Why Business And Biodiversity Go Hand-In-Hand
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Business and biodiversity may seem odd bedfellows at first glance. After all, doesn’t it take every possible effort to create a thriving commercial activity? Strategic roadmaps. Detailed record-keeping. A climate of collegiality. So much is needed to produce profitable goods or services.
Who has time to factor in biodiversity? Pharmaceutical companies, food and agri-businesses, forestry industries, construction, and packaging sectors — they all require critical ecosystem inputs of genes, species, and ecosystem services into their production processes. They depend on healthy ecosystems to treat and dissipate waste, maintain soil and water quality, and help control air composition.
Considering societal and industrial benefits as well as the associated values of these intact ecosystems is vital when exploring land use opportunities and conversion.
In fact, the need to think of business and biodiversity as synergy is becoming evident to many business leaders today. At the 29th Conference of the Parties (COP29) to the UN Framework Convention on Climate Change that took place in Baku, Azerbaijan in November 2024, a number of business leaders, including banks like JPMorgan Chase and Bank of America, were in attendance. COP29 focused on “green finance,” financial products and services that support environmentally friendly initiatives and projects.
Businesses are feeling the pressure from investors to take corporate action on protecting and restoring natural environments, alongside efforts to limit global temperature rise from reaching catastrophic levels. Investing in biodiversity conservation and restoring the ecosystems are the major drivers of human and planetary health, addressing climate change impacts, and ensuring resilience.
Business and Biodiversity: Opportunities and Challenges
Even for businesses that want to do The Right Thing, where does biodiversity fit in — if at all? And isn’t it really just a few businesses that harm biodiversity? Actually, it’s a myth that biodiversity loss is caused by only a few industries; it is driven by practically all industries. All kinds of businesses depend on healthy ecosystems.
Thousands of businesses are already investing heavily in renewable energy and efficiency technologies. Their leaders understand that economic opportunity and planetary health are now inextricably linked. As a result, it’s becoming more evident to stakeholders of both business and biodiversity that market forces can protect the planet protections as well as be profitable. From cleared forests to polluted rivers and streams, investors and companies worldwide are recognizing the economic cost of nature and biodiversity loss and acting to protect the global Feconomy that depends on thriving ecosystems.
Biodiversity, you see, is much more than a philosophical concept; it has tangible economic consequences.
As nature-related risks continue to stack up, more and more investors and companies are ramping up their efforts to confront these material threats. At the same time, consumers, regulators, and shareholders are expecting companies to accelerate how they are transitioning their business models toward ones that support nature’s conservation and restoration.
The momentum behind action is also being spurred by a wave of new resources and tools designed to guide the private sector on its nature journey.
- Nature Action 100 last month announced the results of its first benchmark of corporate progress toward key investor expectations on nature. The results showed most of the 100 assessed companies are still in the early stages of nature action. However, the benchmark offers a robust roadmap of the critical steps companies can take to protect and restore nature and ecosystems in line with global biodiversity goals, as well as shifting financial flows away from economic activities that harm nature.
- The Glasgow Financial Alliance for Net Zero and the TNFD launched two resources to guide financial institutions in weaving nature into their transition planning for cutting emissions and to help companies and investors overall in using disclosure to develop plans to act on their nature-related risks and opportunities.
This growing internal movement to reconcile business and biodiversity by the private sector is a flare to investors who want to emphasize that companies are ready and willing to confront tackling nature loss and water pollution and scarcity head-on.
Think of how ecosystem services, such as carbon storage, water filtration, and food provisioning, contribute significantly to global economic value. Rather than allowing biodiversity risks to manifest themselves in mainstream business, business leaders can take early steps to secure biodiversity and seize opportunities that enable them to remain at the forefront of their sector.
How can Businesses Reap Benefits from Protecting Biodiversity?
Yes, protecting biodiversity — the variety of life on Earth at all its levels, from genes to ecosystems — can increase some costs and decrease bottom lines. More importantly, though, escalating rates of nature and biodiversity loss and water scarcity pose financial risks to investment portfolios, business operations, and the long-term stability of economies, according to an analysis by Forbes. It is estimated that $44 trillion of economic value generation—over half the world’s total GDP—is moderately or highly dependent on nature and its services and, as a result, exposed to risks from biodiversity loss.
Ecosystems generate a wide range of benefits for humans, including some market goods as well as other benefits that are not directly reflected in market activity. Climate change will alter the distribution of ecosystems around the world and change the flow of these benefits.
Failure for a business and biodiversity to go hand-in-hand can mean business instability, reputational risk, and financial repercussions. Companies that are linked with activities that negatively harm nature, such as oil spills and forest fires, operational risks, including declining pollinator populations, can disrupt crop yields, supply chains, and consumer satisfaction at point of sale. Regulatory risks from a number of new and developing laws are being adopted globally that would require businesses to assess and disclose their natural impacts.
A special article in Business Strategy and the Environment outlines how corporate biodiversity protection strategies fall into four categories:
- conservation,
- restoration,
- compensation, and
- reparation.
The authors argue that the field has an unsettled nature, yet a firm’s biodiversity protection strategy should aim to mitigate the primary driver through which the firm causes biodiversity loss. Firms should also report performance in each of the four biodiversity protection strategies separately as well as to seek interdisciplinary collaborations among corporate sustainability scholars and conservation biologists.
The benefits of such actions are numerous. They can include decreased costs from the reduced need of inputs to counter biodiversity degradation. There is also the ever-important public brand loyalty enhancements that arise from the implementation of conservation initiatives.
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