Five reasons why protecting nature should be business-as-usual

After COP 15, biodiversity must become a mainstream part of corporate strategy. Companies have everything to gain by helping nature to recover — and much more to lose if they don't

March 2023

Words by Margot Greenen

illustration-of-margot-green-protecting-nature-is-essential

“The corporate world will come under increasing pressure to disclose its impacts on nature, and to demonstrate that it is working to address them”

1

All human systems rely intrinsically on natural ones

Biodiversity loss will have far-reaching implications for all businesses, not only by disrupting supply networks but by destabilizing societies and markets. According to the World Economic Forum (WEF), over half of global GDP is generated by industries that are highly or moderately dependent on nature, whether because they extract resources from forests or oceans, or because they rely on ecosystem services such as healthy soils and clean water. Most other sectors are indirectly reliant on nature via their supply chains the WEF uncovered significant hidden dependencies among industries such as real estate, aviation, tourism and consumer goods too.

2

The world is watching

Following the historic agreement to protect and restore biodiversity at COP 15 in December, the corporate world will come under increasing pressure to disclose its impacts on nature, and to demonstrate that it is working to address them. We anticipate a wave of legislation to impose stricter rules, on the use of specific habitats, and on reporting requirements and subsidy reforms, to name just a few. Many countries have already started for example, the UK now demands that all developments achieve a 10% biodiversity net gain. Early adoption can pre-empt much greater costs of compliance later on, and by engaging with governments, business can help develop policies and incentives that are better adapted to their needs.

3

For every risk, there is an equivalent opportunity

Biodiversity loss presents a range of operational, regulatory, investor and reputational risks. But recognizing and mitigating these also opens the door to new sources of value. Implementing nature-based solutions can be more cost-effective than traditional grey engineering solutions. For a water utility, planting reed beds can not only enrich local ecosystems, but also reduce treatment costs and improve supply reliability. Recreating natural ecosystems on old mining sites is a relatively easy and cost-effective way to reduce rehabilitation liabilities, while enhancing flora and fauna and creating local jobs. A proactive approach can also uncover new high-value, low-competition revenue streams: in anticipation of new rules on invasive species, Alfa Laval worked with regulatory body the International Maritime Organization to develop a first-to-market ballast-water treatment system that removes unwanted marine organisms without chemicals.

4

You could get stranded

The financial sector is increasingly adopting rigorous biodiversity criteria as part of lending and investment policies, in order to get ahead of the regulatory curve and mitigate the risk of stranded assets. Since 2020, 126 financial institutions representing 21 countries and over €18.8 trillion have signed the Finance for Biodiversity Pledge, committing to protect and restore biodiversity through their activities and investments, and to set targets and to report publicly before 2025. Failing to consider nature in corporate strategies could expose businesses to higher borrowing costs or, in the longer term, leave them unable to secure affordable funding. On the other hand, being able to demonstrate positive action will inspire investor confidence, and could unlock more favourable terms as demand grows for nature-friendly investing.

"People will choose to buy from businesses that reflect their own priorities, and to work for employers where they feel they can make a difference"

5

Destroying nature is not a good look

As awareness of biodiversity loss grows among consumers, employees, investors and policymakers, corporate action on nature will come under increasing scrutiny. The reputational risks of failing to recognize and mitigate negative impacts direct or indirect could become significant. Activists have repeatedly demonstrated the power of a coordinated social media campaign, and of targeting not only firms themselves but their customers and supply chains. At the same time, implementing genuine, validated measures to support biodiversity presents an opportunity to engage with these concerns. People will choose to buy from businesses that reflect their own priorities, and to work for employers where they feel they can make a difference. Local communities and planning authorities will look more favourably on developments that improve environmental quality and help meet biodiversity targets. The Nature Positive Business Pledge, of which WSP is a founder member, establishes a clear framework and a set of principles for businesses looking to start their journey, and a stepwise approach to help them ratchet up their ambitions.

Margot Greenen is a consultant in WSP’s Nature Positive practice, based in the UK 

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