As COP16 wraps up, the urgent need for business action on biodiversity loss, alongside climate change, takes center stage. This year’s COP, the Sixteenth Conference of the Parties to the Convention on Biological Diversity, will be pivotal. For the first time since adopting the Kunming-Montreal Global Biodiversity Framework, governments, businesses and organizations are being called on to accelerate nature and biodiversity protection into global sustainability strategies. Both biodiversity loss and climate change represent not only environmental emergencies but systemic risks that directly threaten the resilience and future viability of businesses worldwide.
At COP16, governments will assess their progress in implementing the Framework. Businesses, too, are increasingly being held accountable for their role in these twin crises. As ecosystems deteriorate and climate change worsens, companies must adopt comprehensive approaches that align with global biodiversity and climate goals. This blog explores why biodiversity matters for businesses, the key risks of inaction, and the transformative potential of integrating biodiversity and climate change mitigation strategies into corporate sustainability agendas.
The Interconnectedness of Biodiversity, Climate and Business Resilience
Biodiversity and climate change are intrinsically connected, creating a feedback loop that exacerbates both crises. Climate change accelerates biodiversity loss by disrupting ecosystems through extreme weather events, while degraded ecosystems contribute to climate change by reducing carbon sequestration capacity. This escalating cycle of destruction poses a direct risk to businesses, who depend on the supply of natural resources and ecosystem services to function.
Our latest whitepaper, The Other Existential Crisis For Value Chains: Biodiversity Loss and How Businesses Can Turn the Tide, highlights how biodiversity protection is integral to the operations of industries such as agriculture and construction. These industries also highly depend on nature’s contributions to people, also known as ecosystem services, in order to thrive. Yet, as biodiversity continues to decline, essential services such as pollination, clean water and fertile soil, are being disrupted, leading to instability and vulnerability. The whitepaper explores how nature-based solutions can provide effective means to mitigate these risks.
The Business Imperative: Why Should Businesses Care About Biodiversity?
Biodiversity degradation is not merely an environmental concern; it is an essential business issue. According to the World Economic Forum’s Global Risks Report, more than half of the world’s GDP – approximately $44 trillion – is moderately to highly dependent on nature. Biodiversity and natural ecosystems underpin industries ranging from food and beverages to pharmaceuticals, providing critical ecosystem services like pollination, climate regulation and disease control. As biodiversity diminishes, businesses face significant financial and operational risks.
Our whitepaper reveals that companies are increasingly aware of these challenges. Many are now exploring how to mitigate biodiversity-related risks, but there is still significant room for growth. Addressing biodiversity loss is not just about avoiding risk; it’s also about unlocking opportunities. Companies that embrace biodiversity conservation and restoration efforts can position themselves as leaders in sustainability, attracting investors, customers and partners that prioritize responsible business practices.
Businesses face three primary risks if they ignore biodiversity:
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Systemic risks: The collapse of whole ecosystems or complex food webs can cascade into disruptions in the supply of raw materials, driving up costs and causing supply chain delays.
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Transition risks: As governments and regulatory bodies introduce stricter biodiversity and climate regulations, businesses may face compliance costs or legal penalties if they fail to adapt.
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Physical risks: Acute events such as wildfires, flooding and other climate-induced disasters, exacerbated by biodiversity loss, can damage infrastructure, disrupt operations and threaten the availability of key resources.
One striking example of the consequences of inaction is the case of PG&E, where wildfires, driven by climate change and poor land management, led to massive financial losses and reputational damage. Integrating biodiversity into corporate strategies helps mitigate these interconnected risks while offering pathways for innovation and growth.
The Economic Case for Biodiversity Conservation
But biodiversity conservation is not just about risk avoidance; it presents significant business opportunities. As highlighted by a report from EY, industries that invest in biodiversity conservation stand to benefit from improved operational resilience, access to capital and enhanced investor confidence. For instance, businesses causing adverse biodiversity impacts may find it increasingly difficult to access capital as investors shift toward nature-positive strategies.
The benefits of integrating biodiversity into business strategies are multifaceted: improved supply chain stability, reduced regulatory risks and enhanced market positioning. Companies that take proactive steps to protect biodiversity are not only safeguarding their operations but also tapping into a growing market for sustainable goods and services.
By taking action now, businesses can not only mitigate their environmental impact but also unlock new opportunities for value creation. The shift toward nature-based markets, estimated to generate up to $10 trillion in annual business value by 2030, is set to redefine competitive advantage in the coming decade.
A Pivotal Moment for Business and Biodiversity
As COP16 convenes, businesses are facing a pivotal moment. The twin crises of biodiversity loss and climate change represent the most significant threats to both humanity and the global economy. Failing to incorporate biodiversity into corporate climate strategies exposes businesses to unforeseen risks, including supply chain disruptions, regulatory penalties and reputational damage.
However, there is also tremendous opportunity for those that act now. Businesses that adopt a holistic, nature-positive approach to sustainability can enhance their resilience, strengthen their appeal to investors and secure long-term profitability. COP16 provides a unique platform for companies to showcase their commitment to biodiversity and climate action. Those that take decisive steps now will be better positioned to thrive in a rapidly changing regulatory and environmental landscape.
The time to act is now.
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