Biodiversity’s Bottom Line: A New Imperative for Business
Biodiversity – the intricate web of life encompassing ecosystems, species, and
genetic diversity – is facing an alarming rate of destruction. This fact is widely recognised. However, what is less commonly acknowledged is the profound impact that biodiversity loss has on businesses.
According to a study by a prominent management consulting firm, the relationship between biodiversity and the business landscape is deeply intertwined and merits a closer examination.
The Economic Value of Biodiversity
Biodiversity is not just a philosophical concept; it has tangible economic implications, too. Ecosystem services, such as carbon storage, water filtration, and food provisioning, contribute significantly to global economic value. The study estimates these ecosystem services to be worth over US$150 trillion annually – roughly double the world’s Gross Domestic Product (GDP). These services are classified as regulating, cultural, habitat, and provisioning, each essential for environmental stability and human well-being.
Drivers and Dangers of Biodiversity Loss
The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) identifies five primary pressures responsible for biodiversity loss: land-use and sea-use change, direct overexploitation of natural resources, climate change, pollution, and the spread of invasive species. Already, this decline in ecosystem functionality costs the global economy more than US$5 trillion annually. Companies engaged in resource extraction and cultivation, especially in food, energy, infrastructure, and fashion value chains, contribute significantly to these pressures.
Business Risks and Opportunities
The decline of ecosystems poses three main biodiversity-related risks to businesses:
Disruption of Supply Chains: As over half of the world’s GDP is heavily dependent on functional natural ecosystems, disruptions to supply chains become a major concern. For instance, food producers may face increased costs due to vanishing natural pollinators.
Regulatory Pressure: Governments are increasingly imposing regulations related to biodiversity, potentially leading to additional costs for non-compliant businesses.
Reputation and Social License: Companies that ignore the negative impact of their operations on biodiversity risk eroding customer goodwill and social license to operate.
However, the crisis also presents opportunities:
Market Expansion: Companies supporting biodiversity can develop innovative products and services, attracting environmentally conscious customers and tapping into emerging markets.
Improved Brand Value: Responding to sustainability demands enhances a company’s value proposition and brand, fostering consumer loyalty.
Access to Capital and Cost Savings: Biodiversity-focused companies may find it easier to secure capital, and they can reduce raw material and energy costs by adopting sustainable practices.
Building a Biodiversity-Positive Business
A four-stage approach for businesses aspiring to become biodiversity-positive entities:
Determine the Scope of Action: Identify key biodiversity-related issues, assess their urgency, and prioritise them. Translate these issues into strategic objectives to guide action.
Align on Targets-Set, Science-Based Targets for local initiatives, establish systems for progress measurement, and publicly disclose progress towards set targets.
Build the Foundation for Success: Educate employees and partners about biodiversity, integrate biodiversity targets into governance mechanisms, and form partnerships to enhance capabilities.
Take the Right Actions: Businesses can take action through footprint management, innovation, and advanced biodiversity support. This can involve adopting biodiversity-safe operating standards, developing eco-friendly products, and contributing to biodiversity through stewardship initiatives.
Business Prospects Linked to Biodiversity and Ecosystem Services
The conservation, responsible utilization, and restoration of biodiversity offer substantial potential for businesses. Companies incorporating biodiversity and sustainability considerations into their operations stand to gain in various ways:
Sustainable Business Models: Employing resources sustainably ensures long-term resource availability, securing business viability.
Cost Efficiency and Improved Operations: Monitoring resource origins can reduce costs and minimize environmental impacts.
Expanded Market Presence: Demonstrating ecologically responsible practices attracts eco-conscious customers, expanding market share.
Innovative Business Models: Companies can innovate products and services with lower environmental impacts, tapping into new markets and revenue streams.
Strengthened Stakeholder Bonds: Taking action on biodiversity strengthens relationships with stakeholders, including customers, regulators, and shareholders.
Integrating Biodiversity in Business and Investment Decision-Making
Businesses must incorporate biodiversity considerations into their core strategies and governance mechanisms.
Robust due diligence and impact assessments are crucial for identifying and mitigating biodiversity impacts. Transparent reporting and communication regarding biodiversity efforts are essential for building stakeholder trust. Voluntary standards, certifications, and industry norms that promote biodiversity integration should be adopted. Policymakers and stakeholders can play a pivotal role by supporting policy interventions, encouraging multi-stakeholder collaborations, and integrating biodiversity goals with climate initiatives.
Kunming-Montreal Framework: Business Goals for Biodiversity Conservation
The Kunming-Montreal Framework, a landmark agreement adopted at COP15 last year to safeguard biodiversity worldwide, has a specific focus on business perspectives and aims to strengthen the collaboration between businesses and biodiversity conservation. The framework emphasises the following key points:
Encouraging businesses, especially corporations and financial institutions, to implement measures for biodiversity conservation and sustainable practices.
Promoting regular monitoring, assessment, and transparent disclosure of biodiversity impacts.
Providing consumers with information for making sustainable consumption choices.
Ensuring compliance with regulations related to access and benefit-sharing.
Final Thoughts
The dynamic interplay between biodiversity and business is reshaping the way industries approach growth and sustainability. The value of biodiversity as a cornerstone of economic prosperity is increasingly acknowledged by enterprises worldwide. The journey towards a harmonious coexistence between economic development and environmental conservation is rife with challenges, but also laden with opportunities for innovation and collaboration. As the global community rallies to address biodiversity loss, businesses must become critical stakeholders. By embracing sustainable practices, adopting green technologies, and actively engaging in conservation efforts, businesses can play an instrumental role in preserving Earth’s rich tapestry of life for generations to come. In this partnership between biodiversity and business, a sustainable future lies waiting to be forged.
Thanks to Geetika Singh who is the author of this article.
