Biodiversity — is that a business issue?

The world is losing biodiversity, defined as the variety of all life on earth, at an alarming rate. The WWF Living Planet Report 2022 has sounded the alarm on the crisis, revealing a catastrophic 69% decline in wildlife populations since 1970. The report, which analyzed around 32,000 populations of 5,230 species around the world between 1970 and 2018, attributes the loss to climate change, among other key drivers, including land use changes, pollution, direct exploitation, and invasive non-native species. Other scientific studies show the planet has already entered the sixth mass extinction phase, with one million species at risk of going extinct in the coming decades at an unprecedented rate.

The World Economic Forum, in its 2020 Global Risks Report, ranks biodiversity and ecosystem loss among the top threats to humanity and the economy in the next decade, with around $44 trillion of economic value generation – which amounts to over half the global GDP – dependent on nature and nature-based services.

The twin threat of biodiversity and climate change

The fate of climate change and biodiversity loss is intertwined. A new study investigating the role of climate change in biodiversity loss suggests that all three climate change variables – temperature, precipitation, and the number of natural disasters – increase biodiversity loss. The study, which used global data on threatened species of birds, fishes, mammals, plants, mollusks, amphibians and reptiles from 115 countries, also correlated higher economic development with increased biodiversity loss.?

Several other studies have also shown deforestation and an increase in the frequency and intensity of extreme weather events such as wildfires, tropical storms, and floods to result in a tragic loss of biodiversity. For example, the 2019-2020 Australian wildfires killed or displaced nearly three billion animals, including koalas, kangaroos, and other native species. The torrential monsoon rains and floods in Pakistan this summer swept away nearly one million livestock and millions of acres of farmland.

Another study finds that many actions to stop and reverse biodiversity loss can also slow climate change. Reforestation and restoration of ecosystems such as forests and mangroves are some of the conservation actions with the highest impact on climate change mitigation.

The business case for biodiversity

As the gravity and consequences of the biodiversity crisis register on companies’ agendas, so does the realization that biodiversity action can positively impact business reputation and bottom line.?

Integrating biodiversity into long-term business strategy leads to opportunities such as strengthening supply chain resiliency and stakeholder relationships, building consumer goodwill, attracting socially responsible investors, improving employee productivity, and creating a triple-bottom-line approach.

Companies also realize that not addressing biodiversity issues poses serious risks to their business, including:

• loss of legal and social license to operate,?
• damage to brand image,?
• the threat of consumer boycotts,?
• campaigns by environmental NGOs,?
• environmental liabilities and fines,?
• loss of ratings in the financial markets,
• and reduced employee morale

Action is needed

More than 1,100 companies around the world and across a wide range of industries with revenues upward of US$ 5 trillion are asking governments to take action to halt and reverse nature loss. Some names include Accenture, Bayer, BNP Paribas, DuPont, General Mills, IKEA, Microsoft, Toyota, Unilever, and Wal-Mart. But much more action is needed.

All eyes on COP 15, COP27 and the G7 Nature-Positive by 2030 commitment

Biodiversity was upgraded from the periphery to the spotlight when G7 leaders last year vowed to make the world nature-positive by 2030 – the first such commitment to halt and reverse biodiversity loss. The momentum has been building fast: 88 heads of state, in addition to the G7, have signed the Leaders Pledge for Nature to reverse biodiversity loss by 2030. The financial market has developed a risk management and disclosure framework called the Taskforce on Nature-related Financial Disclosures (TNFD) – along the lines of the Taskforce on Climate-related Financial Disclosures (TCFD) – to help organizations report on nature-related risks and take appropriate and timely action.

All eyes are now on the COP 15 – the 15th Conference of the Parties to the United Nations Convention on Biological Diversity – scheduled on December 7-19, 2022, in Montreal, Canada, where 196 member countries will meet to negotiate the new Post-2020 Global Biodiversity Framework (a set of goals, targets, and indicators to advance global action on biodiversity conservation efforts through the next decade). The framework, when adopted, will be the most comprehensive and articulate to date when it comes to protecting biodiversity and will accelerate corporate action on this front.

But in November, and far from Montreal, nearly 200 countries will meet in Sharm al-Sheikh, Egypt, at COP 27 – the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change. In the spotlight will be climate adaptation, damage funds for climate disasters, and nature-based solutions to mitigate climate change.?

We can also expect some discussion around protecting and restoring biodiversity and wildlife habitats. Still, most of that discussion will be in Montreal, hopefully building on great outcomes from COP27 on achievable solutions to accelerate progress towards the Paris Agreement goal.

What can companies do?

Don’t wait on the COPs — get started right away. It is important to understand biodiversity risks and opportunities and integrate natural capital considerations into business strategy to prepare for the future. EY published an article detailing how boards and executives should get going:?

1. Educate: Train your employees in biodiversity concepts, tools, and frameworks;?
2. Enlist: Sign up with disclosure frameworks such as the TNFD, Science-Based Targets Network, and support local organizations working on biodiversity;?
3. Estimate: Map biodiversity risks across the value chain;?
4. Enforce: Implement processes for internal accountability; and?
5. Explain: Disclose and monitor progress on biodiversity action.

And if I may add a point — show the world that you are a steward, a Steward of the Future!