Nature is declining, yet more than half of the global GDP relies on it. Businesses need to rethink their strategies to not only protect and restore the environment but also secure enduring economic success.
In a world where the decline of nature is undeniable, businesses are increasingly shifting their attention towards understanding the relationship between climate change and biodiversity within their supply chain. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) and the Intergovernmental Panel on Climate Change (IPCC), solving either issue requires addressing both. While opting to plant a single species for carbon sequestration may seem initially environmentally responsible, it carries the potential risk of compromising biodiversity. However, companies are increasingly acknowledging the significance of strategic solutions. Initiatives like coral restoration and sustainable fishing not only tackle threats to biodiversity but also aligns with corporate ambitions to contribute to climate change mitigation. This dual benefit not only meets environmental responsibilities but also aligns with the growing necessity for businesses to proactively participate in nature-positive practices.
Climate change has long been recognized as one of the key drivers of biodiversity loss, standing alongside other drivers such as land use changes, resource exploitation, pollution, and invasive species. Although historically ranking as the third-largest contributor, scientists believe that climate change is set to become the primary driver in this century. This interdependence underscores the critical need to adopt practices that not only counteract climate change but also preserve and enhance our natural environment.
The interconnectedness between climate change and biodiversity highlight the need for strategies that address both challenges. Examining the synergy between our economy and nature further emphasises the importance of biodiversity. More than half of the global GDP depends on nature, which translates to more than half of our economy being at risk if we do nothing. Late 2022, WWF revealed alarming statistics, including close to 70% decline in species populations since the 1970. This decline contrasts a historical period of human prosperity, which was driven by careful use of natural resources.
Shortages in natural capital – that is, the Earth's natural resources, such as air, water, and ecosystems - underscore the risks of relying too heavily on the environment. Consequently, companies need a thorough understanding of their full value chain dependencies and impacts on nature, with a focus on integrating sustainable practices across their operations. Businesses require a comprehensive approach that protects both the environment as well as economic success.
As biodiversity frameworks gain attraction to help businesses adopt a comprehensive approach to protecting nature, financial market regulations are adapting. The European Commission's Sustainable Finance Disclosure Regulation (SFDR) identifies biodiversity as a key principal adverse indicator, while the EU's Taxonomy objective encompasses protecting and restoring biodiversity and ecosystem services. Nations are also introducing laws that compel biodiversity-related reporting, as seen in France where financial institutions must disclose risks related to biodiversity and climate. The recent introduction of Task Force on Nature-related Financial Disclosures (TNFD) further showcases the global commitment to guiding organisations toward nature-positive outcomes. There is an anticipation that reporting under the TNFD framework may become mandatory, aligning with what has been observed in its carbon counterpart, the TCFD (Task Force on Climate-related Financial Disclosures), which has seen mandated reporting in various nations, including Australia and New Zealand.
Becoming nature positive is often viewed as the holy grail when outlining a biodiversity strategy. This term stems from the global objective to halt and reverse nature loss by 2030, based on a 2020 baseline, and achieve full recovery by 2050. It captures the idea of making nature more abundant and resilient; and the financial sector and its assets play a crucial role in aligning with science-based targets to guide business towards sustainable practice.
The industry is realizing this, and best practice is slowly starting to emerge. Lombard Odier's fund management arm, for instance, exemplifies this shift by appointing a Chief Nature Officer to integrate nature into investment decisions, incorporating it into the balance sheet. This strategic move highlights the intrinsic value of nature in financial decisions.
Moreover, the Science Based Targets Network, a coalition of environmental non-profits, has introduced corporate science-based targets for nature, in harmony with the global goal to become nature positive. These targets emphasize that achieving net-zero is unattainable without addressing nature's pivotal role. Companies, such as Alpro, are pioneers in setting benchmarks with science-based targets, not only for climate but also for land, water, nutrients, and biodiversity. This holistic approach showcases the interconnectedness of environmental impacts, aligning with the broader industry shift towards nature-positive practices.
Strategic focus should extend beyond climate change to broader nature-related considerations. Striving for a nature-positive future is not just a responsibility but a necessity for the well-being of both people and the planet. Businesses, with their influential role, must have a strategy to become nature positive guided by science-based targets. At &BLOOM, we specialize in helping organizations set up for a success towards nature positivity.