Natural Capital and Biodiversity: Getting Higher Up the Business Priority List
Natural capital and biodiversity are topics which, a few years ago, did not often make it to the top of business’ strategy agendas. Nowadays, biodiversity is not only the concern of the occasional hiker or scuba diver, but also of Chief Sustainability Officers and potential investors.
These issues are gaining importance and widely publicized events and reports have shed some light on this urgent matter:
- The UN Biodiversity Conference (COP 15) which took place in Montreal, Canada, in December 2022, worked on the adoption of a biodiversity framework, setting clear targets to address overexploitation, pollution, fragmentation and unsustainable agricultural practices.
- The IPCC’s sixth report published in 2023 acknowledges the “substantial damages, and increasingly irreversible losses, in terrestrial, freshwater, cryospheric [solid precipitations such as glaciers, icebergs etc.], and coastal and open ocean ecosystems”.
- Several organizations such as WWF, National Geographic, or the European Environment Agency continuously study, act, and communicate through various channels on this subject.
As 80% of habitats in the European Union are in poor condition, the European Commission adopted a Nature Restoration Law proposal in June 2022, key element of the EU Biodiversity Strategy — part of the European Green Deal. This continent-wide proposal aims to:
- Improve and re-establish biodiverse habitats
- Reverse the decline of pollinators
- Develop forest ecosystems
- Increase green urban spaces
- Restore agricultural and marine ecosystems
- Identify and remove barriers that prevent river connectivity
- Achieve set targets and monitor progress
The last decade (and last few years especially) has seen many businesses integrating Net Zero objectives and strategies into their plans. The most forefront companies however, are starting to think about Net Positive objectives. This latest one can only be reached while also integrating the protection and restoration of natural capital, among other subjects.
Natural capital assets are usually divided into two main categories: non-renewable and traded assets — such as fossil fuels and minerals — and finite renewable goods including clean air, groundwater, and biodiversity. While the former can currently be priced, the latter typically cannot (how would we price clean air?). The only instruments available to counterbalance the damage done to this unpriced natural capital are environmental regulations and market-based levers, however, these often cannot prevent economic, social, and environmental negative externalities in time.
Biodiversity is clearly becoming a hot topic for companies but it is a highly complex one to measure and act upon. International frameworks aimed at meeting global biodiversity targets are only starting to burgeon and will surely evolve to a great extent; here are the 3 prevailing ones:
- Science-Based Targets for Nature (SBTN)
- Taskforce on Nature-related Financial Disclosures (TNFD)
- Global Reporting Initiative (GRI) renewed Biodiversity Standard
If your company is considering Net Zero and Net Positive targets, these frameworks and standards are essential. Better start early to understand and integrate them in your strategy.
The importance of biodiversity is often understated and the ongoing sixth extinction (as reported by Elisabeth Kolbert in her book “The Sixth Extinction: An Unnatural History”) already has and will continue to have dramatic consequences on our lives. The biodiversity stripes (cover image of this article), inspired by the popular climate stripes created by Professor Ed Hawkins at the University of Reading in 2018, depict the 69% decline in biodiversity between 1970 and 2018.
Companies will have an impact but let’s not forget that they are made of citizens first. Check out what you can do to protect and enhance biodiversity in your area here.
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References:
Biodiversity Stripes: biodiversitystripes.info
Climate Stripes: https://showyourstripes.info/s/globe
Kolbert, Elizabeth. The Sixth Extinction : an Unnatural History. New York : Henry Holt and Company, 2014.
European Environment Agency: https://www.eea.europa.eu/en/topics/in-depth/biodiversity
European Green Deal: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en
EU Biodiversity Strategy: https://environment.ec.europa.eu/strategy/biodiversity-strategy-2030_en
EU Nature Restoration Law: https://environment.ec.europa.eu/topics/nature-and-biodiversity/nature-restoration-law_en
Global Reporting Initiative Biodiversity Standard: https://www.globalreporting.org/standards/standards-development/topic-standard-project-for-biodiversity/
IPCC’s AR6: https://www.ipcc.ch/report/ar6/syr/
National Geographic Education: https://education.nationalgeographic.org/resource/biodiversity/
Paul Polman and Andrew Winston, Harvard Business Review, 2021: https://hbr.org/2021/09/the-net-positive-manifesto
Science-based Targets for Nature: https://sciencebasedtargetsnetwork.org/how-it-works/the-first-science-based-targets-for-nature/
Taskforce on Nature-related Financial Disclosures: https://framework.tnfd.global/introduction-to-the-framework/executive-summary/v04-beta-release/
Trucost Natural Capital Coalition Report: http://naturalcapitalcoalition.org/wp-content/uploads/2016/07/Trucost-Nat-Cap-at-Risk-Final-Report-web.pdf
UN Biodiversity Conference (COP15): https://www.unep.org/un-biodiversity-conference-cop-15
UN Net Zero Coalition: https://www.un.org/en/climatechange/net-zero-coalition
