This briefing provides a compelling case for businesses to take action to safeguard biodiversity, which creates significant global economic value estimated at more than $150 trillion annually. The report highlights how businesses and financial organisations impact nature both directly, through their own operations, or indirectly through value chains and investment decisions. Direct impacts stem primarily from land use and waste generation, while the indirect ones result from the actions of others and are usually the hardest to identify, predict, manage and control.

Risks to business

Biodiversity loss can lead to significant financial impacts, including disruption to supply chains, increased input costs, reduced quality goods and asset impairments. Regulatory and legal risks, such as litigation or restrictions on land use and reduced access to raw materials, and reputational risks expose businesses to additional costs and reduced revenue. Lastly, organisations may face transition risks as new standards and policy changes arise.

Opportunities for business

There are significant business opportunities for those committed to maintaining and restoring natural ecosystems. Nature-based solutions present a business opportunity worth $10 trillion and can create 395 million jobs by 2030. Businesses can develop corporate-level biodiversity goals that drive change internally and demonstrate to stakeholders a firm commitment to reducing biodiversity loss, with associated reputational benefits and access to capital. Finally, understanding biodiversity across your project life cycle and value chain benefits businesses by increasing efficiency, opening new markets, enhancing brand and increasing market share.

Recommendations

Finance professionals can take specific steps to understand the relationship their business has with biodiversity, reduce potential negative impacts, and identify mitigation and adaptation opportunities that could significantly improve business resilience and increase the health of the natural capital with which their business or value chain interfaces.

These steps include: engaging with the organisation’s sustainability team to develop an understanding of how the organisation and its value chain may negatively impact biodiversity; assess how the organisation might enhance biodiversity through the application of mitigation and adaptation strategies; develop an understanding of the risk dynamics of biodiversity loss for the organisation and the value chain; develop the capability of management information systems to collect and compile relevant data for monitoring risks and impacts; set goals and targets to develop an appropriate performance measurement approach; ensure appropriate internal governance processes are in place to embed biodiversity considerations into decision-making; develop an approach to reporting.