Introduction

This article highlights the critical intersection between nature, biodiversity, and global business. Nature loss, including biodiversity decline, poses systemic risks to business operations and the global economy, with over 50% of global GDP ($44 trillion) dependent on nature. This dependency encompasses essential services like pollination, water retention, and carbon sequestration. Failure to address these issues threatens economic stability and climate mitigation efforts.

The nature of nature

The complexity of nature, compared to carbon emissions, makes measurement and management challenging. Natural resources’ value varies regionally and is often invisible, as seen in genetic diversity and soil health. Unlike carbon, nature benefits are location-specific, limiting global compensation schemes. For example, deforestation in Brazil cannot be offset by reforestation in Scotland. Companies must adapt to localised risks and consider long-term restoration horizons, which may take years to yield results.

Accounting for nature

Nature remains undervalued in economic systems, leading to unsustainable exploitation. The 2021 Dasgupta Review criticised GDP’s failure to account for “natural capital,” enabling nations and businesses to erode ecosystems for short-term growth. Companies face escalating risks, including supply chain disruptions, credit defaults, and reputational damage. Financial institutions risk exposure to illegal activities like wildlife trafficking, valued at $281 billion annually.

Governments are tightening regulations to compel companies to address nature risks. Examples include the EU’s Corporate Sustainability Reporting Directive and Deforestation Regulation. In Australia, directors may face personal liability for neglecting nature-related risks. These regulatory shifts are pressuring businesses to integrate biodiversity considerations into risk management.

New financial tools

Innovative financial mechanisms are emerging to address nature loss. The Forest Resilience Bond in California, for example, leverages private capital for forest restoration, repaying investors through cost savings from wildfire prevention and groundwater stability. Similar instruments, like nature-linked sovereign debt and debt-for-nature swaps, offer pathways for scaling investment while providing returns.

However, challenges persist. The voluntary biodiversity credit market faces scrutiny, mirroring issues in carbon credits, with risks of “nature-washing” through exaggerated claims.

No data is no excuse

Advancements in satellite imaging, bioacoustics, and eDNA are improving biodiversity data collection, addressing historical gaps. Technologies enable businesses to monitor ecosystems, track restoration progress, and understand localised impacts. Frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) offer businesses guidance to measure and disclose biodiversity risks. Adoption of these tools is accelerating, with TNFD recommendations expected to become regulatory requirements in some jurisdictions.

Recommendations and actions

Businesses are urged to prioritise their most relevant nature dependencies and impacts. Walmart, for instance, identified land and ocean requirements for its supply chain and targeted regenerative agriculture to address critical risks. Companies must also align biodiversity strategies across their value chains, integrating nature considerations into corporate governance.

Investors are encouraged to engage with high-risk sectors, such as food, chemicals, and mining, through initiatives like Nature Action 100. Financial institutions should also leverage emerging tools for sustainable investments, such as debt-for-nature swaps and biodiversity-linked instruments.

Eyes on nature’s prize

The article concludes by emphasising the long-term benefits of addressing biodiversity risks. Businesses that act will improve resilience, reduce legal and reputational risks, attract ESG-focused investors, and stabilise raw material costs. While immediate returns are less tangible compared to carbon strategies, addressing biodiversity ensures business continuity and sustainable growth.

The existential threat of nature loss requires businesses to integrate nature into core strategies, combining financial innovation, regulatory compliance, and localised action to safeguard ecosystems.