Back to Nature
Last week I joined the TNFD Recommendations Launch Webinar, it was great to see just how much progress has been made in developing the framework since the beta release in March 2022.
The significance of TNFD lies in the fact that it marks a shift towards a holistic view of what sustainable business means. As the co-chair’s preface to the report says:
The future of all living things on our planet, and our future prosperity, depends on the resilience of nature. Declines in nature compromise the security of our societies and increase the risks to business and investors, including our ability to mitigate and adapt to climate change. Sustained improvements in the resilience of our natural world and its biodiversity are essential to secure the prosperity of current and future generations. Nevertheless, businesses today continue to see nature as an unlimited and free provider of critical inputs into their operations and value chains, from the flow of fresh water to the pollination services of bees and the flood mitigation services of mangroves.
At 塔塔咨询服务公司 we're frequently having discussions with our customers about how they can measure and manage nature-based risks and opportunities, what their obligations after the COP 15 agreement will be, and how digital technologies can help them. For many managers outside of corporate sustainability teams, these concepts are unfamiliar and so I will attempt to summarise some of the key terms and issues here.
I want to explore 6 terms that may be unfamiliar to a business audience but need to be understood and appreciated in any company that wants to be sustainable.
'Nature'
The Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) describes nature as “the natural world with an emphasis on the diversity of living organisms and their interactions among themselves and with their environment”. This natural world can be divided into 4 distinct realms – land, freshwater, ocean and atmosphere – and human society is constantly interacting with each of them, being both dependent upon them and impacting upon them.
'Natural Capital'
Recognising society’s economic dependence on nature gives us the idea of natural capital.
Natural capital refers to the stock of natural resources such as plants, animals, minerals, and soil that provide the basis of our economy and society by making fundamentals from food production to recreational activities possible. The concept of natural capital emphasises that the environment and its resources have intrinsic value and are essential for human well-being.
As such, it can even have a monetary value placed upon it and, whilst the TNFD framework doesn’t do that, there are frameworks around ‘Natural Capital Accounting’ and ‘Environmental Profit and Loss (EP&L)’ that will certainly become central to ESG approaches in future.
In a recent interview with Andy Haldane of the The RSA (The royal society for arts, manufactures and commerce) , Christina Figueres argues the importance of putting monetary values on nature.
飞利浦 have been among the pioneers in this approach too, which is why they express their impacts in their annual reports in monetary terms.
The Earth’s natural capital stocks are made up of environmental assets such as forests, wetlands, rivers, and agricultural land.
Environmental assets are further sub-divided into ecosystem assets, which recognise the particular resources and benefits that come from specific ecosystems, the interdependent communities of plants, animals, micro-organisms, as well as the non-living environment that form distinct units.
'Ecosystems' and 'Biomes'
Ecosystems are hugely varied according to which biome they are found, biomes being large distinct ecological regions characterised by climate patterns, vegetation types, and the flora and fauna that inhabit it. Tropical rainforests, deserts, grasslands and tundra are all examples of biomes.
In 2017 an international consortium of conservation scientists created a map of the world’s terrestrial ecoregions. Using satellite imaging and remote sensing technologies, they identified 844 discreet ecoregions across the globe. They can be explored through this excellent web application developed by RESOLVE and Google Earth Engine, with detailed ecoregion profiles provided by One Earth.
Bringing this geographic and ecological perspective to a company's value chain is the first part in understanding what a company's dependencies are on nature, and so being able to assess its nature based risks and its impact on nature.
The TNFD framework is founded on the 'LEAP' approach, a 4 stage process:
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In the first stage companies need to begin by identifying where not only their direct operations but key suppliers are located and how they interact with and impact upon those ecosytems.
This understanding will drive sustainable changes in many aspects of business. Obvious examples would be to relocate water-intensive operations from biomes with high water stress. Also, choices of materials can be determined by whether they are sourced from areas where the production of that material impacts nature to a greater degree than an alternative.
A good example of how this might be applied is through BioScope a tool developed jointly by?PRé Sustainability,?Arcadis?and?CODE. BioScope provides businesses and financial institutions with a quick and simple indication of the main impacts their supply chains and financial products have on biodiversity. It is a good indication of what secondary data sets can be built into enterprise level decision making tools.
'Ecosystem Services'
Biomes and their ecosystems produce massive and diverse flows of benefits to people and the economy, these are referred to as ecosystem services. The provision of timber and fuel wood in a forest, freshwater from a river, the recreational opportunities of a beach, the pollination of crops by insects are all examples of ecosystem services. Combined with abiotic resources such as minerals, metals, and fossil fuels, they make up the total sum of natural capital.
Ecosystem services fall into 4 categories:
Provisioning Services
Provisioning services are any type of produce that can be extracted directly from nature. Food is the most obvious example in the form of fruit, fish, crops, etc. but the term also covers drinking water, timber, fuels, and plants that can be made into fabrics or medicines.
Regulating Services
A regulating service is a benefit provided by an ecosystem's processes that moderate natural phenomena. Regulating services include pollination, decomposition, water purification, flood control, carbon storage and climate regulation.
My favourite example of a regulating service comes in the form of a familiar summer visitor. Episyrphus balteatus?and Eupeodes corollae are the 2 main species of hover flies that migrate to the UK every summer to breed. 500 million of them arrive and the adults are responsible for more pollination in the UK than honey bees. What's more, their larvae consume 20% of the aphid population on cereal crops. So, it's obvious that without these easily overlooked striped buzzing migrants British agriculture would have a major problem.
It is in the category of regulating services that we see the link between nature-based risk and the climate crisis. Through the burning of fossil fuels, the amount of CO2 in the atmosphere is so great that it has exceeded the capacity of the Earth’s ecosystem services in carbon sequestration.
Cultural Services
A cultural service is a non-material benefit that contributes to the development and cultural advancement of people, including how ecosystems play a role in local, national, and global cultures; the building of knowledge and the spreading of ideas; creativity born from interactions with nature (music, art, architecture); and recreation. It's impossible to imagine a travel and tourism industry without cultural ecosystem services.
Supporting Services
The natural world provides so many services, sometimes we overlook the most fundamental. Ecosystems themselves couldn't be sustained without the underlying natural processes of photosynthesis, nutrient cycling, soil creation, and the water cycle. Without supporting services, provisional, regulating, and cultural services couldn't exist.
'Biodiversity'
In recent times, we’ve started to use biodiversity as the catch-all shorthand reference to all of these nature related issues, so it is worth considering what biodiversity is and why it’s important in this context.
As we’ve seen, our economy and society are dependent on ecosystem services and so the health and extent of those ecosystems determines quality and quantity of the ecosystems services that we need. When an ecosystem is healthy and robust, the number and diversity of all types of plant and animal life reflect this. So, biodiversity is the measure of that richness and complexity of life and any decline in biodiversity is a leading indicator which signals a threat to vital ecosystem services.
Leading indicators are an idea borrowed by ecologists from economists. Economic forecasters predict booms and busts by monitoring leading indicators such as mortgage default rates and the results of consumer confidence surveys. Such metrics are like the caged canaries that miners used to take with them into tunnels, highly sensitive to their environment any change in behaviour is an early warning of what is to come.
That’s why the fact that human activity has resulted in the average abundance of native species in most land-based habitats falling by at least 20% since 1900, is a major cause for concern. And why we should be looking to the reversal of that trend as the key indicator of whether we have a viable and sustainable future.
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