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Yes, Biodiversity Matters for your Business

By June 7, 2022September 8th, 2022No Comments

International Biological Diversity Day was recently held on 22 May, and the theme for 2022, “Building a shared future for all life,” once again highlighted the global crisis facing us. Frightening statistics estimate that 83% of wild animals and 50% of all plants have already been wiped out, with more than 1 million species at risk of extinction in the coming decades. It is reported that the current rate of loss is now 10 to 100 times greater than the average over the last 10 million years.

But what does biodiversity loss mean in economic terms, and more simply, what does it mean for a business?

The Environment and Economic Concerns

Biodiversity makes up a business’s natural capital, one of the six forms of capital all organisations depend on for their success[1]. The six capitals are financial, manufactured, intellectual, human, social and relationship, and natural. The capitals are stores of value all of which are inputs to an organisation’s business operations, creating increased shared value for stakeholders. Natural capital consists of natural assets such as fauna and flora, clean water, healthy soils, forests, and clean air, and together these provide ecosystem services that contribute over USD125 trillion annually to the global economy.

If ecosystems are broken down and this functionality is removed, we have to build it back into the system at a cost. According to the World Bank report, “The Economic Case for Nature,” the collapse of select ecosystem services provided by nature, such as wild pollination, provision of food from marine fisheries and timber from native forests, could result in a decline in global GDP of USD2.7 trillion annually by 2030.

The WEF 2021 Global Risks Report identified biodiversity loss as a key environmental and economic risk. In fact, it was rated #4 as top risk by impact and #5 as top risk by likelihood. In 2021, global biodiversity finance made up 0.1 % of global GDP and without action, biodiversity loss poses a major risk to business and the financial sector.

What Businesses Need to do

Businesses need to better understand the potential impact that biodiversity loss may have on them and their operations. As pressure mounts on businesses to ramp up and disclose their sustainability efforts, they also need to avoid or minimise their impacts on biodiversity, restore biodiversity where possible, and adopt actions that result in positive biodiversity outcomes. Certain sectors clearly have more biodiversity risk than others. Adding to the burden is that businesses need to also assess the impacts of their supply chains and their vulnerability to biodiversity loss.

Watch this Space

The Taskforce on Nature Related Financial Disclosures (TNFD) was launched in 2021. It is a framework which will serve as a mechanism to help organisations understand, disclose and manage the financial risks and opportunities associated with nature and their future sustainability. It is anticipated the official TNFD reporting framework will be launched in 2023 following an extensive consultation process.

Get in Touch

Are you protecting your natural capital? We can assist you in identifying and managing your environmental risks and impacts. Let’s have a chat: info@ebsadvisory.com

[1] https://integratedreporting.org/wp-content/uploads/2013/03/IR-Background-Paper-Capitals.pdf