Coles is facing financially material risks through association with a potential extinction event. Research and monitoring has shown that salmon produced in Macquarie Harbour in Tasmania, a product within Coles’ supply chain and sold in its stores, threatens the existence of the endangered Maugean Skate, which is endemic to Macquarie Harbour. The skate population declined 47% between 2014 and 2021. The Threatened Species Scientific Committee (TSSC) within the Australian Federal Department of Environment noted the primary threat to the Skate is degraded water quality due to increases in salmon aquaculture, and that reducing salmon farming was urgent to improve water quality and recover the Skate’s critical habitat.

Despite this, Coles continues to sell Macquarie Harbour farmed salmon using certifications that claim responsible sourcing. As part of its sustainability commitments, Coles requires its Own Brand farmed seafood to be certified under one of three certifications - Aquaculture Stewardship Council (ASC), Best Aquaculture Practices Farm Standard (BAP) or the GLOBALG.A.P (GGN). However, ASC states that none of the 11 salmon farming sites in Macquarie Harbour complies with their standards. Moreover, BAP and GGN are facing calls from more than 80 global conservation groups to decertify Macquarie Harbour salmon.

Coles faces growing risks of reputational damage from greenwashing. For example, in 2024, Coles appeared before the Australian Senate Inquiry into Greenwashing over its use of responsibly sourced seafood labels on products linked to Macquarie Harbour farmed salmon. Coles was also accused of potentially false, misleading or deceptive conduct over sustainability claims on Tasmanian salmon products, according to a complaint lodged with the Australian Consumer and Competition Commission (ACCC).

There is a growing global expectation that companies take responsibility for finding and addressing real or potential adverse nature impacts in their supply chains. For example, the Nature Action 100 initiative that represents over 200 institutional investors with $28 trillion in AUM publishes actions they expect companies with a high impact on nature to take to protect and restore nature and ecosystems. While Coles is not one of them, its competitor, Woolworths, is. The EU now requires this for large companies after passing the mandatory Corporate Sustainability Due Diligence Directive. This shift is a recognition that many certifications have failed to prevent harms to human rights and the environment.

A recent legal opinion considered that directors' existing duty under Australian law to exercise 'care and diligence' already requires directors to take into account nature-related risks and caution that they may be held liable for their failure to do so. The authors stated directors should be disclosing nature-related risks and impacts where they pose a financially material risk to the company.

Coles’ approach falls short of current global best practice and has proven unsuccessful in identifying serious threats to biodiversity, as demonstrated in its farmed salmon supply chain. By conducting its own due diligence, Coles will better understand its exposure to biodiversity risk in its supply chains, the impact of its decisions on threatened species, and the action it can take to avoid contributing to biodiversity loss.