nature can result in changes in the quality and resilience of environmental
assets, which in turn create medium- and long-term risks for organizations, given their dependencies. In short,today’s nature impacts can create tomorrow’s nature-related risks and opportunities”◼ Terms describing the relationship between business and biodiversity 24
Terms
NatureImpacts
Dependencies
Nature-related risks
Physical risks/opportunities
Transition risk

Nature-related systemic riskssummary
The natural world, with an emphasis on the diversity of living organisms (including people) and their interactions among
themselves and with their environment.
Changes in the state of nature may result in changes to the capacity of nature to provide social and economic functions.
Impacts can be positive or negative.
Aspects of ecosystem services that an organization or otheractor relies on to function.
Potential threats posed to an organization are linked to its and other organizations’ dependencies on nature and nature
impacts. These can derive from physical, transition and systemic risks.
They are classified as acute risks (event-driven) chronic risks (long-term changes) or both. Physical risks and opportunities
will have financial implications for the organization.
Risks that result from a misalignment between an organization’s or investor’s strategy and management and thechanging regulatory and policy landscape in which it operates. Developments aimed at halting or reversing the damage
to nature, such as government measures, technological breakthroughs, market changes, litigation and changing
consumer preferences can all impact risks.
In addition to the financial risks to the organization itself, impacts and dependencies across the economy can create
nature-related systemic risks. Systemic risks can refer to:(i)the risk that a critical natural system no longer functions properly;(ii)risks that arise at the portfolio level (rather than at the organization or transaction level) of a financial institution; and(iii) a risk to system-wide financial stability◼ Examples of dependence and impact on business activities25
Examples of the dependence and impact of business activities include the following:

24 Source: Compiled by the Ministry of the Environment from the TNFD Proposed Technical Scope (2021) and

The TNFD Nature-related Risk & Opportunity Management and Disclosure Framework Beta v0.1 (2022)* The
definition of influence and dependence is the same as the definition given in SBTs for Nature
25 Notes: Based on "GUIDELINES FOR PRIVATE SECTOR ENGAGEMENT IN BIODIVERSITY, SECOND EDITION," (2017,
MINISTRY OF THE Environment, JAPAN), with additions made by the Ministry of the Environment

20

Examples of "dependence"✓ Does the business use biological resources such as food, wood, fibre crops, or water in its activities?
✓ If biological resources are used, are they abundant or not?
✓ If the resource is no longer available, are there cost-effective alternatives?
✓ Does the business include activities that utilize the natural environment, such as natural landscape, wild flora and fauna as
ecotourism?
✓ Is the prevention of natural disasters by ecosystems closely related to stable business activities and the performance of thebusiness?
Example of "Impact”✓ Where and to what extent is the land used in the business activities? Does the land used in the business include the area that is
considered to have high conservation value in terms of biodiversity?
✓ To what extent does land use reduce or separate habitat areas?
✓ To what extent are biological resources used in business activities?
✓ Have the business activities caused the introduction of exotic species or genetic contamination?
✓ Does the business activities cause environmental pollution or changes in the environment and affect animals or their habitats?
✓ Do the above impacts restrict others to receive the benefits from biodiversity?
✓ Does the above impacts affect the local society and culture?
✓ Are there possibilities that your company's technologies, products/services, and solutions can contribute to the conservation of
biodiversity?
✓ Is it possible to create added value in the process from raw material procurement to disposal from a value chain perspective?

◼ Examples of risks and opportunities in business activities26
Examples of risks and opportunities in business activities include:
Category
Policy andRisk•regulation••

PublicopinionMarket andProduct

•
•

•
•
•

Finance•

Internal•

Operation•••

Opportunity

Increased cost of raw material procurement due tostricter regulations on natural capital (e.g., higher unit
prices for suppliers and additional tax)
Decrease in biological resource quotas due to stricter
regulations, usage fees, and increased costs oftransportation
Increased costs required to follow the regulations(certifications or permits and licenses) and lost sales
opportunities when not compliant
Damage to brand image due to negative reputation ofadverse effects on biodiversity
Difficulty in obtaining investment from investors due tofluctuating・•Decrease in customers due to changes in consumer
behavior
Decrease in market competitiveness of products andservices due to fall in quality in terms of biodiversity.
Possibility of business suspended by suppliers (bothupstream and downstream in the supply chain) due tooperations that are not biodiversity-sensitive (as a resultof actions taken by suppliers to avoid reputational risk).
Reduced availability of loans due to stricter loan
conditions at financial institutions.

•

Decrease in satisfaction among employees due todeterioration of corporate image.
Instability in raw material procurement (quality andquality) due to a decrease in natural resources
Raw material shortages and increased procurement costs
due to declining natural resources
Degradation of land /forests owned by the company due
to lack of management.

•
•
•

•

•
•

•

•

•
•

Permission to expand operations throughbiodiversity.
Development and sales of new products thatcomply with new regulations, etc.

Improving brand image, attracting consumers
and differentiation from competitors in theindustry.
Promote understanding and strengthen
relationships with local stakeholders.
Developing markets for new biodiversityfriendly products, services, certified products,
etc.
Development of new technologies, products,
etc. that promote the conservation andsustainable use of biodiversity (*biomimicry,
genetic resource utilization, etc.)
Attracting investors who place importance on
ESG investments, etc., and expanding financing
sources
Increased employee satisfaction
Securing Human Resources
Establishment of production processes that are
resilient to the decrease of natural resources,
through sustainable use of natural resources.
Strengthening supply chain resilience bymanagement of suppliers
Resilient national supply chain through the useof domestic natural capital.

26 Note: Based on "GUIDELINES FOR PRIVATE SECTOR ENGAGEMENT IN BIODIVERSITY, SECOND EDITION" (2017, MINISTRY

OF THE Environment, JAPAN), added by the Ministry of the Environment.

21

◼ Example of Sectoral Analysis
A report, “The Future of Nature and Business” by the World Economic Forum” identifies the roles of businessin 16 sectors, and their possible contribution to a nature positive economy. However, the report points out thatsuch a transition requires actions not only by businesses, but also policies and regulations by governments,
behavior change and social norms by civil society, and the development of IoT technologies and data utilization.
◼

The Role of Each Sector in the Transition to a Nature-Positive Economy27◼ Guidelines by business associations.
In understanding and analyzing the relationship between biodiversity and business activities, it is possible torefer to guidelines and plans developed by business associations.
In the evaluation and analysis of the dependencies, impacts, risks and opportunities of the business activities,
it is not necessary to be in detail at the beginning of the process to raise the issue internally. It is important tofirst present a basic story to executives and external stakeholders about the relationship between the company's
business activities. (Please refer to Q&As in Part 4.)
Detailed analyses are described process-by-process in Part 2 and Part 3.

27 Source: Prepared by Ministry of the Environment based on FIGURE E3 of THE FUTURE OF NATURE AND BUSINESS(2020, WORLD ECONOMIC FORUM)

22

Part 2: Processes for Consideration of Biodiversity
This part of the report explains the basic principles and responsibilities of business when conducting
activities for the conservation and sustainable use of biodiversity (Chapter 1), as well as the basic process(Chapter 2) for consideration of biodiversity in their business activities, in align with national and internationalframeworks.
In addition, the approach to handling these processes for a different type of industry and business is
explained (Chapter 3) as depends on the type of industry and the nature of the business.

Chapter 1: Principles and Responsibilities Related to Biodiversity and Business
Activities
The Convention on Biological Diversity, the Basic Environment Law, the Basic Act on Biodiversity, the National
Biodiversity Strategy, and other relevant laws and regulations set forth appropriate principles andresponsibilities for each entity, including businesses, to follow them. Below are some examples from the Basic
Act on Biodiversity.
Principle: Avoid and minimise impacts on biodiversity (Article 3(2) of the Act)
In view of the fact that biodiversity has been damaged as a result of changes in socio-economic activities
and that the use of natural resources is likely to have an impact on biodiversity in Japan and abroad, the useof land and natural resources shall be carried out in a sustainable manner to ensure that impacts on
biodiversity are avoided or minimised.
Principle: Prevention and Adaptation in Accordance with the Precautionary Approach ) ) (Article 3.3 of theLaw)
The conservation and sustainable use of biological diversity shall be carried out with the aim of responding
by a preventive method, in which biological diversity is conserved while striving to enrich scientificknowledge, and an adaptive method, in which the state of biological diversity is monitored even after the
project, etc., is started, scientific evaluations of the monitoring results are carried out, and the evaluation
results are incorporated into the project, etc., taking into account the fact that biological diversity is anatural resource which is likely to be affected by human activities, taking into account the fact thatbiodiversity is based on a subtle balance and includes many phenomena that have not yet beenscientifically explained, and that it is difficult to regenerate biodiversity once it has been damaged.
Principle: Long-term perspective (Article 3.4 of the Law)
The conservation and sustainable use of biological diversity shall be carried out with a view to striving forthe preservation and regeneration of ecosystems, etc., from a long-term perspective, taking into accountthe fact that biological diversity provides many benefits continuously in the long term.
Responsibilities: Responsibilities of companies (Article 6 of the Act)
In conducting business activities, companies shall endeavor to reduce the impact on biodiversity andachieve sustainable use by understanding the impact of their business activities on biodiversity andconducting biodiversity-friendly business activities while coordinating with other companies and otherpersons concerned in accordance with the basic principles.

23

Chapter 2: Basic Process for Consideration of Biodiversity
1. Basic process for consideration of biodiversity, The basic process in these guidelines is as follows.

Process 1: Assessment and System Development
Recognize the relationship between your business and biodiversity, develop a system to understand andanalyze further details (impacts, dependencies, risks, opportunities, etc.) between the activities andbiodiversity/natural capital in your business and supply chain/value chain, then identify critical areas to
set the goal.

Process 2: Goal setting and planning
Establish strategies and policies, relevant indicators and targets, as well as implementation andmonitoring plans for actions to implement these strategies and policies.

Process 3:Implementation
Implement the strategies and policies.

Process 4: Monitoring, evaluation and review
Monitor progress and results appropriately, and revise plans and goals if necessary.
In addition, as cross-cutting activities, (5) internal capacity building and (6) communication with external
stakeholders, including information disclosure, should be conducted as needed. That enables the above
processes to be more efficient, and the strategies to be aligned with business value. In particular, with regard
to (5) internal capacity building, it is essential to raise awareness through training and education for all
employees, including management, procurement, product development, manufacturing, and sales
departments, in order to make the actions reasonable in terms of consideration of biodiversity. It is also
effective to build capacity for consideration of biodiversity by utilizing the internal education system.
These processes vary in their relationships with biodiversity and the difficulty of acquiring data dependingon the type and scale of business, and not all of the processes necessarily need to be accurate from the
beginning. It would also be efficient to do it quick and dirty, and then revise these processes as needed in a
flexible and agile manner.
Efficient activities can be achieved by aligning with the PDCA cycle in the environmental management
systems that many businesses have already implemented, as well as with the international frameworks andtargets for consideration of biodiversity and information disclosure that have been established in recent years.
The PDCA cycle in the environmental management systems is described at the end of this chapter as a reference.
Basic process for consideration of biodiversity

24

Framework for the basic process
Process

Step

1. Assessment andstructuredevelopment

1-1 Establishment ofadministrative
structure

Outlines
・Clarify the responsibilities of the department in charge and the

Page
p.26

structure for reporting to the executives, etc. (e.g., designate aleading department and provide authority and resources forassessment and evaluations.)

1-2 Understand and・analyze therelationship between
business activities and・
biodiversity, assess
・
impacts, and identify
critical areas
2. Goal setting andplanning

3. Implementation

4. Monitoring,evaluation andreview

Research and analysis of dependencies and impacts of theas the risks and opportunities for business management.
Evaluation of the Impact of the business on biodiversity, etc.
Selection of (critical) areas closely related to biodiversity andnatural capital.

2-1 Setting strategies,
policies, goals, andindicators

・

2-2 Development of
implementation andmonitoring plans

・

3-1 Implementation

・

Implementation

・

Implementation of various activities based on the plans・Monitoring the progress of the plan・

Evaluation and analysis of the results of various activities based

4-1 Monitoring

p.26

business activities, products and services on biodiversity, as wellSetting strategies and policies for the conservation of

p.27

biodiversity in critical areas, and setting targets and indicators as
far as possible
Development of plans for specific implementation to achieve thep.28

targets, and plans for the acceleration and management of theimplementation.
p.29

p.29

on the implementation plan

4-2 Review of plan・

Evaluation and analysis by the indicators

・

Flexible review based on the results of monitoring andp.29

evaluation
・

Review of policies based on the results of activities, monitoringand evaluation

・

Review and revise strategies, implementation plans/goals, andadministrative structure

Cross-cutting
activities

5 Capacity building・

Review by responsible parties

・Appropriate training and information sharing with management

p.30

and employees

6 Information
・
disclosure and・communication withexternal stakeholders.
・Appropriate disclosure and dialogue with investors
Information disclosure and dialogue with external stakeholders(local governments, NGOs/NPOs, citizens, etc.)
Developing and monitoring goals, indicators, and plans incollaboration with external stakeholders

25

p.30

2. Details of each step

Process 1: Assessment and structure development
Step 1-1 Establish the administrative structure
Step 1-2 Understand and analyze the relationship between business activities andbiodiversity, assess impacts, and identify critical areas (materiality)❖ In order to promote biodiversity-related activities in your company, establish and strengthen theadministrative structure accordingly. In addition, clarify the responsibilities of the departments incharge and the reporting line, etc.

❖ Understand and analyze how the business activities impact biodiversity (which may include
activities in the supply chain).

❖ Understand regionality, if necessary (which geographical areas are involved and how the businessactivity depends on and affects regional biodiversity, based on the status of the regional naturalenvironment).

❖ Analyze the risks and opportunities for management.
❖ Based on the above steps, identify priorities and key areas (materiality) for the business andmanagement.
(Step 1-1)
First, establish the administrative structure to promote biodiversity-related activities in your company, andclarify the responsibilities of the department in charge, the administrative structure, and reporting line, etc.
For instance, the company can designate a leading department, and provide authority and resources for theassessments. In addition, the initiative of executives is important for improved governance.
(Steps 1-2)
After establishing the administrative structure, the company identifies the scope of its activities, assesses
dependencies and impact of the business activities on biodiversity and natural capital in each region, andanalyzes how these activities take risks and opportunities for the company. Several frameworks including TNFD
and SBTs for Nature provide analytical methods.
Depending on the industry, it may be desirable to analyze the relationship with biodiversity not only in thecompany's own business but also in the supply chain (upstream and downstream). Although the length andcomplexity of the supply chain may make it difficult to understand the relationship, the scope of activities
should be determined based on feasibility and expected impact.
It would be also desirable to include in the analysis not only how business activities affect biodiversity, butalso how changes in biodiversity affect business activities.
Based on the understanding and analysis of the impacts, it is recommended to identify the materiality to thecompany, and then proceed with a combination of qualitative and quantitative analysis of the impact ofbusiness activities on biodiversity and the risks and opportunities for the company.
According to the Keidanren Council for Nature Conservation (2020), in Japan, 57% of companies understand,analyze, and assess the impact of their business on biodiversity for "head office operations," 43% for "groupcompanies," and 24% for "supply chain" respectively28.
◼

Importance of understanding the supply chain
Looking down the supply chain, natural capital is used as raw materials for products. Therefore, it isnecessary to understand your supply chain in order to understand the impact of your business activities on
biodiversity as well as the impact of changes in biodiversity (quantitative and qualitative) on your company.
However, it is difficult to understand the entire supply chain of a company in detail. Therefore, after identifying
activities and/or commodities that highly depend on, or have a larger impact on biodiversity, it would be

28 Source: QUESTIONNAIRE ON BIODIVERSITY - SURVEY ON THE RELATIONSHIP BETWEEN NATURE'S BLESSINGS AND

BUSINESS ACTIVITIES (2020, KEIDANREN COUNCIL FOR NATURE CONSERVATION)

26

necessary to understand the supply chain as much as possible, and then evaluate the impact on biodiversity while
utilizing various databases and evaluation tools (see below). It is also necessary to ensure traceability where
possible. The companies can prioritize the activities according to the business portfolio and gradually expand thescope of the activities as needed.
◼

The relationship between the supply chain and biodiversity(Notes.)For supply chain and value chains in which the company is not directly involved, it is difficult for the company
to assess the impact on biodiversity, so it is necessary to ask suppliers to disclose data, and in some cases, thecompany may need to ensure consideration of biodiversity by procuring certified products.
On the other hand, it should be noted that when procuring certified products, it is not possible to ensure
information on "ecosystem impacts" for specific products. In some cases, such as the EU's proposed regulation
on mandatory due diligence in the prevention of deforestation, a certified product does not ensure traceability.
Therefore, in addition to certification, some companies promote mapping or other projects to understand theimpacts.
It is expected that financial institutions obtain information on dependencies, impacts, risks, andopportunities related to biodiversity at the industry or business unit level. In this case, the main input would
be the data disclosed by the investee. In addition, using existing tools (such as the examples in Part 3), they canidentify industries or companies that are considered to have significant risks to biodiversity, and request further
information on these industries or companies.

Process 2: Goal setting and planning
Step 2-1 Setting strategies, policies, goals, and indicators
Step 2-2 Development of implementation and monitoring plan
❖ Based on the results of Process 1, establish the strategy and policy, as well as indicators andtargets.

❖ Consider activities not only as risk mitigation but also as opportunities to lead to growth inbusiness.

❖ Develop a plan that includes specific conservation and other activities to achieve the goal.
❖ The plan will also include monitoring of activities and review of the plan to make the PDCA cycle
effective.fd0oki.
(Step 2-1)
The company establish strategies and policies for biodiversity based on the results of the analysis in Process
1. It is important to formulate strategies and policies in line with the impact and dependencies of businessactivities on biodiversity and natural capital.
Then, the company consider setting quantitative/qualitative goals and indicators as much as possible, toimplement the strategies and policies. At this point, there may be cases where quantitative goals and indicators
are not appropriate due to the type of industry, nature of business, etc. In such cases, qualitative goals can be27

set, but it is recommended to explain the reasons why quantification is not appropriate. (The details of setting
goals and indicators are described in Part 3.)
According to Keidanren Council for Nature Conservation (2020), 75% of companies have included theconcept of biodiversity conservation in their management and environmental policies, 53% of them have set"qualitative targets”, and 27% have set "quantitative targets" respectively. 29
It is possible to incorporate biodiversity perspectives into existing management and environment policies
as well as procurement standards.
(Notes.)In setting strategies and policies, it is recommended to be aligned with official targets and indicators such as
the Kunming-Montreal Biodiversity Framework and the National Biodiversity Strategy, as well as indicators andtargets in the international frameworks such as SBTs for Nature and TNFD. It is also important to follow
declarations and guidelines by business associations if they have.
(Step 2-2)
After setting strategies, policies and goals, a detailed implementation plan is compiled including how andwhen they will be achieved.
For example, the content of the plan could include the deadline and quantity of target products to be
switched to local, certified, and/or organic products in order to reduce the negative impact on biodiversity.
The plan also includes administrative and management structures to follow the PDCA cycle. In this regard,
existing environmental management systems such as ISO 14001 and environmental committees can be utilized
to promote activities for the conservation and sustainable use of biodiversity.
Examples of contents in the plan✓

Structure (responsibilities and roles) for managing and monitoring environment-related risks and opportunities✓

Compliance with environmental laws and regulations✓

Standard procedures for managing impacts on the environment and regular training for it.

✓

Due diligence to prevent and minimize negative environmental impacts, including a checklist.

✓

Product life cycle assessment and product design to minimize environmental impact.

✓

Alignment with internationally recognized environmental certifications and standards (e.g., ISO 14001)✓

Participation in international initiatives for biodiversity or natural capital✓Internal audits✓

Supplier audits✓

Regular training related to standard procedures for accident prevention and emergency management.

(Notes.)If there are existing environment-related plans such as climate change, it would be more efficient andeffective to integrate biodiversity with the existing plans as much as possible.
While it is desirable to set as precise and quantitative targets and indicators as possible, it is not appropriate
to reduce the frequency of monitoring due to the increased cost of verification. It is effective to set short-termtargets (annual targets) to periodically check progress toward the achievement of medium- to long-term targets(2030 targets or 2050 targets).

Process 3 Implementation
Step 3-1 Implementation❖ Implement specific initiatives based on the structure, goals and plans developed in Processes 1
and 2.

29 Source: QUESTIONNAIRE ON BIODIVERSITY - SURVEY ON THE RELATIONSHIP BETWEEN NATURE'S BLESSINGS AND

BUSINESS ACTIVITIES (2020, KEIDANREN COUNCIL FOR NATURE CONSERVATION)

28

❖ Roles and responsibilities are allocated to implement the plan according to the structure.
Executives initiate and support if necessary.

❖ Activities are implemented in relevant departments based on specific activity plans.
(Step 3-1)
The company implement specific activities based on the plan and regularly monitors and analyzes the
progress and evaluates them. Based on the results, the company flexibly revise policies, targets, andimplementation plans if necessary.
In general, a company have various departments and divisions such as management, environment,
procurement, manufacturing production, R&D, design, sales, and facilities. Regarding the implementation of
the plan, it is important that each of these departments work together to realize the overall policy andcontribute to the achievement of the goals. Details of activities are available in Chapter 3, "Basic Approach by
Industry and, Business ".
The relationship with the region where the office is located is also important, and when considering
biodiversity, it is necessary to collaborate and cooperate with the region and local government. Chapter 3, "2.
Information for Considering Cooperation with Local Governments," explains further details that may be helpful
for collaboration and cooperation with local governments.
In the implementation of the plan, "Step 5 (internal capacity building)" and "Step 6 (information disclosure,communication with external stakeholders)," as cross-cutting activities, are implemented at the company or
department/division.

Process 4: Monitoring, evaluation and review
Step 4-1 Monitoring
Step 4-2 Review of the plan
❖ Understanding the status of activities is essential to make the PDCA cycle effective.
❖ Conduct regular monitoring to manage progress.
❖ Based on the results of monitoring, review and revise targets and plans flexibly. In addition,
disclose as much information(results) as possible.

❖ Based on the monitoring results, expand the scope of activities gradually, involving the supply
chain and value chain.

❖ Analyze the international, national and regional status of biodiversity, and review the plan, taking
them into consideration.
(Step 4-1)
It is important to monitor regularly, analyze the status of the activities, evaluate the progress andachievement, and reflect the results into the plan to make the PDCA cycle effective.
However, the subject, method and frequency of monitoring varies depending on the nature of the activities.
It is recommended to conduct an analysis, integrating the results of monitoring of all activities in the company
about once a year.
It is desirable to incorporate a system to review plans and policies through monitoring results andinformation disclosure, for example, by disclosing them on the annual Report, Sustainability Report, and CSR
Report.
(Step 4-2)
The basic idea of the review is to set benchmarks for the relationship between biodiversity and businessactivities and improve the plan. It enables the company to review, revise and improve the administrative
structure, the goals, and the activities.
As the business and social environments, as well as international and national status/trends on biodiversity,
are not stable, It is important to review the plans and activities to respond to them.
(Notes.)
It would be desirable to flexibly revise targets and plans according to the progress of the Kunming-Montreal
Biodiversity Framework, the National Biodiversity Strategy, and private sector-based international frameworks.
29

Cross-cutting activities
Step 5 Internal capacity building
Step 6 Information disclosure and communication with external stakeholders❖ Share common understanding of biodiversity, natural capital and management within thecompany by promoting training and education for executives and employees, and active
participation in national and international conferences.

❖ Through information disclosure on biodiversity and dialogue, the company can ensurecommunication with investors and local stakeholders, which provides business stability.

❖ In particular, information disclosure has become more important in recent years as an importantpart of a public relation and dialogue (engagement) with stakeholders, including investors. It must
be implemented in accordance with international rules, regulations and guidelines.
(Step 5)If efforts to conserve biodiversity remain to the person or department in charge, it would be difficult to beshared throughout the entire company as an important issue. First of all, it is fundamental that executives
understand the relationship between biodiversity and business activities, for internal processes such as thedevelopment of the structure and governance. At the same time, it is necessary to establish and maintaininternal communication procedures for other departments and employees to make these internal processes
effective.
In doing so, it is recommended to utilize various guidelines by public organizations and/or businessassociations, including these guidelines. It is also recommended to actively participate in national andinternational conferences and events to learn about the latest national and international trends.
Step 6 “Information Disclosure and Communication with External Stakeholders", describes effective capacity
building through dialogue with external experts.
(Notes.)
It is not easy for an individual company to gather a variety of knowledge from scratch. Participation inindustry associations and various partnerships enables the company to build internal capacity to facilitateprocesses 1-4.
Ministry of the Environment website, Japan Conference on the 2030 Biodiversity Framework (J-GBF): Business Forum website30
To achieve international targets and national strategies such as the Kunming-Montreal Framework for Biodiversity, the Japan-GBF (JGBF) was established to promote the participation and cooperation of all sectors in Japan, including the national government, local
governments, businesses, citizens, NGOs, and youth, and to promote initiatives for the conservation and sustainable use of
biodiversity (Secretariat: Ministry of the Environment). Under the J-GBF, the "Business Forum" and "Regional Cooperation Forum"
have been established to share information with Japanese companies and to share information on Japan's initiatives at international
conferences.

(Step 6)
To achieve sustainable business, it is becoming essential not only to promote biodiversity-sensitive activities
but also to gain social commitment to the business activities through active communication with internal andexternal stakeholders.
There are frameworks for disclosure regarding biodiversity, such as the TNFD and SBTs for Nature (see Part
3).
Through such information disclosure and dialogue (engagement), it is expected that executives andemployees raise their awareness of the environment, and they would have insights for innovation andenhanced corporate value in their core business.
It would be desirable to ensure accessibility and regular disclosure of information, for example, by publishingintegrated reports, sustainability reports, or CSR reports, on an annual basis on the website.

30 Source: MINISTRY OF THE ENVIRONMENT WEBSITE, JAPAN CONFERENCE ON 2030 BIODIVERSITY FRAMEWORKREALIZATION (J-GBF)

30

(Notes.)
It is also useful to share information with environment-related support centers, various alliances, and private
biodiversity initiatives.
The Ministry of the Environment has established Environmental Partnership Offices (EPOs) in various regions,as well as Regional Collaboration and Conservation Activity Support Centers at local governments for
networking and introducing experts. Opportunities for networking are also provided by the "30 by 30 Alliancefor Biodiversity”, the Keidanren Council for Nature Conservation, JBIB, and the Nature Conservation Society ofJapan (Nacs-J).
Examples of external stakeholders✓

National government✓

Local governments (providing local information on biodiversity, coordination and collaboration among various stakeholders,)✓

NGOs/NPOs (hearing opinions on the impact of business activities on biodiversity, collaboration in policymaking and social
activities, etc.)✓

Citizens (collaboration in social activities, etc.)✓

Academia and research institutions including universities, museums, and elementary education(providing scientificknowledge and information on indigenous ecological culture, conducting surveys on local ecosystems and local society,environmental education using corporate garden, etc.)✓

Domestic and foreign business partners and related businesses

31Reference for the basic process.
As the reference to follow the basic process, the procedures of existing frameworks, the Environmental
Management System and the Natural Capital Protocol are shown below, in addition to the procedures of SBTs
for Nature, a framework for goal-setting, and that of TNFD (LEAP approach), a framework for information
disclosure.

2. Steps in the Environmental Management System
ISO14001 PDCA

Policies and leadership
・ Commitment
・ Environmental Policy
・ Responsibilities, Authority, andRoles

Operation

Performance

Improvement

・ Operation of theplan

・ Monitoring

・ Revision

・ Measurement, analysis andevaluation

・ Continuous
improvement

・ Management

・ Review

Plan
・ Risks and Opportunities
・ Goal setting

Eco-Action 21

・ Planning
Planning

Implementation

・ Clarification of challenges andopportunities in business・ Implementationand operation

・ Clarification of environmental
management policy

・ Development ofadministrative
structure

・ Assessing environmental impact
and activities, and compilingenvironment-related laws andregulations

Monitoring andevaluation
・ Monitoring andevaluating the
progress

・ Education, training

Overallevaluation andreview・ Communication
・ Reporting・ Overall・ Solving andpreventing
problems

Supportevaluation andreview by
representatives

・ communication

3. Steps to integrate natural capital into business (example of Natural Capital Protocol)
Overview of Natural Capital Protocol
The Natural Capital Coalition published this report in 2016. It provides a framework for identifying measuring
and evaluating the impact and dependence of business activities on natural capital. It is designed to takenatural capital into consideration in corporate decision-making.
Natural Capital Protocol: Steps to Integrate Natural CapitalStage 1: FrameworkStage 2: Scope

・ Development of a・ Setting purpose

framework for evaluation

・ Identifying the scope ofevaluation
・ Estimation of impact anddependency

Stage 3: Assessment andevaluation
・ Assessing impact anddependencies
・ Monitoring changes in thestate of natural capital・ Evaluation of impact anddependencies

32

Stage 4: Application

・ Verification of the results
and application

4. Steps for goal setting (example of SBTs for Nature)
Overview of SBTs for Nature
SBTs for Nature are measurable, actionable, time-bound targets based on the latest available science thatenable companies to act within the limits of the Earth and in line with sustainability goals with respect to theinterconnection of water, biodiversity, land, and oceans in the value chain. Therefore, by setting targets for
SBTs for Nature, companies can act in line with relevant UN conventions and the Sustainable Development
Goals (SDGs).
A methodology for setting SBTs for Nature is being developed by the Science Based Targets Network, aninternational network of more than 45 organizations.
Further details for SBTs for Nature are available in Part 3.
SBTs for Nature: Steps in Goal Setting
Step 1:
Asess

Step 2:
Interpret andprioritize

Step 3:
Measure, set anddisclose・ Consider possible

Step 4:
Act

Step 5:Track・ Use the SBT・ Monitor progress andframework todevelop plans andtake actions

impactreview

5. Process for disclosure of information (example of TNFD)
Overview of TNFD and LEAP approach
TNFD is an international task force that develops a framework for the appropriate assessment and disclosureof risks and opportunities for corporate activities for natural capital and biodiversity. TNFD promote an
integrated assessment for nature-related risks and opportunities so called LEAP(Locate, Evaluate, Assess,
Prepare).
Further details of the TNFD and LEAP approaches are available in Part 3.
LEAP Approach: Disclosure Process
Process 1: Locate (Identify
the firm’s interface withnature)・ Understanding the businessfootprint
・ Identifying interface with
NatureProcess 2: Evaluate(Consider naturedependencies andimpacts)・ Identifying relevant
environmental assets andecosystem services

Process 3: Assess (Material
risks and opportunities)
・ Assessing risks andopportunities
・ Existing risk mitigation andrisk/opportunity
management

・ Identifying location/areas

・ Identifying dependencies
and Impacts

・ identifying sector

・ Analyzing dependencies

・ Additional risk mitigation
and risk/opportunity
management

・ analyzing impacts

・ Materiality assessment ofrisks and opportunities

33

Process 4: Prepare (Steps
towards responding andreporting)・ (Strategy and Resource
Allocation) Strategy andresource allocation,measuring performance・ (Disclosure Action)
Reporting, publication

Chapter 3: Basic Approach by Industry and Business1. Basic approach by industry and business
Each of the processes described in Chapter 2 should be modified according to industry. The following tableshows the classification of business activities for biodiversity by industry.
First, the company can identify activities for biodiversity in the respective industry in the table below to takeaction. After that, it is desirable to monitor the status of the supply chain and value chain in collaboration with
suppliers for further actions to be taken accordingly.
◼

Activities for biodiversity by industry3132
8

9

Industry33

Classification in "Relationshipbetween Economic Activities andBiodiversity”

R&D and Innovation

7

land
management
Land Use andDevelopment
Maintenance, disposal andrecyclingsales

4logistics

3

Production andProcessing
Procurementof Raw
Materials

Primary
industry

Activity
5
6

2

fundraising1

Agriculture, forestry

1a. Agriculture (crops),
1b. Agriculture (livestock), 1c. Forestry

✓

✓

✓

✓

✓

✓

Fishing

2a. Fishery (other than aquaculture),
2b. Fishery (aquaculture)

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Mining, quarrying, gravel
3. Mining
extraction

SecondaConstructionryindustry
Manufacturing✓

4. Construction

✓

✓

✓

✓

✓

✓

5a. Manufacturing (electronics)
5b. Manufacturing (food and beverage)
5c. Manufacturing (pulp and paper)

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Electricity, gas, heat supply, 6a. Energy
and water supply
6b. Water
Telecommunications✓

7. Information and Communication

Transportation and postal
8. Transportation and postal services
services

✓

✓

✓

✓

✓

✓

✓

Wholesale and retail

9. Wholesale and retail✓✓

Finance and insurance

10. Finance and insurance

✓
✓

✓
✓

✓
✓

✓
✓

✓
✓

Real estate and leasing

11a. Real estate
11b. lease and rental

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓
✓
✓

✓
✓
✓
✓

✓
✓

✓
✓
✓
✓

✓
✓
✓
✓

✓

Academic
research, 12. Academic research, professional andeducational services, and teaching andTertiary professional and technicallearning support
industry services

✓

✓

✓

Accommodation and food
13. Accommodation and foodservices

✓

✓

✓
✓

Lifestyle and entertainment

14. Lifestyle
15. Tourism✓✓

Education
support(see 12.)✓✓

16. Medical care and welfare

✓
✓
✓
✓

and

learning

Medical care, welfare
multiservice

Post Office (see 8.)
Cooperatives

Service and hospitality(see 1. or 2.)
17. Recycling and waste disposal business

✓
✓
✓

✓
✓
✓
✓

✓
✓
✓

✓

✓

✓

31 Source: "GUIDELINES FOR PRIVATE SECTOR ENGAGEMENT IN BIODIVERSITY, SECOND EDITION," P. 22 (2017, MINISTRY

OF THE ENVIRONMENT)
32 Source: Note: "✓"in the table indicates the type of activity for biodiversity that the industry
can apply, but a blank also imply the possibility to apply those activities.
33 Source: Japan Standard Industrial Classification (2013, Ministry of Internal Affairs andCommunications)

34

35

◼ Activities for biodiversity by supply chain and division
Specific examples for each stage of the supply chain and division are presented according to the following
sections:① Stages and divisions: It is classified by stages on the supply chain (raw material procurement ⇒production and processing ⇒ distribution ⇒ sales ⇒ maintenance, disposal, and recycling) and by
types of activities within the company (land use and development, land management, R&D andinnovation, and financing).
② Relationships: It describes the relationships with biodiversity based on the nature of the activity. You
can use it as a reference to assess your business activities.
③ Possible indicators and targets: It describes possible indicators and targets for the conservation of
biodiversity.
④ Reference: It includes information on the efforts of industry associations and other organizations as areference.
① Stage /Division② Relationships

1 Procurement of raw materials[Impact on biodiversity (example)]⚫
Through the procurement of biological resources as raw materials (e.g., timber, fishery products,
agricultural products), business activities at the production sites (e.g., land use, use of biologicalresources) have a significant impact on biodiversity.
⚫
Through the procurement of raw materials such as mineral resources (e.g., rare metals, copper, iron)in Japan and abroad, activities in the mining areas and other areas have an impact on biodiversity.
[Mitigation of negative impacts on Biodiversity (example)]⚫
Reduction of raw material consumption through improvement of production processes, etc.
⚫
Integrate consideration of biodiversity into the procurement standards in the guidelines (compliance,
procurement of certified products, procurement for local biodiversity, etc.)⚫
Improving the supply chain through collaboration with suppliers and the application of traceability
technology⚫
Sharing information within the industry⚫
Mitigation of water stress, introduction of technologies to reduce water withdrawal[Characteristics].
⚫
Ensuring sustainable procurement for biodiversity leads to long-term procurement stability.
⚫
Longer supply chains and the various suppliers make it difficult to manage and assess.
⚫
Collaboration with suppliers is important. Since it is desirable to increase the volume of biodiversitysensitive raw materials in the country, collaboration within the same industry is also effective. While
suppliers are requested to consider biodiversity as necessary, it should be taken to avoid "abuse of
dominant position" under the Antimonopoly Law.

③ Possible
indicatorsand targets④ Reference① Stage /Division② Relationships[Indicators and targets]⚫
Percentage of certified raw materials procured (e.g., RSPO-certified palm oil, Rainforest Alliancecertified cacao, etc.)⚫
Percentage of raw materials sourced from regions with "high" or "very high" water stress
Guidelines for biodiversity-sensitive procurement of raw material by JBIB (Japan
Business Initiative for Conservation and Sustainable Use of Biodiversity)34
The guidelines show the risks and challenges in raw material procurement forbiodiversity and provide possible solutions.

2 Production and processing[Impact on biodiversity (example)]⚫
The use of fuel and water resources at the plant affects the availability of water and the ecosystem in
the region.
⚫
Water pollution due to the wastewater from factories and offices affects the habitat and ecosystem
in rivers and seas.
⚫
Light pollution (lighting) affects insects, plants, etc.

34 Source: JBIB WEBSITE

36

⚫
⚫

③ Possible
indicatorsand targets

Inappropriate use of pesticides and fertilizers in crops, land and water management that only
prioritize productivity affects biodiversity.
It may compromise local societies, economies, and traditional cultures rooted in local biologicalresources.

[Mitigation of negative impacts on Biodiversity (example)]⚫
Appropriate treatment of wastewater in accordance with environmental regulations⚫
Reduction of use of water through improvement of production processes, etc.
⚫
Control and management of light leaks, lighting season and time, depending on the location.
⚫
Obtaining certification for environmentally friendly agriculture, etc.
[Indicators and Targets]⚫
Percentage of factories and offices located in "high" or "very high" water stress⚫
Total water withdrawal, total water consumption⚫
GHG emissions (scope 1, 2, and 3 emissions)④ Reference

Water management guidelines for biodiversity-sensitive water management by JBIB
(Japan Business Initiative for Biodiversity)35
It summarizes the results of research conducted by JBIB member companies on how
companies can use water in a sustainable manner. Based on new issues such as water
footprint, and balancing water withdrawal and wastewater on a watershed basis, it
presents a direction toward water neutrality, where the impact on water resources isreduced to zero.

① Stage /Division② Relationships

3 Logistics③

Possible
indicatorsand targets① Stage /Division② Relationships[Impact on biodiversity (example)]⚫
Ballast water from ships and hull-fouling invasive species affect marine and coastal ecosystems.
⚫
Invasive species associated with transportation (seeds on vehicle tires, contamination, etc.) affectbiodiversity⚫
Exhaust from transportation affects the ecosystem[Mitigation of negative impacts on Biodiversity (example)]⚫
Water treatment systems and anti-fouling systems to prevent the impact of ballast water and hull
fouling on ecosystems in marine and coastal areas, and ports⚫
Prevention of invasive species in cargo.
⚫
Reduction of environmental impact through electrification of transportation (replacing fossil fuelswith electricity).
⚫
Local production for local consumption⚫
Reduce the ecological impact of paints on ships⚫
Use of wood in pallets, etc.
[Indicators and Targets]⚫
GHG emissions (scope 1 emissions), quantity of energy use, percentage of fuel oil, percentage of
renewable energy

4 Sales[Impact on biodiversity (example)]⚫
Indirect negative impact on natural capital, etc., due to food loss, etc.
[Mitigation of negative impacts on Biodiversity (example)]⚫
Increasing biodiversity-sensitive products and services⚫
Integrate consideration of biodiversity into procurement policies and standards⚫
Provide information and raise awareness among consumers⚫
Reduction of food loss, etc.
[Characteristics].
⚫
Since the company can directory access consumers, there are risks and opportunities throughconsumers’ behavior (e.g., less willingness to buy products due to lack of consideration of
biodiversity, and/or creation of consumer needs for biodiversity-sensitive/local products and services
through promotion).
⚫
Consumer awareness and behavior are expected to affect the upstream supply chain.

③ Possible
indicatorsand targets[Indicators and Targets]⚫
Percentage of sales of biodiversity-sensitive products and services (e.g., detergent made by RSPOcertified palm oil, chocolate made by Rainforest Alliance-certified cacao, etc.)

35 Source: JBIB WEBSITE

37

① Stage /Division② Relationships③ Possible
indicato
rs andtargets④ Reference

5 Maintenance, disposal and recycling[Impact on biodiversity (example)]⚫
Inappropriate treatment has negative effects on biodiversity, etc.
[Mitigation of negative impacts on Biodiversity (example)]⚫
Conserving natural resources through repair and recycling of products, proper disposal, and reduction of
disposal⚫
Proper repair of products⚫
Promotion of recycling and reuse⚫
Product design for easy repair and recycling[Indicators and targets]⚫
Volume of waste, Volume and/or percentage of landfill, and recycling rate⚫
Volume of food waste

Guidance on Disclosure and Dialogue to Promote Sustainable Finance for the Circular
Economy (Ministry of the Environment and Ministry of Economy, Trade andIndustry)36
The world's first circular economy-specific disclosure and dialogue guidance wasdeveloped by the government. The guidance is designed to promote dialogue between
companies and investors.
Waste treatment and recycling guidelines (Ministry of Economy, Trade and Industry)37
The guidelines were formulated by the Industrial Structure Council in December 1990
to promote voluntary actions by businesses. It sorts actions for waste treatment andrecycling which should be done by businesses. The most recent follow-up was
conducted in 2006.

① Stage /Division② Relationships

6 Land Use and Development[Impact on biodiversity (example)]⚫
Land use and development have significant direct and indirect impacts on biodiversity (e.g., soil
runoff).
[Mitigation of negative impacts on Biodiversity (example)]⚫
Appropriate measures such as tree planting and replacement⚫
Assess negative impacts on biodiversity in advance to avoid or reduce them⚫
Conservation and monitoring after land use/development⚫
Collaboration and dialogue with residents and other external stakeholders to avoid or reduce impacts,
as well as planning, management, and monitoring with them⚫
In overseas operations, conserve and sustainably use biodiversity in collaboration with thegovernment, and international NGOs, and work in compliance with the relevant laws and regulationsin the country and region.

③ Possible
indicators
and Targets④ Reference① Stage /Division② Relationships[Characteristics].
⚫
It is desirable to utilize databases (RESAS, etc.) maintained by the Ministry of the Environment andother organizations for mitigation.
[Indicators and targets]⚫
Replaced area relative to the area of land development

RESAS (Regional Economy (and) Society Analyzing System)
A system that aggregates and visualizes big data from the public and private sectors, such as industrial
structure, population and its’ flow, to support various activities for regional development. It is provided incollaboration with the Secretariat of the Headquarters for the Creation of Towns, Hospitals, andWorkplaces of the Cabinet Office and the Ministry of Economy, Trade and Industry. It can assess the impactof biodiversity using local revitalization indicators.

7 Land management[Mitigation of negative impacts on Biodiversity (example)]⚫
Conservation and management of land owned by the company (green land, forests, etc.).
⚫
Participation and application to 30by30, Other effective area-based conservation measures (OECM),
etc.
⚫
Management of land to mitigate negative impacts such as the introduction of invasive species on local
biodiversity,

36 Source: DISCLOSURE AND DIALOGUE GUIDANCE FOR PROMOTING SUSTAINABLE FINANCE IN THE CIRCULAR ECONOMY(2021, MINISTRY OF ECONOMY, TRADE AND INDUSTRY, MINISTRY OF THE ENVIRONMENT)
37 Source: GUIDELINES FOR WASTE DISPOSAL AND RECYCLING (2021, MINISTRY OF ECONOMY, TRADE AND INDUSTRY)38

⚫

③ Possible
indicatorsand targets④ Reference① Stage /Division② Relationships③ Possible
indicatorsand targets④ Reference

Conservation and monitoring of biodiversity in the lands through collaboration with external
stakeholders (residents, experts, NPOs, NGOs, and local governments), as well as creation of ecosystem
networks with the surrounding area, and preservation of endangered species.
⚫
Utilize certification system for nature-symbiosis areas developed by the Ministry of the Environment,
and other certification systems that evaluate green spaces[Indicators and targets]⚫
OECM area of land owned by the company.

Ministry of the Environment's "Nature-Symbiosis Site" certification system
A system to certify areas where biodiversity is being conserved by private companies as "NatureSymbiosis Site" is under development It is scheduled to establish in 2023/2024. The Ministry of theEnvironment can register the certified "Nature-Symbiosis Site " as OECMs in the international database toshow that they directly contribute to the Kunming-Montreal Biodiversity Framework.

8 R&D and Innovation[Mitigation of negative impacts on Biodiversity (example)]⚫
To reduce the negative impact on biodiversity in the supply chain and contribute to nature-positive,
research, development, and innovation are needed to create new businesses. (The scope of "R&D
and innovation" is not limited to products and services, but also includes sales and marketing
methods, as well as business models). Therefore, R&D and efforts for innovation should be done invarious sectors and industries.)⚫
Providing the latest and innovative technologies, products, and services to contribute to biodiversity.
⚫
Technology and utilization of data to assess the impact on biodiversity.
⚫
Research and development of products, services, production methods, and construction methods that
reduce the impact on biodiversity.
⚫
Development of biodiversity-sensitive services, sales and marketing methods, and business models⚫
Technical cooperation and technology transfer to developing countries, etc.
⚫
Compliance with ABS procedures[Characteristics].
⚫
The development of new products and services using genetic resources requires procedures basedon the national and international framework of the ABS.
[Indicators and targets]⚫
Budget for R&D for research, development, and innovation of technologies, products, and services thatcan reduce negative effects on biodiversity and contribute to nature positive.
Business for GBF (Global Biodiversity Framework) project
It was launched jointly by the Ministry of the Environment and Keidanren in November 2020. ManyJapanese companies have technologies, products, and services that contribute to achieving the goals of the2030 Biodiversity Framework (later known as the "Kunming-Montreal Biodiversity Framework"). This
project shares these outstanding technologies, products, and services globally.
Access and Benefit-Sharing (ABS)An internationally recognized concept for access to genetic resources and benefit-sharing. It is mentioned
in the Convention on Biological Diversity and the Nagoya Protocol.

① Stage /Division② Relationships③ Possible
indicatorsand targets

9 Fundraising[Mitigation of negative impacts on Biodiversity (example)]⚫
Assessment and analysis of dependencies, impacts, risks, opportunities, etc., and disclosure of
information[Characteristics].
⚫
To obtain investment and financing, it is essential to address ESG issues, including consideration of
biodiversity in business activities.
⚫
In addition to specific actions for biodiversity conservation, the company engage in dialogue withinvestors and other stakeholders through information disclosure.
⚫
Currently, international discussions on the TNFD are ongoing, and it is necessary to align with theseframeworks.
[Indicators and targets]⚫
Quantity of investment, financing, and revenues for businesses related to biodiversity conservationand nature positive39

2. Basic concept for financial institutions◼

Concept❖ Biodiversity and natural capital have a significant impact on the business of the investee, which
can be risks and/or opportunities for financial institutions.

❖ As various international frameworks, such as the TNFD and Finance for Biodiversity, are underdiscussion and development, actions need to be taken in line with those internationalframeworks.
Biodiversity and natural capital are risks and opportunities for financial institutions, as they have a significant
impact on the business of the investee. In this context, investments in biodiversity became more important as
green finance and ESG investments expanded globally.
Therefore, it is important for financial institutions to analyze the risks to their portfolios based on the statusof TNFD and other initiatives, to promote investments for biodiversity-sensitive business activities throughdialogue (engagement) with investee.
Examples of actions✓

Integrate consideration of biodiversity into criteria for investments➢

In project financing, if the project can be identified, utilize the Equator Principles and request an environmental
impact assessment, including biodiversity as part of the review process.

➢For investing, confirm the consideration of biodiversity by the investee (e.g., existence of a policy on biodiversity
conservation and sustainable use, utilization of environmental management system, etc.).

✓

Considering Principles for Responsible Investment (PRI) and biodiversity✓

Develop and provide financial instruments that promote biodiversity-sensitive business activities (integrating consideration of
biodiversity into the evaluation process for ratings for example).

✓

Sharing good practices on the conservation and sustainable use of biodiversity① Industry② Relationships③ Possible
indicatorsand targets④ Reference

Financial Institutions[Mitigation of negative impacts on Biodiversity (example)]⚫
Assessment and analysis of dependence, impact, risks, opportunities of the investee, andinformation disclosure[Characteristics]⚫
Biodiversity and natural capital itself have a significant impact on the business of the investee, which
can be risks and/or opportunities for financial institutions.
⚫
As various international frameworks, such as the TNFD and Finance for Biodiversity, are underdiscussion and development, actions need to be taken in line with those international frameworks[Indicators and targets]
The following indicators are listed in the TNFD beta version.
⚫
Amount of investments to industry and company that are highly dependent on ecosystem services.
⚫
Assets under management (AuM), investments, loans, and insurance exposed to significant risk⚫
Financial data (investment, financing, insurance, etc.) that demonstrates significant mitigation ofnature-related risks.
⚫
Financial data (investments, loans, insurance, etc.) with positive impacts on nature positive
TNFD Annex 3.3 Supplement in the Financial Sector (Draft)38
Refer to Part 3
TNFD Annex 3.4 Assessment and Disclosure Indicators for the Financial Sector (image)39
Refer to Part 3

3. Collaboration with local governments
This section contains information for collaboration between businesses and local government/community.
As there are a variety of issues related to biodiversity in a region, concerned parties in the region need to work
together to solve these issues. When considering collaboration with local communities, it is also necessary forbusinesses to make effective efforts in accordance with the characteristics of the local community.

38 Source: THE TNFD NATURE-RELATED RISK AND OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3

ANNEX 3.3 ADDITIONAL DRAFT DISCLOSURE GUIDANCE FOR FINANCIAL INSTITUTIONS (2022, TNFD)
39 Source: THE TNFD NATURE-RELATED RISK AND OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3
ANNEX 3.4 ILLUSTRATIVE ASSESSMENT AND DISCLOSURE METRICS FOR FINANCIAL INSTITUTIONS (2022, TNFD)

40

Currently, 47 prefectures have already formulated regional biodiversity strategies by local governments, andthe sub-regional strategies are under development by municipalities. It is important to make them consistent andcoherent with global targets but also to be unique and take the characteristics of the local biodiversity and social
norms into account. It is expected that regional strategies will be reviewed and revised based on the KunmingMontreal Biodiversity Framework and the National Biodiversity Strategy.
The Ministry of the Environment promotes the formulation and revision of regional strategies based on the
National Biodiversity Strategy through the publication of guidelines and providing technical support by experts.
◼

Steady implementation of the National Biodiversity Strategy and regional biodiversity strategies

In addition, examples of activities related to biodiversity through collaboration between local governments andbusinesses are compiled in the Reference Materials section.

41

Part 3: Impact Assessment, Strategy and Goal Setting, andInformation Disclosure
In this part, we will explain in more detail the concept of assessing the impact on biodiversity and natural
capital, setting strategies and goals based on this assessment, and information disclosure in relation to theprocess for considerations of biodiversity described in Part 2.
Case studies are included in Chapter 4 in this part as references for impact assessment, strategy and goal
setting, and information disclosure.

Chapter 1: Impact Assessment
1. Basic concept of impact assessment and analysis based on data and indicators
To integrate consideration of biodiversity into management and implementation, it is necessary toquantitatively assess the impact and dependence of business activities on biodiversity as much as possible andto analyze and evaluate the risks and opportunities for business derived from the assessment.
For the impact assessment by the company:⚫ there is an assessment of the negative impacts of business activities on biodiversity, including resource
consumption, procurement, and land development.
⚫ there is an assessment of the amount of contribution to the reduction of environmental burden by theactivities, technologies, and products and services provided by businesses. However, it is necessary to
identify a method and the indicators for the impact assessment.
For evaluation purposes, it is required:⚫
to select an appropriate method for the objectives of the evaluation.
⚫ to select indicators according to the objectives evaluation.
⚫ to collect data such as resource usage, waste volume, suppliers, procurement volume, and productdata.
The examples of businesses listed in these guidelines are helpful in selecting methods and indicators. The
relevant documents of the Kunming-Montreal Biodiversity Framework include Ecological Footprint (as acomponent indicator and a supplementary indicator) and LIME (as a supplementary indicator) to monitor
the progress of the targets.40
Subjects of evaluation include:⚫ the overall impact of the business,⚫ the impact of products or services,⚫ the impact of supply chain and value chain,⚫ quantitative change in impact from a specific year, and⚫ the impact of new products compared to the old ones.

Biodiversity and natural capital vary in vulnerability and impact depending on location. Therefore, dependingon the objectives of the assessment, it may be necessary to assess the status of biodiversity and natural capitalin each location where business activities are conducted.

40 Indicators for measuring progress on the Kunming-Montreal Biodiversity Framework include

Headline Indicators: Indicators that capture the overall scope of goals and targets.
Component Indicators: optional indicators that cover all elements of each goal and target along with headline
indicators
Auxiliary Indicators: any indicators that can be applied for thematic and detailed analysis of each goal andtarget42

The company identify the business activities and locations in which the business is highly dependent on
biodiversity, as well as the impacts. Then, the risks and opportunities to the business activities and society are
analyzed in detail. In doing so, it is also important to indicate negative and positive impacts without offsetting
them in the assessment, since ecosystems are site-specific.
While various methods of impact assessment have been proposed, this chapter includes the methods
proposed by SBTs for Nature and TNFD, as well as examples of disclosures by advanced companies First, you
can refer to the following methods, data, indicators, and tools.
◼

Examples of evaluation methods, indicators, and tools for impact assessment

Category

Name

Biodiversity
impactassessment(crosssectional)

Ecologicalfootprint

Outline・・・・

LIME2,

It has also been used as an indicator in GBO4 and GBO5.

・

the monitoring framework of the Kunming-Montreal Biodiversity
Framework, has been a component and supplementary indicator of thetarget because of the availability of global and country-specific assessments
and data since 1965.

・

Licensing fees are required to make calculations based on their data (as ofJanuary 2023).

・One of the Life Cycle Impact Assessment (LCIA) methods, which can assess
the impact of business activities on multiple areas (biodiversity, primary
production, climate change, air pollution, etc.).
The Japanese version of LIME2 and the international version of LIME3 arebeing developed.
The impact can also be evaluated in economic value.
Due to the relatively large amount of inventory data required, basicmunicipality-level data may not be available.
In LIME3, the G20 region is supported as a weighting factor.
In the monitoring framework of the Kunming-Montreal Biodiversity
Framework, it has been an example of an LCIA assessment indicator and a
supplementary indicator to the target.
Fee for inventory database is required to be calculated based on their data(as of January 2023).

Taiheiyo
Cement (P65),
Kao, Sekisui
Chemical,ToppanPrinting,
Fujitsu,
Bridgestone,
Ricoh

・

The Natural Capital Finance Alliance led in development in collaboration
with UNEP-WCMC and others.

・

Tools help users to understand and visualize the impact of environmental
changes on the economy.

BNP Paribas(P66), AssetManagement
One (P68)

・

It visualizes how the business depends on and has an impact on nature, andhow these potential dependencies and impacts can be business risks.

・

Analysis results can be obtained by selecting the industry and production
method.

・No license fees are required (as of January 2023).

・

The GLOBIO model aims to inform and assist policymakers by quantifying the
global impacts of human activities on biodiversity and ecosystems.

・It calculates the health of regional terrestrial biodiversity, expressed as mean
species abundance (MSA), as a function of six types of impacts of humanactivities on the environment: land use, road construction, habitat
fragmentation, hunting, atmospheric nitrogen deposition, and climatechange.

・

GLOBIO4 was developed in 2020 and has been widely used by theInternational Science-Policy Platform on Biodiversity and Ecosystem Services(IPBES), the Secretariat of the Convention on Biological Diversity (CBD ), andothers.

・
・
・
・
・

・

GLOBIO

Daiichi Sankyo(P65), Kao(P71)

・

LIME3

ENCOREThe results of the environmentally-extended input-output analysis, basedon land area at the national level, are available.
The volume and weight of each procurement item, enable us to estimate
the country or region the item is likely to be procured as well as the level ofenvironmental impact.
If a country or region is identified, country- or region-specific data can beapplied.
Although a highly comprehensive analysis is available, it should be notedthat the effects of chemical substances are not included in the results.

Case Studies(pages)43

Hermes (P69)Biodiversity
ImpactAssessment(Local)IBAT・

No license fees are required (as of January 2023).

・

Information on biodiversity, such as protected areas and endangered
species, is integrated and displayed on a map.

・

If a protected area is registered in the World Database on Protected Areas(WDPA ) in the target country, it is possible to check the area to be conservedin the country as well as the Key Biodiversity Areas (KBA) on a map, andwhether or not the area is affected by land use.

・

While it contains information on the distribution of species on the KBA
Target Species List or the IUCN Red List, there is no information on theimportance of species in the region. It cannot identify the extent of
distribution of important species for a region or site-specific biodiversity.
Depending on the functions to be utilized, license fees are required (as ofJanuary 2023).

・WWF
Biodiversity
Risk Filter

Other(water,forests, etc.)

FAO/
AQUASTATTrase

WWF Water
Risk Filter

WRI
Aqueduct Water Risk
Atlas

・

A corporate and portfolio screening tool to help companies and investors
prioritize the most important commodity and location to address
biodiversity risks, increase business resilience, and contribute to asustainable future.

・

Scores of 33 items in 8 categories related to biodiversity can be checked at
the sector level.

・No license fees are required (as of January 2023).

・

It is a global database by the Food and Agriculture Organization of the United
Nations (FAO), with more than 180 variables and indicators by country.

・Data can be reviewed in geography and population, water resources, wateruse, irrigation and drainage development, environment and health, etc., andcan be used to identify hot spots.

・

CSV data is available from the database distribution page.

・

No license fees are required (as of January 2023).

・

Mapping the risks on forests by supply chain connecting consuming
countries and traders with production sites.

・It enables visualization of countries, regions, and businesses with high rates
of deforestation.

・The target commodities are 13 items that are strongly related todeforestation (soybeans, palm oil, beef, shrimp, cocoa, coffee, corn, wood
pulp, palm kernel, chicken, cotton, sugar cane, and pork).

・No license fees are required (as of January 2023).

・

Tools for screening and prioritization at the business and the portfolio.

・It allows businesses and investors to assess and prepare to address current
and future water risks.

・It helps to identify future water risks on a map based on the Shared Socioeconomic Pathway (SSP) scenario or the Representative Concentration
Pathway (RCP) scenario.

・No license fees are required (as of January 2023).

・

A risk mapping tool that can be used by businesses, investors,
governments, and other users to understand where and how water-relatedrisks and opportunities are occurring around the world.

・

Water risk can be viewed on a map in(1) overall risk, (2) physical risk(quantitative), (3) physical risk (qualitative), and (4) regulatory andreputational risk.

・It enables users to search for a location by entering an address or importinga file.

・No license fees are required (as of January 2023).

Lotte (P69),
Taiheiyo
Cement (P65)-

BNP Paribas
(P66)

Asset
Management
On (P68)

Kirin (P67)

BNP Paribas(P66), Kirin(P67), AssetManagement
One (P68),
Lotte (P69)*A list of other data, indicators, and tools mentioned in TNFD, SBTs for Nature, etc. are listed in the Reference
Materials section.

44

◼ Financial data and indicators
Financial institutions need to analyze the impact, dependence, risks and opportunities on a sector basis fortheir investments. Below are examples of data and indicators used by financial institutions.
Data and indicators (andguidance on them)
BFFI Model: Biodiversity
Footprint for Financial
Institutions(Case studies of forestation,coffee, and offshore wind
power incorporating the
EXIOBASE and ReCiPe
models)DNB Indebted to Nature(conversion of the threebiodiversity-related risks tofinancial risk (physical,
transition, and reputationalrisks))CISL Handbook for Naturerelated Financial Risks(identification of the impact
on the operating company
for each physical risk,
transition risk, liability risk,
and financial risk as a result)

Summary・

NoteThis report introduces a methodology formeasuring the effects of biodiversity
conservation and restoration throughinvestment that may apply to the sameminded investment and financial
institutions.

・It is an example of only investments
closely related to biodiversity.

・This report summarizes the case studies
and workshops that analyzed thecontribution to the biodiversity of theinvestments using existing tools.

・It follows the model of environmental
risks linked to financial risks analyzed by
the Network for Greening the Financial
System (NGFS) which was established byfinancial authorities in various countries.

・The analysis depends on existing available
data on the financial condition andbiodiversity of the financial institutions.

・The risk of quantitative financial loss
associated with biodiversity loss can beassessed for assets held by financial
institutions.

・The report presents a categorization ofnatural environmental risks41, the impactof these risks on business, and the risks tofinancial institutions42).

・

The actual usability of the system needs
to be verified through case studies andother means.

41 Physical, transition, and liability risks
42 credit risk, market risk, liquidity risk, and business risk

45

◼

Examples of Impact Assessment

Methods for assessing the impact (burden) of business activities on biodiversity
To assess the impact of business activities on biodiversity, you can use the conversion coefficients provided by various tools to
calculate the burden on biodiversity based on the data of material flow of business activities.
In this case, there are two possible units of impact assessment: the "organizational level" and the "product/service level”.
Organizational-level impacts include the consumption of natural resources in business activities, land use associated with theestablishment of business sites and factories, and disposal. On the other hand, individual products and services are related to theconsumption of natural resources and disposal during their production and consumption processes (life cycle), which directly andindirectly affect biodiversity.

2. Identification of risks and opportunities for business activities
You can use data, indicators, and tools to calculate the impact and dependence on natural capital at key
business locations, and then identify risks and opportunities for business activities and society.
There is no required method to follow for identifying risks and opportunities, and the TNFD Framework
requires disclosure of such information as financial information. On the other hand, it is desirable to analyze awide range of risks and opportunities (e.g., impacts on nature and society) as non-financial information anddisclose them proactively in environmental reports.

46

Chapter 2: Setting Strategies and Goals
1. Setting Strategies and Goals for Biodiversity
After analyzing the impacts, dependencies, risks, and opportunities in business activities and biodiversity,
the company proceeds with its actions as a business entity (e.g., establishing governance, and setting andimplementing strategies and targets). After that, information disclosure to investors is made, focusing on
finance.
Various frameworks are being developed for assessing impacts, setting targets, and disclosing information,such as the TNFD Framework, SBTs for Nature, CDP, and international standards for biodiversity. It would bedesirable to work in line with these frameworks as much as possible. The following is an example of how to set
strategies and targets based on these frameworks.

2. How to set biodiversity targets
When setting targets, it is desirable to set quantitative targets as much as possible, while utilizing theevaluation tools described in Chapter 1. On the other hand, depending on the nature of the business and its
impact on biodiversity, setting quantitative targets may make it more difficult to take action. Below are someideas for setting qualitative and quantitative targets based on international frameworks such as SBTs for Nature.

(1) Quantitative target setting
Setting quantitative targets has various advantages, such as clear targets and activities, monitoring ofactivities and detailed analysis, and transparency to stakeholders including investors. There is a growing
demand for setting quantitative targets as much as possible.
On the other hand, there is no standardized method for quantification of biodiversity, the GHG Protocol forclimate change. Therefore, at this moment, each company needs to set its indicators and targets based on thenature of its business and regional conditions. For example, the "impact of invasive species" is highly difficult
to quantify, so it is necessary to consider targets while referring to indicators in the TNFD framework.
It is also important to note that businesses that depend on natural capital from a wide range of regions
through their supply chains should set national or international targets, not just targets for a specific region forcompliancereasons.
Examples of quantitative goal setting
Increase the percentage of certified products from x% to x% by 20xx.
By 2030, register 10% of its sites in the international database as OECMs
By 2030, reduce the negative impact on biodiversity in the entire supply chain by 30% from the current level by assessing theecological footprint.
Triple the scale of products and services that contribute to biodiversity conservation by 2030
Promote technological development for the conservation of biodiversity and develop xx(number) new technologies
Increase the number of green products that contribute to biodiversity conservation to 30%
By 2030, provide training on biodiversity conservation for all employees

47

(2) Qualitative goal setting
It is often difficult to set and measure quantitative indicators for biodiversity because databases and tools
are still under development, and the company may have to set qualitative targets to have comprehensive goals.
In such cases, it is necessary to establish indicators for activities as much as possible, so that the progress andresults of activities can be evaluated objectively. Examples may include the following.
Examples of qualitative goal setting
Promote dialogue with external stakeholders such as NGOs and NPOs regarding the assessment of business impact on
biodiversity and their initiatives (frequency of dialogue or numbers of participants).
Create a map of the relationship between business activities and biodiversity
Develop a procurement policy that takes biodiversity conservation into consideration

3. Key points for goal setting
The following four points may be considered when setting specific targets. In addition to the following
perspectives, it is also important to clearly define "by when," "by whom," and "what" for goal setting.
✓

1: Setting targets for significant impacts on business and nature
It is desirable to set the target considering the significance of the impact on business activities andbiodiversity.

✓

2: Set targets in line with global and national targets
It is desirable to set targets in line with the quantitative targets set in the Kunming-Montreal
Biodiversity Framework and the National Biodiversity Strategy. It can refer to the declarations andtargets of private initiatives.

✓

3: Gradual expansion of goal setting to entire business areas
It is desirable to start by setting targets considering the impact on and contribution to biodiversity inbusiness areas, while gradually expanding the target setting to the entire business activities and supply
chain/value chain.

✓

4: Site-specific goal setting
It is necessary to consider the impacts according to the geographic characteristics of the supply chain.
Ecosystem conditions vary from country and region, and they have their priorities. It is recommended
to refer to "regional biodiversity strategies" and other regional plans established by local governments
so that the company can take effective actions in accordance with the characteristics of the region.

4. A step-by-step approach to goal setting
While it would be ideal to set targets that are quantified, comprehensive, covering the entire supply
chain/value chain, and beyond the international and domestic targets, given the developing methodology andthe ongoing discussion of domestic and international frameworks, it is practical to gradually set and revise thetarget.
The following is a step-by-step approach for goal setting, developed with reference to the Maturity Modelsuch as ISO 37153 and TNFD frameworks. However, it is not strict, and companies do not necessarily need tofollow it.
Ultimately, it is expected that activities align with major national and international targets and guidelines,
such as the SBTs for Nature guidance and the Kunming-Montreal Biodiversity Framework, which will be
developed.
If a company has already established targets in its environmental management system, it is expected to aim
for a higher level, such as "Level 4" (some activities have been initiated or implemented to be aligned withinternational frameworks like SBTs for Nature) or "Level 5" (activities have been continuously implemented inline with international frameworks). For companies that have not yet set biodiversity targets, they are expected
to aim for "Level 2" (setting targets for a part of their business activities related to biodiversity) or "Level 3"(setting biodiversity targets based on their environmental management system, and continuously

48implementing activities considering biodiversity ), and then work toward the higher levels. Of course, it isappreciated to aim for "Level 4" or "Level 5" from the beginning.
Companies that are uncertain about the relationship between biodiversity and their business activities
should analyze their dependence on and impact on biodiversity, risks and opportunities as the first step, rather
than setting formal targets.
◼

A step-by-step approach to goal setting
Level
1

2

3

A step-by-step approach to goal setting
The target for biodiversity has not been set.

Targets are set for a part of business activities related tobiodiversity.

Targets for biodiversity based on the environmental
management system are set and continuously
implementing activities considering biodiversity.

The next step・Consider the inclusion of biodiversity targets inenvironmental activities.

・If the company has already set targets forclimate change and resource recycling, consider
adding biodiversity-related targets to them.

・

If the company has already set targets,
implement activities for biodiversity by using anenvironmental management system.

・ISO 14001 and Eco Action 21 are usefulreferences.

・

If the company use an environmental
management system to set goals and carry out
activities, consider using the SBTs for Natureframework so that the company can meetinternational requirements.

・

See Chapter 2, Section 6.

4

Some activities have been initiated or implemented to
be aligned with international frameworks like SBTs for
Nature・

If the company use the SBTs for Nature or otherframeworks to set goals, continue and consider
expanding the scope of activities.

5

Activities have been continuously implemented in linewith future international frameworks like SBTs for
Nature・

If the company already implement activities in
response to international frameworks, continue
and lead the industry.

◼ Level of ambition of the target
Apart from the goal-setting process described above, there is a "level of ambition" that indicates thedifficulty of achieving a goal. In setting goals, the level of ambition for the company is also an important issue.
It is one way to efficiently improve the state of biodiversity by setting more ambitious targets for areas thathave a large impact on biodiversity or have a high potential for reducing negative impacts.
For example, in the case of a quantitative goal of "reduce burden by XX%" a reduction of 80% would be moredifficult than a reduction of 50%. However, when applied to individual companies, an 80% reduction for
Company A may not be the same level of difficulty as an 80% reduction for Company B.
It is also important to constantly analyze whether the achievement of goals is affecting improvements in thestate of biodiversity.

49

5. Relationship between strategy and goal setting
Setting quantitative targets has various advantages, such as clear targets and activities, monitoring ofactivities and detailed analysis, and transparency to stakeholders including investors. There is a growing
demand for setting quantitative targets as much as possible. On the other hand, it is considered difficult to set
biodiversity targets based on a unified quantification method like GHG emissions in the field of climate change,
because the conditions and impacts of biodiversity vary from region to region. It is also advisable to keep inmind that the data and indicators are expected to develop in the future and should be updated accordingly.
Therefore, while setting quantitative targets as much as possible, it is also important to have a story that can
explain "why it is important for our business activities to work on biodiversity" not only within the organization
but also to stakeholders such as investors and consumers.

(1) Creating a coherent strategy and story
It is necessary to explain the importance of activities for biodiversity to the company and society from theperspectives of the risks and opportunities for the company. In addition, by describing the activities(responses)
with the qualitative or quantitative impact on those risks and opportunities, the activities would be more
coherent. Furthermore, by showing the relationship between the activities in the pipeline and the ongoing
activities, it becomes a coherent story based on past achievements.
It is also important to create stories and implement strategies in relation to the PDCA cycle in theenvironmental management systems that many businesses have already had, as well as to the internationalframeworks for natural capital, target setting, and information disclosure. It is also important to receive
feedback from investors, consumers, other stakeholders, and the market, on the disclosures to improve it.

(2) Set goals to support the strategy
Based on the strategies and stories, in setting actual targets, it is advisable to refer to the targets set in theKunming-Montreal Biodiversity Framework and the National Biodiversity Strategy.
◼

Examples of business-related targets in the Kunming-Montreal Biodiversity Framework
Summary

Target2

At least 30% of degraded ecological areas are under effective restoration

3

At least 30%of land, water and sea to be protected by protected systems such as OECMs (30 by 30 target)

6

Reduce the introduction of invasive alien species by at least 50%.

7

Reducing excess nutrients lost to the environment by at least half, reducing the overall risk from pesticides andhighly hazardous chemicals by at least half, and preventing, reducing, and working towards eliminating plastic
pollution

13

Take actions to ensure the fair and equitable sharing of benefits for genetic resources from digital sequence
information (DSI) and facilitate a significant increase of the benefits shared in accordance with the Access andBenefit-Sharing (ABS).

14

Ensure the full integration of biodiversity and its multiple values into policies, regulations, planning anddevelopment processes, poverty eradication strategies, strategic environmental assessments, environmental
impact assessments and, as appropriate, national accounting

15

Take legal, administrative or policy measures to encourage and enable business, and in particular to ensure thatlarge and transnational companies and financial institutions

16

Reduce the global footprint of consumption equitably, including through halving global food waste, significantly
reducing overconsumption and substantially reducing waste generation50

◼ Examples of Goals in National Strategies
The National Biodiversity Strategy sets out the following target states and target actions for businesses.
Although the following are national targets, the role of business is important in achieving them. Therefore,businesses are expected to set their targets and action plans while taking into account the goals of the National
Biodiversity Strategy.
In setting these targets, the scope of impact, dependence, risk, and opportunity analysis ( at the company,
including group companies, or the entire supply chain) and materiality are taken into consideration.

Targets in Basic Strategy 3 of the National Biodiversity Strategy
Since it is essential for the nature-positive economy to transform society, target states for integrating biodiversity and natural
capital into business activities would be set from the perspectives of the financial sector, overall business activities, and theagriculture, forestry, and fisheries sectors. In addition, to achieve these target states, it includes target actions related to actions toencourage the evaluation, analysis, and disclosure of the impact of business activities on biodiversity, actions to utilize the benefits
from the sustainable use of biological resources for conservation, and actions to support businesses that contribute to theconservation of biodiversity.
From a financial perspective, to promote the realization of nature positive economy through investments, it is necessary to provide
technical advice to help companies quantitatively assess and analyze the impact of their activities on biodiversity, set targets, anddisclose information, as well as to create the environment for investments by promoting information disclosure by companies, raisingawareness on financial institutions and investors, and promoting dialogue between business and investor, thereby expanding thescale of ESG investment and financing and promoting allocation for the biodiversity. It is also necessary to promote technologies andservices that make a positive contribution to biodiversity in all business activities. At the same time, it is necessary to promote thesustainable use of biological resources and give back to biodiversity conservation through access to genetic resources and the fair andequitable sharing of benefits from their use. Through these efforts, it is necessary to increase positive contributions to biodiversity andreduce negative impacts in all business activities. From the perspective of agriculture, forestry, and fisheries, it is necessary to provide
support to reduce negative impacts and increase positive contributions to biodiversity at each stage from production to consumption
to expand sustainable agriculture, forestry, and fisheries in the country.

[Target States]✓

ESG investments that contribute to biodiversity conservation are promoted, and resources are appropriately allocated toactions that contribute to biodiversity conservation.

✓

Reducing the negative impacts of business activities on biodiversity, increasing positive impacts, reducing biodiversity-relatedrisks for companies and financial institutions, and promoting actions to ensure sustainable production is progressed.

✓

Sustainable agriculture, forestry, and fisheries are expanding.

[Target Actions]✓

Promote quantitative assessment of impacts of business on biodiversity, analysis of the current status, science-based target
setting, and information disclosure, as well as create the environment to promote investment by financial institutions andinvestors, and promote activities to conserve and restore biodiversity from the perspective of investment and financing.

✓

Promote support for technologies and services that contribute to biodiversity conservation.

✓

Conduct ABS associated with the use of genetic resources.

✓

Expand sustainable, environmentally friendly agriculture, forestry, and fisheries, including a 10% reduction in chemical pesticideuse (risk equivalent).

51

6. Goal setting based on SBTs for Nature◼ SBTs for Nature43 (Science Based Targets for Nature)
As discussed in Part 2, SBTs for Nature are measurable, actionable, time-bound targets based on the latest
available science that enables companies to act within the limits of the Earth and in line with sustainability
goals with respect to the interconnection of water, biodiversity, land, and oceans in the value chain. It defines
the direct and indirect factors contributing to the degradation of nature, as well as the state of nature itself,
and proposes to set targets based on five categories of direct factors.
As actions to be taken by business, it presents the importance of understanding the science of loss of natureand the impact of business activities on biodiversity, and then setting goals to transform their business, thereby
reducing the negative impact on the natural environment and biodiversity, and promoting net positive
contributions to biodiversity (restoration and regeneration) to ensure the sustainable business.
Initial guidance to set targets and indicators was published in September 2020.
◼ High-level target categorization for SBTs for Nature
The Science Based Targets Network, an international network of more than 45 organizations, is developinga methodology for setting SBTs for Nature, and while the SBTs for Nature guide is still under development, aguide for setting water-related targets that consider watershed conditions, SBTs for Water, “Setting Site Water
Targets Informed By Catchment Context: A Guide For Companies" has been published.

43 Sources: SCIENCE-BASED GOAL SETTING ON NATURE INITIAL GUIDANCE FOR COMPANIES EXECUTIVE SUMMARY(JAPANESE ONLY) (2020, SBTS FOR NATURE)

52

◼

SBTs for Nature: Steps and points for goal setting

Step

ActionStep 1: Assess

Deliverables

・ Gather and/or supplement existing data to estimate your value
chain-wide impacts and dependencies on nature, resulting in alist of potential ‘issue areas’ and value chain locations for target
setting.

・

Initialassessment

of

the

environmental footprint and alist of potential issue areas andlocations

Step
Interpret

2:
andprioritize
Step

3:

Measure,set

and disclose
Step 4: Act

Step 5: Track・ Interpret the outputs of Step 1, prioritizing key issues andlocations to take action. You will consider actions across different‘spheres of influence’ from your operations to the landscapes
surrounding your value chain(s).

・ Candidate sites for target setting,and the initial estimation of therequired efforts

・ Collect baseline data for prioritized targets and locations. Using
the data from this and previous steps, you can set targets alignedwith Earth’s limits and societal sustainability goals and thendisclose these publicly.

・ Detailed baseline and targets,action program with timelinesand deadlines for achieving thetargets

・ Once targets are set, you utilize SBTN’s Action Framework (AR3T:
Avoid, Reduce, Regenerate, Restore, and Transform) to make aplan and begin to address your contributions toward theunsustainable use and loss of nature key impacts.

・ Basic plan for actions in priority

・ Monitor progress toward your targets, report publicly on thisprogress, and adapt your approach as necessary.

・Publication of activities

・Internal knowledge and lessons

locationslearnt.

SBTs for Nature AR3T (action framework)
SBTs for Nature recommends AR3T as a framework for actions that businesses shouldtake to achieve goals for the Earth and nature. As shown in the figure on the right, it
consists of four steps: Avoid, Reduce, Restore & Regenerate, and Transform.

53

Chapter 3: Information Disclosure
1. Basic concept of information disclosure
The analysis of impacts, dependencies, opportunities, and risks in business activities, as described, as wellas the strategies and goals based on that analysis would be published, and the company communicate withstakeholders to deepen understanding of the business and lead to opportunities for fundraising and market
reputations. It is also expected to raise awareness of executives and employees on the environment, as well as
obtain insights from external stakeholders that contribute to innovation and corporate value in the business.
On the other hand, failure to disclose that information may be regarded by stakeholders as a failure to fulfil
corporate accountability and social responsibility, leading to risks in fundraising and market reputation, as well
as being a transition risk in the global movement toward disclosure.
Currently, the TNFD framework is progressing for information disclosure by businesses regarding biodiversity,and it is expected to follow the TNFD framework. In Europe, regulatory information disclosure systems such as
the Sustainable Finance Disclosure Regulation(SFDR) have been established. When the company aims to
expand its business internationally, it is necessary to pay attention to the information disclosure systems inother countries. On the other hand, it should be noted that the TNFD Framework is intended to disclose
financial information, and non-financial information that is not directly related to the business such as impacts
on nature, may not necessarily be subject to disclosure. Therefore, it may be appropriate to disclose a wider
range of information than that of the TNFD Framework to stakeholders such as local communities.
In addition to information disclosure, compliance with the Due Diligence Directive and the Taxonomy is also
becoming a requirement, particularly in Europe. By responding to these regulations in an integrated manner
through analysis of impact, dependence, opportunity, and risk, it would be easier to respond to international
market trends.

2. Channel of information disclosure(1) Current status of media used for information disclosure
According to a survey by the Keidanren Council for Nature Conservation, the majority of the media currently
used for biodiversity-related information disclosure are websites followed by booklets and brochures, annual
financial reports, and integrated reports, and it is not limited to conventional environmental and CSR reports.
Websites, booklets, and brochures are effective for disseminating not only financial information but also
non-financial information to a wide range of stakeholders. It is appropriate to use different media dependingon the target population.

◼

Disclosure of media for environmental reports by expected appeal destination44

44 Source: COMMENTARY FOR ENVIRONMENTAL REPORTING - ENVIRONMENTAL REPORTING GUIDELINES 2018 COMPLIANCE(2019, Ministry of the Environment).

54

3. Framework of information disclosure
There are some frameworks of information disclosure for your reference. Disclosure based on the size of thebusiness and the interest of the stakeholders is appropriate.

(1) Information disclosure based on environmental reporting guidelines
The Environmental Reporting Guidelines by the Ministry of the Environment of Japan cover not only biodiversity
and natural capital but also environmental reporting as a whole. For example, if the company have beenreporting on climate change, it is expected to add information on biodiversity and natural capital to the report.

◼

Overview of basic descriptions in the Environmental Report45
Item

Summary

Basic Information

Performance✓ Reporting Organizations: Scope of organizations to be included in environmental reporting✓ Reporting period: Period covered by the report (it is important to be done regularly, at least oncea year)✓ Standards, guidelines: Name of the standard or guideline applied✓ Structure of the environmental report: If the report is to be published in multiple media orformats, explain the structure using a visual method such as a diagram so that theinterrelationships among them can be clear.
✓ From the performance indicators that show the results of actions for the environment, select twoto three important indicators, and describe changes over the past three to five years while also
listing the main business indicators.

Indicators<Example of change in performance indicator>

Basic Requirements

Changes in

Item
Commitment
Governance

Stakeholder
Engagement
Risk management
Business model
Value chain
management✓ Commitment of executives to address key environmental issues✓ Governance structure of the company✓ Representative for managing important environmental issues.
✓ Role of the board members and the executives in the management of significant environmental
issues✓ Policy for stakeholder relations✓ Summary of stakeholder engagement✓ Methods for risk identification, assessment and response✓ Interrelation of the above methods with overall risk management✓ Business model✓ Value chain overview (value chain map)
✓ Green procurement policy, targets and achievements

45 Source: ENVIRONMENTAL REPORTING GUIDELINES 2018 (2018, Ministry of the Environment).

55

Long-term vision
Strategy
Procedure to identify
criticalenvironmental issues
Key environmental
issues for businesses

✓
✓
✓
✓

Status of environmentally friendly products and services
Long-term vision and period
Reasons for choosing the periodBusiness strategies to achieve a sustainable society✓ Procedures to be followed when the company identifies a significant environmental issue(implementation procedures)✓ List of significant environmental issues identified (results)✓ Reasons for identified environmental issues to be important (criteria)✓ Boundary of important environmental issues (scope of business activities)✓ Policy and action plan
✓ Targets and results of actions based on performance indicators✓ Calculation method of performance indicators✓ Scope of performance indicators✓ If the financial impact of risks and opportunities is significant, the quantity of those impacts andthe method used to calculate them
✓ Assurance report if an independent third-party assurance has been provided(2) Information disclosure based on CDP
CDP has added six new biodiversity-related questions to the 2022 Climate Change Questionnaire. These
questions are based on the IUCN Corporate Reporting on Biodiversity Guidelines, which intend to collect dataon the progress/degree of implementation of biodiversity strategies in the companies, and indicate key areas
where businesses should report information.
◼

Additional biodiversity questions added to the CDP46 (2023 version, tentative translation)question
number
C15.1

Questions related to biodiversity

C15.2

Is there board-level oversight and/or executive management-level responsibility for biodiversity-related matterswithin your organization?
Has your organization made a public commitment and/or endorsed any initiatives related to biodiversity?

C15.3

Does your organization assess the impact of its value chain on biodiversity?

C15.4

What actions has your organization taken in the reporting year to progress your biodiversity-related
commitments?
Does your organization use biodiversity indicators to monitor performance across its activities?

C15.5
C15.6

Have you published information about your organization’s response to biodiversity-related issues for this reporting
year in places other than in your CDP response? If so, please attach the publication(s).

46 Source: CDP WEBSITE

56

4. A step-by-step approach to information disclosure
As described in Chapters 1 and 2, international frameworks such as the TNFD are still under development,
and the indicators and targets are expected to vary depending on the situation of the business and other factors.
Therefore, it is desirable to take a step-by-step approach to information disclosure as is the case of target setting.
The following is a step-by-step approach to information disclosure, with reference to the Maturity Model ofISO 37153 and other standards, to provide an outline of each step. However, it is not a required approach, andit does not necessarily mean that the steps must be taken in this order.
Many businesses implement information disclosure in their environmental management systems. For thosethat have already implemented biodiversity-related information disclosure in their environmental
management systems, it is expected that they would aim for a higher level of disclosure, such as "Level 4" (apart of activities have been implemented to follow international frameworks (such as TNFD) that will become
necessary in the future) or "Level 5" (activities have been continuously implemented to follow internationalframeworks (such as TNFD) that will become necessary in the future) as is the case of target setting. Companies
that have not yet disclosed biodiversity-related information are expected to aim for "Level 2" (disclosed
information on some of their biodiversity-related activities) or "Level 3" (disclosed biodiversity-related
information based on their environmental management system, and are continuously considering biodiversity),
and then move on to the next level.
The highest level(Level 5), implements activities in line with national and international trends and guidelines,
such as the Kunming-Montreal Biodiversity Framework adopted at COP15, the TNFD Framework, IIRC, and GRI
Standards. On the other hand, for those businesses that have not disclosed information, it is expected that theywould disclose information with items that are easy to disclose in the environment sector (e.g.,
decarbonization).
◼

Step-by-step approach to disclosurelevel

Description

To the Next Level

No disclosure on activities related to biodiversity

・Consider the inclusion of information on
biodiversity in environmental reports and otherdocuments.

・

If the company has already disclosed
information on climate change and resource
recycling, consider adding a biodiversity section
to them.

・

If the company has already disclosed
information, please continue to disclose
information on biodiversity by using anenvironmental management system or othermeans.

・ISO 14001 and Eco Action 21 are usefulreferences.

・

If the company use an environmental
management system to disclose information,
consider using the TNFD framework, to follow
international requirements.

1

2Disclosure of information on some activities related tobiodiversity

3

Disclosed biodiversity-related information based on
their environmental management system, andcontinuously took biodiversity into consideration

・

Refer to Chapter 3, Section 5.

4

A part of the activities has been implemented to follow
international frameworks (TNFD)・

If the company uses the TNFD framework orother information disclosure tools, continue andconsider expanding the scope of information
disclosed.

5

Ongoing implementation of activities in line withinternational frameworks (e.g., TNFD)・

If the company have already implemented
disclosure in line with international frameworks,
continue and lead the industry and supply chain.

57

5. Information disclosure in line with the TNFD
The items covered by the TNFD recommended disclosure are Governance (the organization's governance of
nature-related dependencies, risks and opportunities), Strategy (key risks and opportunities related to thebusiness, strategy, and finance), Risk and impact management (identification and assessment of nature-relatedrisks and management), and Metrics and targets (targets and indicators to assess and manage nature-relatedrisks and opportunities). These are included in the basic processes discussed in Part 2.
◼

TNFD Recommended Disclosure47

Even CSR activities (nature conservation in local communities, contributions to the 30 by 30 targets, etc.) can
help to understand local communities and raise awareness of employees by disclosing information with a storyof the relationship between CSR and the risks and opportunities on the business.
TNFD conduct pilot tests and develops and publishes guidance to support information disclosure. In addition,
TNFD has launched an initiative called the "Nature-related Data Catalyst" to promote the assessment of thecurrent status and development of nature-related data. (as of February 2023)

47 Source: The TNFD NATURE-RELATED RISK & OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3,

2022, TNFD.

58

Collaboration with society and local communities in TNFDThe TNFD presents that the impact and dependence of business activities on nature varies from place to place and it isclosely related to society and local communities. Local communities and civil society may have specific perspectives andexperiences on how the business activities interact with nature, and they may also have specific knowledge and expertise tomeasure and assess the local ecosystems. Considering these perspectives in impact assessments can strengthen thecommitment of executives the focus on nature-related risks and opportunities in the investment portfolio.

The TNFD framework lists the following risks and opportunities◼ Risks and Opportunities in the TNFD Framework48
Main Category
Risk

Sub-category
Physical risk
Transition risk

Systemic risk
Opportunity

Improved resource
efficiency
MarketFundraising
Resilience
Reputation

ExampleAcute risks (natural disasters), chronic risks (loss of pollination services)
Policy and legal risk (compliance), market risk (changes in supply, demand, and financing
due to changes in consumer and investor trends), technical risk, and reputational risk
( brand value from society, customers, and communities)
Ecosystem collapse risk, aggregated risk, and spillover risk throughout the financial
system
(Opportunities from increased resource efficiency of natural resources such as water andenergy)(Opportunities to develop new markets by introducing products, services, and solutions
with low environmental impact)(Opportunities through easier access to financing through ESG)
(Opportunities through resilient supply chain resiliency)(Business opportunities through reputation from stakeholders)◼ LEAP Approach49
The LEAP approach, also introduced in Part 2, is a voluntary guidance to support internal analysis anddiscussion for disclosure, in which the company present an integrated assessment process for nature-relatedrisks and opportunities within their business. This process consists of four steps. After scoping, the impact anddependence of the business on nature, and the risks and opportunities to the business are assessed.
In the LEAP approach, the following questions are asked with respect to setting the scope before the analysis.
Then the steps in the LEAP approach are presented.
✓ What are the organization’s activities where there are likely to be material nature-related dependencies,
impacts, risks and opportunities?
✓ Given the current level of capacity, skills and data within the organization and given organizational goals,
what are the resource (financial, human and data) considerations and time allocations required andagreed upon for undertaking an assessment?
（①(Locate: locate the interfaces with nature)
Since dependence and impacts on nature vary from place to place, it is essential to understand where thecompany or supply chain conducts business activities (L1) and then to understand the natural conditions(ecosystem/biome) specific to that location (L2). Therefore, information about business activities and thenatural environment of the area is essential. The company then identifies what business activities haveinterface with priority areas for biodiversity or water stress (L3 and L4).

48

Source: The TNFD NATURE-RELATED RISK & OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.1,
2022, TNFD.
49 Source: The TNFD NATURE-RELATED RISK & OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3,
2022, TNFD.

59

（②(Evaluate: evaluate dependencies and impacts on nature)
Identify the natural capital and ecosystem services(E1) based on the business activities and priority areas
identified in ① which they depend or have impact on, identify their relationship (dependence or impact) (E2),and analyze their scale and degree (positive or negative) (E3 and E4).

60

TNFD has also developed an initial list of non-financial priority sectors. While all non-financial sectors areaffected by nature-related risks and opportunities, TNFD has identified sectors that are more financiallysensitive due to their dependence and impact on nature than others. Additional guidance will be published forthese sectors in the future.
8 non-financial priority sectors✓

Food & beverage✓

Renewable resources and alternative energy✓

Infrastructure✓

Mining, mineral processing✓

Health care✓

Resource transformation✓

Consumer goods✓

Transportation（③(Assess: assess nature-related risks and opportunities to your organization )Based on the dependencies and impacts described in (2) above, risks (physical risks and transition risks) in
the organization are identified (A1). Then, the mitigation and management measures already in place for thoserisks are reviewed (A2), and if those measures are not sufficient for risk mitigation, additional measures are
considered to be taken (A3). At the same time, the company assess the opportunities for their business(A5).
The company should also analyze the impact of nature-related risks and opportunities on its financial
performance (revenues and costs) and financial condition ( assets and dept).
（④(Prepare: prepare to respond to nature-related risks and opportunities, including reporting )It is divided into two phases: “Strategy and resource allocation” and “Disclosure actions”. Based on the
results of the risk/opportunity analysis described in ③, the strategy and resource allocation are determined(P1). In addition, determine how goals would be set and how progress would be defined and measured (P2).
For the disclosure action, determine what would be disclosed following the TNFD disclosure proposal (P3).
then decide where and how the company would present their nature-related disclosure(P4).

Strategy development based on scenario analysis
As one of the disclosure recommendations, the TNFD requests “an explanation of the resilience of the strategy, taking a variety of
scenarios into consideration”. One approach is "scenario analysis," which allows for flexible business decisions by considering future
uncertainties and constructing business strategies that can respond to a range of future scenarios. Many companies have alreadyconducted scenario analysis on climate change in line with the disclosure recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD).
The TNFD v0.4 beta to be released in 2023 will include draft scenario guidance on biodiversity and natural capital.

◼ LEAP-FI focused on the needs of financial institutions.
TNFD recognizes that the scope and type of analysis vary depending on the type of financial institution, thetype of asset or financial instrument, the sector, the region, and the investment theme. Therefore, TNFD has
developed a customized LEAP-FI specifically for financial institutions as investors or capital managers.
Specifically, in addition to the four phases of the LEAP approach (Locate, Evaluate, Assess, and Prepare), theLEAP-FI outlines a series of scoping questions to help financial institutions prioritize and focus on theassessments of investment portfolios. The LEAP-FI is designed to help financial institutions move through the"Locate" and "Assess" phases of LEAP, depending on the business activities, asset classes/financial instruments.
While it is generally the same as for the non-financial sector, additional guidance has been issued for thefinancial sector due to certain points to be noted.

61

Annex 3.4 Illustrative Assessment and Disclosure Metrics for Financial Institutions(image)50✓

Four types of indicators exist dependency metrics, impact metrics, risk metrics, and opportunity
metrics.

✓

Each is an indicator for their exposure (the amount of exposure to sectors with significant biodiversity
impact, etc.)✓

Numerous relevant research papers are referred

Annex 3.3 Additional draft disclosure guidance for financial institutions51✓

Guidance for additional disclosures for the financial sector.

✓

The financial sector includes banks, insurance, asset managers and asset owners, and developmentbanks.

✓

It assumes disclosure for the entity as a whole, not for financial instruments.

✓

Many parts are the same as with the TNFD framework, but there are additional points to consider➢

No specific supplemental guidance for financial institutions➢

The strategy is as followsStrategy B " Describe the impact of nature-related risks and opportunities on the organization’s businesses,
strategy and financial planning."⚫

Financial institutions should describe qualitatively their consideration of nature-related risks andopportunities as well as provide quantitative information on those risks and opportunities.

⚫

In all cases, this should factor in a view of nature-related dependencies and impacts, including theirlocation where possible. It is recognized that for both qualitative and quantitative information, financial
institutions have a reliance on disclosures from non-financial corporates, so there may be limitations towhat financial institutions can disclose.

Strategy C: "Describe the resilience of the organization’s strategy, taking into consideration different scenarios”.
⚫

Description of the scenarios used, including the critical input parameters, assumptions and considerations,and analytical choices.

⚫

How such scenarios are integrated with (or distinct from) climate related or other internally usedscenarios.

⚫

Time frames used for the nature-related scenarios, including short-, medium-, and long-term milestones.

⚫

How the outputs from the scenario analysis are used in risk management processes, given the financial
institution’s activities and relevant timeframes (e.g. the maturity of loans for banks differs from theholding periods of asset owners, which differs from the liability duration for insurers / re-insurers).

Strategy D "Describe the organization’s interactions with low integrity ecosystems, high importance ecosystems
or areas of water stress."⚫

➢

Financial institutions may disclose metric(s) that represent the volume (e.g. absolute amount orpercentage of lending, assets managed or owned, or insurance premiums underwritten) to companies
with potential nature-related risks emerging from dependencies and impacts on nature due to theiroperations. Over time as the disclosure approach becomes more mature this disclosure may also include a
sector and/or geographic component (e.g. country, biome and/or ecosystem).

Risk assessment, indicators and targets are also described for supplementary guides in financial institutions and will be
added in the future.

50 Source: THE TNFD NATURE-RELATED RISK AND OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3

ANNEX 3.4 ILLUSTRATIVE ASSESSMENT AND DISCLOSURE METRICS FOR FINANCIAL INSTITUTIONS (2022, TNFD)
51 Source: THE TNFD NATURE-RELATED RISK AND OPPORTUNITY MANAGEMENT AND DISCLOSURE FRAMEWORK BETA V0.3
ANNEX 3.3 ADDITIONAL DRAFT DISCLOSURE GUIDANCE FOR FINANCIAL INSTITUTIONS (2022, TNFD)

62

6. Others(1) Due diligenceOECD Due Diligence Guidance for Responsible Business Conduct defines due diligence as "the processenterprises should carry out to identify, prevent, mitigate and account for how they address these actual andpotential adverse impacts in their operations, their supply chain and other business relationships”◼ EU Corporate sustainability due diligence (published February 2022)
European Commission adopted a proposal for a Directive on corporate sustainability due diligence in February
2022. The aim of this Directive is to foster sustainable and responsible corporate behavior and to anchor humanrights and environmental considerations in companies’ operations and corporate governance. The proposal will
go to the European Parliament and the Council for approval. Once adopted, Member States will have two years
to transpose the Directive into national law and communicate the relevant texts to the Commission.
TargetCompanies in the EU in Europe

Non-EU companies

Group 1More than 500 employees and more than EUR 150
million net turnover worldwide
More than 250 employees and more than EUR 40
million net turnover worldwide, and operating in
defined high impact sectors, e.g. textiles, agriculture,
extraction of minerals.

More than EUR 150 million net turnover worldwide

Group 2More than EUR 40 million net turnover worldwide, andoperating in defined high impact sectors, e.g. textiles,
agriculture, extraction of minerals.

◼
“EU Deforestation-Free Regulation “"(Political agreement in December 2022)
In December 2022, a provisional agreement was reached by the Council and the European Parliament on a
draft Regulation on the prevention of deforestation in the EU. The Regulation aims to prevent global
deforestation and forest degradation caused by the expansion of agricultural land for commodity crops. It
requires that commodity crops supplied to or exported from the EU are not produced on agricultural lands
developed through deforestation (“Deforestation-Free"). If a non-EU company supplies a commodity crop to
the EU market, the first distributor/seller in the EU market is responsible for the due diligence. The regulation
sets mandatory due diligence rules for all operators and traders who place, make available or export thefollowing commodities from the EU market: palm oil, cattle, wood, coffee, cocoa, rubber and soy. The rules
also apply to a number of derived products such as chocolate, furniture, printed paper and selected palm oilbased derivates.
EU member states will be responsible for enforcing the Regulation and setting penalties. The EU member
states will be responsible for enforcing the regulation and setting penalties for violations. The new rules also
take into account the protection of human rights related to deforestation and a reference was added to theprinciple of free prior and informed consent of indigenous peoples.

63

(2) EU taxonomy for sustainable activities (effective 2020)
The EU promotes sustainable finance based on the EU Action Plan on sustainable finance adopted in 2018,
which regulates the disclosure of information related to taxonomy (classification and definition ofenvironmentally sustainable economic activities). The Regulation sets "protection and restoration of biodiversity
and ecosystems" as one of the objectives, aiming to ensure that by 2050, all ecosystems and their services
worldwide are restored, resilient, and protected.
Screening Criteria for Biodiversity52✓

SC1: Activities that actively or passively improve the condition of ecosystems or maintain it in good condition.

✓

SC2A: Activities that are undertaken in such a way that the pressure they are responsible for is kept to a sustainable level, i.e. alevel below which there is no harmful effect on the ecosystem.

✓

SC2B: Activities that are undertaken in such a way that the pressure on the environment is much lower than the baseline (i.e. if asimilar activity was taking place instead), but are higher than the sustainable level and thus have a harmful effect on theecosystems compared to no activity taking place (reduction of biodiversity or ecosystem services). Activities that have a negative
impact on ecosystems (reduction in biodiversity or ecosystem services) compared to no activity because their environmental
impacts are much lower than the baseline (for the same type of activity) and higher than sustainable levels.

Examples of activities related to direct improvement and restoration of environmental conditions 53✓

Crop production✓

Animal production✓

Tourism, sports and leisure activities✓

Forestry and logging✓

Construction (including conversion from other land uses)✓

Passenger or freight land transportation✓

Hydropower (dams, weirs, run-off-the-river)✓Marine fishing✓

Water transport✓

Wind, wave and tidal power✓

Manufacture of food and beverage products

52 Source: PLATFORM ON SUSTAINABLE FINANCE : TECHNICAL WORKING GROUP (2022, European

Commission)
53 Source: PLATFORM ON SUSTAINABLE FINANCE : TECHNICAL WORKING GROUP (2022, European
Commission)

64

Chapter 4: Case Studies◼

Business case studies on impact assessment, strategy and goal setting, and information disclosure

Daiichi Sankyo Company, Limited
Impact assessments using ecological footprints54
Daiichi Sankyo conducts surveys in Japan and other countries on biodiversity-related activities, use of biological resources, andcompliance with the Cartagena Protocol, and identifies key issues by assessing relationships with biodiversity and analyzing risks andopportunities.
Daiichi Sankyo collaborated with experts from the Global Footprint Network, an NGO, to calculate the "Ecological Footprint," anindicator related to biodiversity, for all environmental impacts of the Group's business activities in Japan. The calculation results areused as an indicator of overall environmental impact, including biodiversity, by checking and monitoring changes over time in the"relationship (trade-off) between environmental impact reduction and biodiversity conservation.

Biodiversity Relationship Map

Taiheiyo Cement Corporation
Location analysis and disclosure of mines and protected areas by IBAT,
Assessment and disclosure of environmental impacts of concrete during its life cycle by LIME355
Taiheiyo Cement Corporation recognizes that mines have the greatest relationship with biodiversity in cement production, and isconducting environmental impact assessments. For the limestone mine located near the cement plant, IBAT is used to analyze therelationship between the limestone mine and the nature conservation areas designated by the International Union for Conservationof Nature (IUCN).
In addition, environmental impacts during the life cycle of concrete produced in various countries are assessed by LCA (LIME3) to
identify critical impact areas. The results of the environmental impact assessment showed that in many countries, environmental
impacts from land reclamation of demolished concrete, consumption of fossil resources, and CO2 emissions are important, with air
pollution being a significant impact in some cases.

Results of LIME3 environmental impact assessment of concrete throughout its life cycle

54 Source: DAIICHI SANKYO COMPANY, LIMITED WEBSITE
55 Source: ANNUAL JOURNAL OF CONCRETE ENGINEERING, VOL. 42, NO. 1: PAPER ENVIRONMENTAL IMPACT ASSESSMENT

OF CONCRETE IN VARIOUS COUNTRIES CONSIDERING VARIOUS IMPACT AREAS (2020, JAPAN CONCRETE INSTITUTE)

65

BNP Paribas Asset Management
Assessment and disclosure of portfolio companies' dependence on ecosystem services by ENCORE
Analysis and disclosure of water-related risks for the companies by FAO/ AQUASTAT, WRI Aqueduct - Water Risk Atlas
56

As part of its sustainability efforts, BNP Paribas Asset Management developed a biodiversity roadmap in 2021 At that time, thecompany used ENCORE to identify dependence on coal-based services by sector in the portfolio. Water, flood/storm protection, andclimate regulation were identified as the most important ecosystem services on which the investment portfolio depends, so thoseare current priorities.
In addition, BNP Paribas Asset Management analyzes the water stress of their portfolio companies, utilizing databases and tools
such as FAO/ AQUASTAT and WRI Aqueduct - Water Risk Atlas.

Dependence on ecosystem services per euro invested, according to ENCORE

Number of locations of own portfolio companies in stressed river area based on WRI Aqueduct - Water Risk Atlas

BNP Paribas' water stress levels based on assets under management, according to FAO/ AQUASTAT, WRI Aqueduct - Water Risk Atlas(Compared to the world average, now and 2040 (Business-as-Usual))

56 Source: SUSTAINABLE BY NATURE: OUR BIODIVERSITY ROADMAP (2021, BNP PARIBAS ASSETMANAGEMENT CO.)66

Kirin Group
Information disclosure(trial) in line with the TNFD LEAP process and SBTs for Nature AR3T framework,
Water stress analysis and disclosure at manufacturing sites by WWF Water Risk Filter, WRI Aqueduct - Water Risk
Atlas for 57
The Kirin Group recognizes that the conservation of natural capital such as biological and water resources requires a local
perspective because their characteristics vary by "region" and "location” and discloses information following the TNFD LEAP
approach.

Trial disclosure in line with TNFD LEAP approach

Furthermore, recognizing that the business depends on natural capital such as agricultural products (biological resources) andwater, the company is proceeding with a trial evaluation of the AR3T Framework in the SBTs for Nature as being consistent with its
previous approach.

Pilot evaluation in line with the SBTs for Nature framework

The Kirin Group prioritize location by analyzing risks (water stress) and impacts (water withdrawal) on watersheds of its
manufacturing sites according to the proposed methodology in SBTs for Nature. Water stress is assessed using the WWF Water Risk
Filter and the WRI Aqueduct - Water Risk Atlas.

Based on WWF Water Risk Filter, WRI Aqueduct - Water Risk Atlas, etc.,
Trial Prioritization List of Kirin's Manufacturing Sites

57 Source: Kirin GROUP ENVIRONMENTAL REPORT 2022 (2022, KIRIN GROUP)

67

Asset Management One Co., Ltd.
Analysis and disclosure of relationships between domestic equity and ecosystem services by ENCORE
Assessment and disclosure of supply chains by Trase
Analysis and disclosure of water intensity per sales of domestic equity by WRI Aqueduct - Water Risk Atlas58
As a first step to follow the TNFD Framework, Asset Management One is attempting to analyze domestic equity using the TNFD
Framework's LEAP-FI approach to assess nature-related risks and opportunities by utilizing analysis tools such as ENCORE, with thesupport of external experts.
Regarding the "Locate" of the LEAP-FI approach, in the "Forest" sector, Asset Management One use the Trase tool to analyze
deforestation risk in global supply chains. In addition, in the area of water, Asset Management One uses WRI Aqueduct - Water Risk
Atlas to calculate water intensity per unit of sales for each sector based on available data for listed companies in Japan, identifies
sectors with high freshwater water intensity, and analyzes global water stress risk for the five major companies in Sector A with thehighest water intensity.

Domestic equity and associated ecosystem services, natural capital, and opportunity flows from ENCORE and other sources

WRI Aqueduct - Water Stress Risks in Industrial Sector A from the Water Risk Atlas

58 Source: ASSET MANAGEMENT ONE CORPORATION SUSTAINABILITY REPORT, 2022, ASSET MANAGEMENT ONE

CORPORATION.

68Hermes International
Analysis of impact on biodiversity throughout the value chain by GLOBIO and other tools59
Hermes International analyzes the impact of various components of economic activity on ecosystems using GLOBIO and othertools. Hermes International use GLOBIO to analyze eight types of impacts on nature (land use, fragmentation, atmospheric nitrogen
deposition, climate change, hydrological disturbance, wetland use, and wetlands). fragmentation, atmospheric nitrogen deposition,
climate change, hydrological disturbance, wetland conversion, nutrient emissions, and land use change in the watershed)

Process for collecting and analyzing data on the relationship between business activities and biodiversity

Lotte Corporation
Assessment and disclosure of biodiversity Risk of Company's Production Sites by IBAT 60
Lotte Corporation uses IBAT to assess the biodiversity risk of their production sites (8 in Japan and 4 overseas) within a 10 km
radius by overlapping with World Heritage Sites, Ramsar Convention Wetlands, UNESCO Man and the Biosphere Programme, IUCNKey Biodiversity Management Categories (I-V), IUCN Red List, Key Biodiversity Area, IUCN Red List).

IBAT's Biodiversity Risk Assessment of Production Sites

59 Source: HERMÈS INTERNATIONAL UNIVERSAL REGISTRATION (2021, HERMÈS INTERNATIONAL)
60 Source: Lotte CORPORATION SUSTAINABILITY DATA BOOK 2022 (2022, LOTTE CORPORATION)

69

Bridgestone Corporation"No Net Loss of Biodiversity " is a long-term environmental goal for 2050, based on the Environmental Declaration,
which aims for symbiosis with nature.61
Bridgestone's "Environmental Declaration" contains their unchanging desire "for all future generations to live with peace of mind,"and Bridgestone is committed to reducing CO2 emissions in response to the urgent issue of global warming, by developing andutilizing technologies that "use resources with care," to "live in harmony with nature,"
Bridgestone has set " No Net Loss of Biodiversity *" as the long-term environmental goal for 2050 and aims to continue living inharmony with nature by maximizing its contribution to biodiversity while minimizing the impact of business activities on it.
*Minimizing the impact of business activities on biodiversity while offsetting the loss to the ecosystem as a whole through biodiversity restorationand other contributions.

(Left) Bridgestone's Environmental Declaration (Refined in 2011)(Right figure) Conceptual diagram of "Biodiversity No Net Loss

Michelin Group
Biodiversity Commitments for 203062
The Michelin Group has announced its commitments for biodiversity for 2030. The commitments include the following targets:"100% of LCA with biodiversity criteria" and "80% of natural rubber production must meet the environmental criteria of the
Sustainable Natural Rubber Policy.

Biodiversity Commitments for 2030

61 Source: BRIDGESTONE CORPORATION WEBSITE
62 Source: MICHELIN GROUP WEBSITE

70

Taisei Corporation GroupTAISEI Green Target 2050, a long-term environmental goal, promoting activities to realize Nature Positive.63
To realize a sustainable and environmentally friendly society, the TAISEI Group has established "TAISEI Green Target 2050," a longterm environmental target toward 2050, aiming to realize "three societies (decarbonized society, circular society, and society inharmony with nature)" and solve "two specific issues (forest and water). About a society in harmony with nature, TAISEI Group aims
to realize Nature Positive, minimizing the negative impacts associated with construction projects and maximizing the positive
impacts of projects for nature.

Long-term Environmental Target TAISEI Green
Target 2050

Kao Corporation
Sustainable sourcing of natural capital (palm oil) 6465
In recent years, it has become increasingly important to consider human rights in activities related to biodiversity. Kao
Corporation is committed to sustainable procurement of palm oil, one of the most important natural capitals, with fullconsideration for human rights. Kao also believes that to solve deforestation, which is deeply related to biodiversity, it is essential
to support independent small-scale plantations, which are likely to have human rights issues.
As an example, together with Apical Group (oil supplier) and Asian Agri (oil production company), Kao is implementing the"SMILE*" program to support small-scale palm plantations in Indonesia to improve their productivity and obtain certification forsustainable palm oil (RSPO certification). In addition, Kao has started to operate the Grievance Mechanism (direct dialoguemechanism) for the small-scale palm plantations supported by the "SMILE" program.
*"SMILE": Smallholder Inclusion for Better Livelihood & Empowerment program

Small Palm Plantation Grievance Mechanism

SMILE" Program Overview

63 Source: TAISEI CORPORATION WEBSITE
64 Source: PROGRESS IN SUPPORTING SMALL-SCALE PALM PLANTATIONS IN INDONESIA (2022, KAO CORPORATION)
65 Source: Kao CORPORATION TO BEGIN OPERATING A GRIEVANCE MECHANISM FOR SMALL-SCALE PALM PLANTATIONS IN

INDONESIA (2022, KAO CORPORATION).

71

Kering Group
Integration of the three areas of climate, biodiversity, and circularity in the environmental policy in the mid-long-term
strategy66
Assessment of the entire supply chain using the EP&L (Environmental Profit and Loss) method. 67
The Kering Group's mid- long-term strategy, the "2025 Strategy," outlines three areas in the environmental policy: climate,biodiversity, and circularity.
About the area of biodiversity, in 2020, the company published a corporate biodiversity strategy aimed at halting the loss of
biodiversity, restoring ecosystems, regenerating species, and encouraging organizational change throughout the supply chain.

Strategies and guidelines in the environmental area in the mid- long term strategy

EP&L (Environmental Profit and Loss Calculation) Results

To balance the conservation of natural resources and business development, Kering calculates its environmental footprint and its
economic value by assessing the entire supply chain using the EP&L (Environmental Profit and Loss) method. The six items used todetermine their footprint are air emissions, GHGs, land use, waste, water consumption and water pollution.

66 Source: 2021 UNIVERSAL REGISTRATION DOCUMENT ANNUAL FINANCIAL REPORT - INTEGRATED REPORT (2021,

KERING)
67 Source: KERING GROUP WEBSITE

72

Enel SpA
Materiality analysis is both in "financial materiality" (the impact of the issue on the company) and "impact materiality"(the impact of the company on the issue).68
Enel SpA presents the results of materiality analysis both in "financial materiality (the impact of the issue on the company)" and"impact materiality (the impact of the issue on the company)" in the four areas of planet, people, prosperity) and principles ofgovernance.
For example, the second issue in the planet area is "ecosystem conservation and environmental management," which presents
the degree of impact of biodiversity loss on business activities and the degree of impact of business activities on biodiversity.

Results of the analysis in the planet area

United Utilities Group
Disclosure in line with the four pillars of the TNFD framework (governance, strategy, risk and impact management,
and metrics and targets)69
Within its annual report, United Utilities Group reports on governance, strategy, risk management, and metrics and targets in linewith the TNFD Framework.
For example, as part of the "governance" United Utilities has established an Environmental Advisory Group. This group is
responsible for ensuring that commitments to nature-related strategies (including land, watersheds, clean air, plastics, waste, water
quality, water resources, and natural capital) are implemented.

Information disclosure in the "Governance" part of the TNFD Framework

68 Source: ENEL SPA SUSTAINABILITY REPORT 2021, ENEL SpA, 2021.
69 Source: UNITED UTILITIES ANNUAL REPORT AND FINANCIAL STATEMENTS (2022, UNITED UTILITIES)

73

Part 4: Q&A
This part provides answers to frequently asked questions by businesses. To implement biodiversity actions
in business activities, it might be useful in your organization's internal coordination.
Chapter 1, "Q&A for Practitioners," suggest answers to questions from the management or executive level.
Chapter 2, "Q&A for Practitioners (SMEs)," suggest answers to questions from the management or executive
level in SMEs.
Chapter 3, "Q&A for Financial Institutions," suggest answers to questions from the management or executive
level in financial institutions.
Chapter 1: Q&A for Practitioners
Q1-1. Why should our company work on biodiversity?
A1-1. Because doing nothing could be a huge business risk.
・The climate change issue has triggered an expansion of the criteria for evaluating corporate value toinclude long-term corporate sustainability (expansion of stakeholder capitalism). The Japanese
government has also stated the importance of disclosing not only financial information but also nonfinancial information. For example, when financial institutions make investments, one of their criteria
is increasingly including the perspective of how companies consider their response and actions tobiodiversity and natural capital from both financial and non-financial perspectives, to ensuresustainability.

・Therefore, the consideration of biodiversity in business activities is important for attracting investments
as well as for reputation, and the failure of this may pose a significant risk to business in the future.

・Procuring raw materials devastating the ecosystem (even if you don't know it) is not sustainablebusiness management.

・On the other hand, it is also important to consider to contribute to the conservation of biodiversity
globally, through the technologies, products and services of your company. It would be an opportunity
for the growth and competitiveness of the company.

Q1-2. We don't think our business has relative biodiversity, but do we still have to work on it?
A1-2. No analysis and evaluation could be considered an abandonment of accountability.
・(As for the risk of inaction, see Q1-1.) It is important to analyze and evaluate the relationship between
biodiversity and business activities before determining whether biodiversity has an impact on businessactivities (or business activities have an impact on biodiversity). If you claim that your company has no
relationship with biodiversity without analysis and evaluation, even if there is no relationship, thecompany would be regarded as not fulfilling accountability.

・It can be said that all businesses relate to biodiversity as they use land, water, natural resources, orenergy.

・Therefore, it would be better to start by identifying the relationship between business activities andbiodiversity.

74Q1-3. Is there any penalty if we don't work on biodiversity?
A1-3.Penalties are expected, especially in international supply chains and investments in the future.
・As of FY2022, there are no legal penalties in Japan for failure to address biodiversity. 70

・On the other hand, there are various regulations, mainly in Europe, to conserve biodiversity and natural
capital (internalization of externalities), such as the EU Deforestation Regulation, which prohibits theuse of raw materials produced through deforestation. That regulation makes it difficult to export to thecountries in the future.

・

If the European Taxonomy Regulation defines business activities that take biodiversity and natural
capital into consideration, business as usual may not be eligible for global investments.

・

Therefore, to prepare for such transition risks, it is advisable to identify risks and opportunities related
to your company's activities, biodiversity and natural capital, and to consider a policy to deal with themin advance.

Q1-4. Currently, there are no clear targets or indicators for biodiversity, and data is limited. Compared toclimate change initiatives such as the Paris Agreement and GHG protocols, it may be more difficult to address
biodiversity.
A1-4. Although it is less developed compared to climate change initiatives, actions can be taken even under thecurrent situation. Also, a convincing story is more important than detailed targets and indicators as the firststep.
・Compared to climate change, actions for biodiversity are more difficult because there are no clear
targets or indicators, and the impact of the same action on natural capital and biodiversity can vary
greatly depending on the location.

・On the other hand, the "Natural Capital Protocol," "Ecological Footprint," and "LIME" (which are also
explained in these guidelines) have provided certain methodologies. In addition, more indicators anddatabases are being developed in the "TNFD Framework" and "SBTs for Nature".

・Data and methodologies for biodiversity and natural capital are still developing and are expected to
evolve over the long term. While precise targets are important, what is more important is to make it
clear why biodiversity is important from a mid to long-term perspective, and how it is connected to its
business activities.

Q1-5. Is it possible to assess the whole supply chain?
A1-5. Step by step approach is important. In doing so, you can promote initiatives in collaboration with othercompanies, or work with other areas such as climate change, human rights, and economic security.
・As Japan depend on other countries to obtain natural capital, assessing the whole supply chain requires
a considerable amount of effort. Therefore, it is important to identify the material area and its
relationship with nature for your company and then assess it step by step.

・Supply chain issues have also existed in other areas such as climate change, human rights, andeconomic security, with a certain degree of progress already made, particularly in addressing Scope 3
climate change.

・The assessment of the supply chain should be done based on existing information as the first step andthen expanded as necessary.

・

Therefore, it would be better to collect information on biodiversity in combination with relevant
information such as GHG emissions that are already underway, rather than trying to gather informationon the whole supply chain only for biodiversity.

・It would also be better to collect biodiversity-related information in areas where traceability has alreadybeen secured.

70 In Japan, the Natural Parks Law (e.g., unauthorized planting in national parks), the Law for Conservation ofSpecies (e.g., capture and transfer of species designated by law), and the Invasive Alien Species Act (prohibitionof the keeping, etc. of specified alien species) all have laws and regulations with penalties for content that directly
damages biodiversity. Especially in recent years, the regulations and penalties have been strengthened throughlegal revisions, and the legal risks are increasing. On the other hand, there are also laws that promote biodiversity
conservation, such as the Act on the Promotion of Distribution and Use of Legally Logged Timber, etc. (commonly
known as the Clean Wood Act), which was enacted in 2017 to promote the distribution and use of timber and its
products made from trees harvested in compliance with the laws of Japan and the country of origin. There are
also

75

・

However, the data required for climate change is not necessarily the same as the data for biodiversity(e.g., the latter requires the status of biodiversity in each region where business activities are
conducted).) Since it is difficult to obtain such data from a company, it is important to work incollaboration with associations, governments, and international NGOs.

Q1-6. Due to climate change actions, we can't address biodiversity issues at the same time. Should we respondto climate change first?
A1-6. It is important to address biodiversity from the perspective of combating climate change.
・In the field of climate change, there is a growing recognition that climate change and ecosystems are
inseparable (see the Glasgow Climate Agreement at COP26 of the United Nations Framework
Convention on Climate Change and the IPCC Sixth Assessment Report). The European taxonomy rules
also include a "Do No Significant Harm" (DNSH) condition (no significant harm to any of the six
environmental goals, such as climate change, biodiversity, etc.).

・

Furthermore, there has been growing concern about greenwashing in carbon credits and green finance,and efforts that focus exclusively on climate change may be at risk.

・Assuming that companies will eventually be required to work on biodiversity, integrating climatechange and biodiversity, rather than considering them separately, will lead to more creative and costeffective approaches for your company.

Q1-7. What should we do for dialogue with investors?
A1-7. While preparation of disclosure in line with the TNFD Framework is fundamental, it is also important tomake a story about the relationship between business activities and biodiversity. In addition, responding to
CDP and other evaluation and rating agencies is also considered an important step toward dialogue withinvestors.
・

Basically, it is expected that the contents (governance, strategy, risk management, and indicators andtargets) should be prepared in line with the TNFD framework.

・On the other hand, as described in Q1-4, detailed methods for risk management, indicators/targets,data sets, and scenario analysis are expected to be developed in the future, and there are limitations
in disclosing such information. Therefore, it is important to create a mid to long-term story to explain
how biodiversity and natural capital would relate to the business, and how risks/opportunities would
be taken.

Q1-8. What is the definition of Nature Positive?
A1-8. The Japanese government uses the term in the National Biodiversity Strategy and other documents tomean "halting and reversing the loss of biodiversity”.
・There is no internationally agreed definition of Nature Positive. However, its importance is agreed by
the G7 countries in the G7 2030 Nature Compact, an annex to the Leaders' Communiqué of theCornwall Summit in 2021.

76

Chapter 2: Q&A for Practitioners (SMEs)
Q2-1. Why should our company be involved in biodiversity conservation?
A2-1. Your company may be required to take responsibility as a supplier or a local company.
・As the international influence of the TNFD framework increases, suppliers will be required tostrengthen management throughout the supply chain. Even if the company does not follow the TNFD,
the buyer would request to do so.

・

In addition, as awareness of biodiversity is raised, the local communities may request the company totake more responsibility, either as users of local natural capital (land and water) or as entities
responsible for conserving biodiversity in the region (such as 30 by 30).

・

These are business risks, but they can be converted into business opportunities through distinctive
actions for biodiversity.

Q2-2. We don't have human/financial resources, where should we start working on biodiversity?
A2-2. First, you can evaluate the relationship between business activities nature and water resources. Then,
you may start with areas that are relatively easy to address, such as 30 by 30.
・

The first step is to assess how your business activities relate to nature, water, and land. In assessing therelationship, you can ask the local government whether your location is rich in nature or not andwhether there is a water shortage. You then identify important relationships between local biodiversity
and your business.

・After identifying critical business activities for biodiversity, you consider how you can reduce risk andcreate opportunities.

・For example, the promotion and support of regional OECM registration for 30 by 30 would lead to risk
reduction for business activities as it secures water resources, disaster prevention and mitigation.

77

Chapter 3: Q&A for Financial Institutions
Q3-1. Why is it necessary to consider biodiversity in investments and loans?
A3-1. Biodiversity compliance can be a major financial risk for investees at the industry level.
・Biodiversity and natural capital may be a risk or opportunity for financial institutions, as they have asignificant impact on the business of the investee.

・In this context, green finance and ESG investments have been expanding internationally in recent years.
It is expected to increase the impact of these investments on business for the conservation of
biodiversity.

・The importance of the response by financial institutions is internationally recognized, as it can be seenin the Kunming-Montreal Biodiversity Framework71.

Q3-2. How should financial institutions themselves take action for biodiversity?
A3-2. It is important to support the actions of investees through dialogue with them. It is expected to review
the portfolio based on the dialogue with the investee and the results of sector-specific risk assessments.
・

Financial institutions should provide qualitative explanations as well as quantitative information related
to impacts, dependencies, risks, and opportunities of the investee’s business activities for nature.

・However, there are limitations of both qualitative and quantitative information to be disclosed, since it
depends on disclosures from investees.

・

TNFD is developing LEAP-FI as an integrated assessment process for nature-related risks andopportunities for financial institutions and published a part of it.

・

In addition to the LEAP-FI, TNFD plans to publish use cases and case studies, including examples of
disclosures for financial institutions, by the end of 2023.

Q3-3. How should we conduct dialogue with investees?
A3-3. Discuss how actions for biodiversity will lead to reduce risks and increase opportunities in their businessfor the mid to long-term.
・

It is important to make investments and loans that promote biodiversity-sensitive business activities
through dialogue with investees in line with the latest status of TNFD and other initiatives.

・

During engagement, it is important to discuss how actions for biodiversity will lead to reduce risks andincrease opportunities in their business activities for the mid to long term.

Q3-4. How should financial institutions assess investees, and how should we work with them?
A3-4. The first step would be to analyze the information disclosed by investees. In addition to public
information, it may also be necessary to take opportunities for dialogue to assess transparency and content, if
necessary.
・

According to the Evaluation Criteria and Perspective on "Environmentally Sustainable Companies"(Ministry of the Environment, 2018), which focuses on information disclosure by companies especiallyfor investors, the following are examples of important items related to biodiversity-related information
disclosure.
⚫ If biodiversity is an important issue for the business, is it indicated the reasons why it is considered
important?
⚫ Are business risks/opportunities related to biodiversity identified considering the company's
business model and phase?
⚫ Have strategies, guidelines, and commitments been developed to address biodiversity?
⚫ Are management activities for risks associated with biodiversity, supply chain and value chain
taken?
⚫ Are Key Performance Indicators (KPIs) and targets established to evaluate and manage risks andopportunities related to biodiversity, and are their performance monitored?

71 Kunming-Montreal Biodiversity Framework Target 15 "To promote actions to progressively reduce negative

impacts on biodiversity, reduce biodiversity-related risks to business and financial institutions, and ensuresustainable modes of production, while encouraging and enabling business to Take legal, administrative or policy
measures to ensure that businesses, especially large corporations, multinational corporations and financial
institutions, are able to do the following, while encouraging and enabling them to do the following.

78

⚫
・

Is corporate governance regarding biodiversity and other related risks and opportunities
demonstrated?

In addition, existing tools in Part 3 may be used to identify industries and companies in which significant
biodiversity and natural capital risks are expected in the investment portfolio and to request
information on those industries and companies.

March 2023

79

Nature Positive character

DAIDARAPOSIEJAPAN