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There is growing awareness that biodiversity loss poses a significant risk to the global economy, but a lack of clarity on what this means for corporations, and how they are responding. This study provides a first quantitative assessment of biodiversity risk exposure across the world's largest listed companies, compared with their adoption of biodiversity policies, through analysis of disclosures from a sample of 11,812 companies from 2004 to 2018. We find that companies have started responding strategically to biodiversity risk, with 29% having adopted a biodiversity policy by 2018. However, around $7.2 trillion of total enterprise value remains exposed to unmanaged biodiversity risk. Companies in sectors with material impacts on biodiversity tend to have high levels of response, but there is poorer responsiveness to material biodiversity dependency risks. A natural‐capital‐based view (NCBV) of the firm is proposed to theorise how corporations are constrained by both their impacts and dependencies on natural capital. [ABSTRACT FROM AUTHOR]

This article explores whether increasing fossil fuel divestment commitments are related to the reduction of capital flows into the oil and gas sector, based on an analysis of syndicated lending, equity and bond underwriting across 33 countries from 2000 to 2015. We find that increasing oil and gas divestment pledges in a country are associated with lower capital flows to domestic oil and gas companies. This effect is enhanced in more stringent environmental policy regimes and diminished in countries which heavily subsidise fossil fuels. However, the divestment movement may have an unintended effect, insofar as domestic banks situated in countries with high divestment commitments and stringent environmental policies provide more finance to oil and gas companies abroad. We explain these findings through the lens of institutional theory and show how both regulatory and socially normative elements of institutions shape this dynamic. [ABSTRACT FROM AUTHOR]

Voluntary organic standard-setting organisations (SSOs) depend upon public trust in the truth claims implied by their labels: that the product in question has been produced using organic methods. They create and maintain this trust through assurance frameworks based on third-party verification of compliance with organic standards. It is therefore potentially problematic if an SSO makes additional claims that are not capable of being supported by their assurance frameworks. We investigate the claims made about the sustainability of organic agriculture by three voluntary organic SSOs, compared with assurance provisions within their standards. The analysis covers Australia, which has 53 per cent of the world's certified organic farmland; and is extended internationally by including the IFOAM standard, with which a further 49 organic standards are affiliated worldwide. We find that while these standards generally contain principles and requirements that support sustainability claims, they lack well-specified means of verification in most cases other than the 'core' claims to exclude synthetic chemical inputs and genetically modified organisms. This assurance gap creates the risk of a consumer backlash. We discuss two ways to mitigate this risk: by strengthening verification within standards; and/or by employing new agricultural information and communication technologies to support claims outside the certification process. [ABSTRACT FROM AUTHOR]

A new financing mechanism known as REDD+ (reducing emissions from deforestation and forest degradation, and conservation, sustainable management of forests and enhancement of forest carbon stocks) is being established to achieve large-scale reductions in GHG emissions from tropical forestry and land use. Can REDD+ successfully integrate an emphasis on sustainable development benefits (as with Official Development Assistance, ODA) with a focus on delivering emission reductions (as with the Clean Development Mechanism, CDM)? It is argued that there is a real risk that REDD+ will stay too close to ODA and fail to move beyond its ‘readiness’ phase. Moreover, as with the CDM, there could be an over-emphasis on results in terms of emission reductions, which would only make it attractive for a small set of activities in relatively few countries. In order to balance sustainable development with cost-effective emission reductions, REDD+ needs to involve the private sector in project implementation and financing, its rules for reference levels and crediting arrangements need to be flexible, and forest countries need to proactively direct activities.Policy relevanceREDD+ has the potential to deliver funding at an unprecedented scale for forestry and land use activities in developing countries. However, this will only occur if the mechanism can successfully transition from its current readiness phase (which is similar to ODA) to a results-based REDD+phase (which implies similarities with the CDM). A framework for analysing the attractiveness of results-based REDD+ for both forest and funder countries is provided. It is argued that the interests of forest and funder countries coincide when there are activities that score well with respect to financing and co-funding requirements, socio-economic impacts, and governance implications, within the context of each forest country's policy environment and capabilities. An early case study of a results-based REDD+ transaction, the Indonesian logging moratorium, suggests this conceptual framework provides an effective decision support tool to help design future REDD+ policy interventions to avoid the various pitfalls of ODA and the CDM. [ABSTRACT FROM AUTHOR]

Consideration of incentives for reducing emissions from deforestation and forest degradation (REDD) is now formally part of the post-2012 climate change negotiations. A significant amount of financing will be required to make REDD a success, but the design of the REDD architecture can determine the availability of capital. Therefore, in negotiations this should be considered at the same time and on an equal basis with methodological and political considerations. Detailed consideration is given to the type of commitment, the financing mechanism, the level of incentive allocation, and the fungibility of carbon credits, in the context of experience from existing carbon markets. We conclude that a financially successful REDD mechanism would be based on a strong regulatory framework with mandatory targets, market-based, with some degree of project-level crediting, creating fungible REDD credits, subject to a cap. [ABSTRACT FROM AUTHOR]

A letter to the editor in response to an article in the previous issue of the journal on carbon emission policy of the Chinese government is presented.