Biodiversity: ESG’s new frontier
Download a PDF of this articleCorporations need to view their biodiversity and climate strategies in tandem to meet increasing stakeholder expectations.
Over recent years, as scientific evidence of the decline in biodiversity and natural capital has grown, so too has the realisation of its importance as fundamental to all life on earth. Diverse ecosystems support a healthy, stable environment on which humans have depended for thousands of years, but it is now clear that the biological diversity which supports a healthy planet is under threat from human activity and the impacts of the climate crisis.
Ground-breaking work has sought to attach an economic value to the ecosystem services provided by nature. Biodiversity is the support system of the global economy, with half of world GDP dependent on nature. The UN Environment Programme found that every dollar invested in the restoration of nature creates up to $30 in economic benefits. This economic reliance on functioning, diverse ecosystems highlights the potential costs of a lack of action to prevent further decline, alongside the case for the restoration of nature.
The World Bank estimates that the collapse of ecosystem services could result in a decline in global GDP of $2.7 trillion annually by 2030. The rate of biodiversity decline is inextricably linked to the acceleration of the climate crisis, as highlighted by the IPCC’s sixth assessment report. As such, it is imperative that corporate environmental strategies acknowledge the interdependencies between biodiversity and climate and begin to create holistic Net Zero transition pathways that incorporate the restoration of natural ecosystems.
In line with the growing recognition of the importance of protecting biodiversity, focus on this area has intensified over the past year, with the terms biodiversity, natural capital, and ecosystems weaving their way into the corporate lexicon. Capital markets partners such as Aviva have out clear biodiversity expectations for their investee companies to protect and restore biodiversity, identify impacts and collaborate with others to accelerate action. As the UN Convention on Biological Diversity (COP15) approaches and biodiversity reporting frameworks establish, expectations are growing for companies to act on biodiversity with the same urgency as climate change.
A new global goal for the world to become nature positive by 2030 and fully restore nature by 2050, sets the tone for corporates who will need to act swiftly on this topic to meet stakeholder expectations. With concurrent environmental challenges of biodiversity loss, climate change, and natural resource depletion, not to mention the multiple other planetary environmental boundaries which are threatened, expectations of companies are evolving and soon Net Zero emissions alone will not be enough – companies will also need to target Nature Positivity.
This short paper sets out in further detail the economic value and implications of biodiversity for businesses, covers the platforms that have been developed for businesses to engage on the issue with partners and wider stakeholder groups and how efforts to better measure impacts are developing and informing best practice in corporate strategy development. While biodiversity is the key focus, it must not be treated in a silo, instead an effective biodiversity strategy must consider the links between biodiversity decline, climate change, and overconsumption of resources.
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