Image by Teo Tarras on Shutterstock
We are losing nature, and fast. Businesses can help reverse the trend.
In this blog, we explain nature loss and its key drivers; why it matters to business; how companies are responding; and what you need to know about the Taskforce on Nature-related Financial Disclosures.
What is nature loss?
Nature provides innumerable benefits and services to humanity, including the production of renewable resources, nutrient cycling, pollination, air purification, and protection against soil erosion, as well as physical, mental, and cultural-spiritual human wellness. Without healthy ecosystems, we lose the natural regulators for carbon, nitrogen, and oxygen, necessary to support human life.1
Biodiversity is the variability among living organisms from all sources, including diversity within species, between species, and of ecosystems. It underpins the healthy functioning of natural systems, as well the provision of ecosystem services essential for human health, livelihoods and economies, food security, and quality of life worldwide.
Healthy and varied ecosystems and biological diversity are crucial to the resilience and sustainability of our planet, and yet they are severely threatened. Nearly 1 million species are at risk of extinction from human activities, and over 75% of the Earth’s total land surface has been significantly altered and impacted by human actions.2 In just the past few decades, we have lost half of the world’s coral3 and 60% of all animal life,4 and we are losing 88,000 sq. km of forest every year – the equivalent of a football field every two seconds.5
Planetary health is not separate to human wellbeing. The two are intricately intertwined, and immediate – and intensive – action is necessary and overdue.
Why does biodiversity loss matter to companies?
Nature loss carries the risk of significant economic impacts for business. These impacts can be chronic, acute, and sudden, resulting in disruption to supply chains, increasing regulatory compliance costs, and potentially eroding societal acceptance. Central banks, lenders, investors, and regulatory and supervisory agencies are beginning to recognise the potential of nature loss as a threat to economic and financial stability, and therefore, part of their fiduciary duty.
More than half of the world’s economic output – US$44 trillion – is moderately or highly dependent on nature,6 and our present pace of nature loss could cost the global economy upwards of US$2.7 trillion annually by 2030.7
But it’s not all doom and gloom: conserving natural capital and transitioning to using its components in a sustainable manner has the potential to generate US$10 trillion in business opportunities and to create nearly 400 million jobs by 2030.8
What’s driving biodiversity loss?
In order to limit biodiversity loss, we need to understand the drivers of its decline. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has identified five key drivers of biodiversity loss:9
Changes in the use of land and sea, including how we grow food, harvest materials such as wood and minerals, and create urban spaces.
Overexploitation of plants and animals, such as through hunting, poaching, and overfishing. Three billion people rely on fish as their primary source of protein, and yet nearly a third of all monitored global fish stocks are overfished.
Climate change, through the increasing intensity and severity of elevated temperatures, extreme weather events, fires, droughts, ocean acidification, and other effects that are outpacing the ability of organisms to adapt.
Pollution in the air, soil, and water, from nitrogen and ammonia to plastics and heavy metals.
Invasive non-native species, which are out-competing local biodiversity for key – and dwindling – resources such as food, shelter, sunlight, and water.
Collectively, these drivers threaten to compromise the resilience of the natural and social systems in which human life is embedded, and the foundation upon which business depends.
How are companies responding?
Halting and reversing nature loss depends on businesses of all sizes and from across the industrial spectrum understanding, identifying, assessing, managing, and disclosing nature-related dependencies, impacts, risks, and opportunities.
Some of the early goals that we see in our research and assessment are centered around learning about biodiversity and ecosystems and the drivers of their decline. These goals are focused on companies understanding the issue of nature loss; the impact of their operations and value chain on ecosystems and the interdependencies between their business and nature; and relevant limits that they must operate within to safeguard the resilience of ecosystems.
The majority of credible goals are related to the mitigation hierarchy – a framework that supports “no net loss in biodiversity” through avoiding and minimising impacts, restoring areas that have been developed and populations that have been reduced, and offsetting. Some of these goals include eliminating deforestation; holding flat the total land use associated with operations and value chains; and supporting regenerative agriculture.
There is also a growing number of companies that are moving beyond the traditional mitigation hierarchy and are setting nature-positive biodiversity and land-use goals. These companies seek to protect and restore more nature than they disturb.
More guidance is coming
The Taskforce on Nature-related Financial Disclosures (TNFD) was established in 2021 to address the growing need to factor nature into financial and business decisions. The TNFD is in the process of developing a disclosure framework to help organisations to report and act on evolving nature-related risks and opportunities, with the goal of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.
The TNFD recently released the third draft of its framework, which outlines disclosure requirements and provides guidance on setting science-based nature-related targets. The taskforce intends to release a fourth draft in March 2023 and to publish final recommendations in September 2023.
Next (or first) steps for business
It can be challenging to pursue a nature-positive business strategy. Fortunately, guidelines for developing, implementing, achieving, and disclosing credible nature-related action are available, and more – such as the TNFD’s guidelines – are on the way.
In our discussions with senior leaders and sustainability professionals, we heard that it can be difficult to choose between different frameworks and guidance. There are many reputable sources of information and recommendations, such as the CBD’s Global Biodiversity Framework, or Business for Nature’s Calls to Action, and leaders are often hesitant to select and adhere to one of these frameworks.
“What if we pick the wrong one? What if we commit time and resources, then new knowledge, regulations, or expectations emerge?”
This is a common and valid concern, and it can be paralysing. However, it is important not to allow the pursuit of “perfection” to get in the way of doing “good.” Regardless of whether your business is just beginning to explore ecosystem resilience and nature loss as an issue, or is preparing to develop and implement a strategy that advances nature positivity, a key step in the process is to simply choose to a framework and get started. You canmake adjustments later, as you work your way towards creating a positive impact.
To learn more about the causes and impacts of nature loss, why it matters to business, and the actions required to halt and reverse ecosystem and biodiversity decline, check out our Issue Snapshots.
We are also writing a guide on developing credible nature-related position statements. Sign-up for our newsletter to be notified when it is released. If you require any more specific support, be sure to get in touch.