Capitalism is about working with nature, not against it

Growing economic incentives are making sustainability initiatives a business imperative for companies around the world, especially in the U.S. and Europe. We know that a company’s sustainability path will vary depending on its size,?industry, and market context. What is becoming increasingly clear is that companies that explore new economic opportunities in circularity, biodiversity, and renewable energy will?have the advantage with reduced environmental impact, lower costs and increased profits.?

Take BMW’s decision last year to donate $1.25 million to restore and preserve eight acres of urban wetlands in South Carolina. BMW’s US manufacturing is based in South Carolina and has led the nation in auto exports by value for nine consecutive years. But South Carolina also experiences a six-month hurricane season, with Hurricane Ian pummeling homes and businesses across the state last year. When BMW works to preserve wetlands—a known natural buffer for storm destruction—it’s also mitigating storm risk and the costly damage that accompanies natural disasters. By actively preserving the natural landscape and ecosystems within it, BMW is addressing a core operational business risk that has enormous long-term financial implications.

According to Business for Nature and the World Economic Forum, over half of the world’s estimated $44 trillion in GDP is moderately or highly dependent on nature. Environmental risks and increasing natural disasters are costing more than $300 billion per year. If nature is at risk, business sustainability and profitability are, too. Regardless of your company’s size, industry, or market, incorporating sustainability into your business strategies can provide a stronger competitive advantage. For ideas on how to integrate sustainability into your business, check out the “Planet” pillar on the Council for Inclusive Capitalism’s commitments platform for hundreds of example actions and consider sharing your actions and ideas.

Circularity in 2023: Supply imitations present economic opportunities

Supply chain shortages and new policy changes have sparked a revolution in product innovation, forcing household names to rethink how they make and sell their goods. Enter circularity—a solution framework for addressing the costs of climate change, waste, pollution, and biodiversity loss while increasing resource utilization and business competitiveness.

The idea is simple: restore, reuse, and repurpose. Companies like Davies Office, John Deere, and Caterpillar have been leading the way in circular practices, using remanufacturing to restore used products to like-new condition and reducing costs while expanding offerings. Even clothing resale has taken off, with the secondhand goods market expected to reach $82 billion by 2026.

The circular economy isn't just about addressing environmental impact, important as that is; it's also highly profitable. By embracing reuse, refill, and return models for packaging, companies like Clorox are reducing waste and saving on material costs, while opening up new innovation and job opportunities. A McKinsey study assessing the potential for a circular economy in Europe found that circular practices could drive a 7% increase in GDP—a whopping $2.1 trillion USD. Car manufacturers like BMW can benefit from implementing a circular value chain as well, potentially increasing profitability by 1.5 times and enabling revenues 15–20 times the vehicle sales price, according to a 2022 Accenture assessment.

As circularity continues to gain momentum and offer a profitable and impactful opportunity for growth, consider what it means for your business, and share with the Council for Inclusive Capitalism the steps you’re taking to restore, reuse, and repurpose.

Actions to Watch: Companies driving circular economy innovation

• Gemini ??- Gemini Corporation NV is one of the world's leading circular economy market makers, engaged in the collection, recycling, segregation, sourcing, and distribution of recyclable plastics, paper, metal, and rubber. The company pledges to double its plastics recycling target to 400,000 tons by 2025 and—through a subsidiary—create circular infrastructure to enable the collection, sorting, and recycling of more than 50,000 tons of plastics by 2025.
• Nestlé ??- Nestlé is a multinational food and beverage company that has set a goal to halve absolute greenhouse gas emissions by 2030 and achieve net-zero emissions by 2050, in addition to pursuing a “Forest Positive” strategy to not only end deforestation in its supply chains but also have a positive impact on the company’s surrounding landscapes. The company has launched initiatives such as its "Cocoa Plan," which aims to improve the lives of cocoa farmers and protect the environment, and a plan to eliminate deforestation from its palm oil supply chain.?
• Plastic Bank ?? - Plastic Bank builds ethical recycling ecosystems in coastal communities and reprocesses the materials for reintroduction into the global manufacturing supply chain, while providing collectors a premium for the materials they collect and helping them to provide basic necessities to their families. Incorporating both circular economy practices and addressing impacts on natural resources, Plastic Bank is committing to enable millions of people access to clean water by 2030 through the collection of ocean-bound plastic and the enactment of strategic partnerships.
• Natura & Co ?? - Natura & Co is a Brazilian multinational cosmetics company that has set a goal to become "forest positive" by 2030. The company has launched initiatives such as its Amazon Program, which aims to promote the sustainable use of the Amazon's resources and biodiversity as part of its profitable business practice.

Nature-based solutions: What they are and why they matter

Sustainability in boardrooms has shifted from reducing waste and carbon footprints to a newer, perhaps unexpected focus: protecting biodiversity. Industries ranging from food and agriculture to real estate development and tech are beginning to take notice.

In some cases, the business connection is clear. For those in the food and agriculture sectors, protecting natural resources like land and water are crucial for business viability. Seafood companies must safeguard marine ecosystems to ensure they have products to sell. But the benefits of preserving biodiversity extend far beyond just these sectors.

The World Economic Forum’s 2023 Global Risks Report indicates that biodiversity loss ranks as a top business risk—and for good reason. Services provided by thriving ecosystems, such as clean water systems and carbon sequestration, are estimated at $125–140 trillion annually, more than 1.5 times global GDP. The need to protect these valuable resources is changing the way businesses operate.

For San Francisco-based tech giant Salesforce, a commitment to plant 100 million trees has direct risk mitigation for its business—the continual spread of wildfires in California will impact the company’s staff and headquarters. Recognizing the central role of wood in its products, furniture company Ikea has responded to risks like this with a “Forest Positive Agenda” that in FY21 led to more than 98% of the wood the company used in its product either being Forest Stewardship Council-certified or recycled.

But beyond risk mitigation, there are also significant financial incentives. The World Economic Forum estimates that protecting nature and biodiversity could generate $10 trillion annually in business opportunities and create nearly 400 million new jobs in sectors from farming and fashion to finance. Companies like Salesforce are already vying for opportunities to meet this trend, expanding its offerings to include a Net Zero Cloud reporting system for companies to manage their sustainability data and reporting systems, as well as a Sustainability Exhibit designed to push suppliers to commit to a science-based target tied to the Paris Agreement’s 1.5 degrees Celsius goal.

Learn more from Council for Inclusive Capitalism members taking action to advance??and SDG 14: Life Below Water.

How to take action

• ?? Join our global movement of business leaders who believe in inclusive capitalism and make a commitment of your own.
• ?? Support the initiatives of Council members highlighted in this newsletter and share their work with others.?
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• World Economic Forum | 5 ways businesses can implement the new Global Biodiversity Framework