What have businesses got to do with biodiversity? A lot.

In a 2021 paper, The Biodiversity Crisis Is a Business Crisis, the Boston Consulting Group (BCG) puts the issue in perspective: “Two facts about biodiversity are not up for debate. The first is widely known, the second less so. Fact number one: biodiversity—the level of diversity in the natural world, at the ecosystem, species, and genetic levels — is being destroyed at an alarming rate. Fact number two: biodiversity loss has massive implications for business.”

BCG set out to study the biodiversity crisis, understand the business role, and determine how companies should respond.

Their findings are worth noting.

Biodiversity creates significant economic value in the form of ecosystem services, such as food provisioning, carbon storage, and water and air filtration, which are worth more than $150 trillion annually — about twice the world’s GDP.

Five primary pressures — land-use and sea-use change, direct overexploitation of natural resources, climate change, pollution, and the spread of invasive species — are causing steep biodiversity loss. Already, the decline in ecosystem functionality costs the global economy more than $5 trillion a year in the form of lost natural services.

Many business activities, especially activities related to resource extraction and cultivation, contribute to the pressures driving biodiversity loss. The operations of four major value chains — food, energy, infrastructure, and fashion — currently drive more than 90% of man-made pressure on biodiversity.

As ecosystems decline, the report adds, businesses face significant risks, including higher raw material costs and a backlash from consumers and investors.

But the crisis also creates real opportunity.

Companies that act to support biodiversity can develop powerful new offerings and business models, improve the attractiveness of existing offerings, and lower operating costs.

Another report by EY (2022), Why biodiversity may be more important to your business than you realize, says while the impact of biodiversity loss can be extensive and cause disruption to supply chains, increasing regulatory compliance costs and potentially eroding social license, many companies have only just begun to explore their impact on biodiversity loss and only a small number of pioneering companies have published credible biodiversity strategies with robust biodiversity goals aligned to the Science-Based Targets Network, a collaboration of leading global non-profits and mission-driven organisations working together to equip companies as well as cities with the guidance to set science-based targets for all of Earth’s systems.

The EY report adds that investors are also increasingly considering how to address biodiversity as part of their assessments and how they direct capital toward companies that can demonstrate and report on their biodiversity strategy.

It could easily be assumed that biodiversity risks are confined to heavily impacted sectors such as mining, forestry and agriculture. In these industries, unsustainable business practices can lead to environmental degradation, supply-chain disruptions, fluctuating prices, smaller crop yields from overused land and a loss of pollinators. However, many companies likely rely on natural capital, and this can impact them in some way.

Therefore, the paper argues, businesses should consider including biodiversity and natural capital in their mainstream risk register.

Here’s an example that illustrates the issue nicely.

“Take a shoe manufacturer, for example. They may think biodiversity loss has nothing to do with them but where do they get their leather? Is their supplier clearing forests to raise cattle? Was there an impact on biodiversity as a consequence? explained Eugenie Molyneux, Zurich’s Chief Risk Officer for Commercial Insurance.

“Just as a company can be sued for polluting a water supply, it’s perhaps not an extreme scenario for similar litigation to be applied to biodiversity loss. This is an issue for every single one of us — businesses, governments and individuals — and everyone has to play their part,” says Molyneux.

Limited efforts

While businesses can gain from biodiversity conservation, their current efforts, says Dr Rajat Panwar, department of forest ecosystems & society, College of Forestry, Oregon State University, says the current efforts of businesses are “too limited and perfunctory” to be consequential for achieving the 2050 vision for biodiversity.

Many studies, Dr Panwar told me, advocate for a sector-focused approach to reduce business impacts on biodiversity. For example, the World Economic Forum emphasises the need for critical transitions in three key sectors of the economy — food, land, and ocean use; infrastructure and the built environment; and energy and extractives — to avert biodiversity loss.

But, Dr Panwar Panwar challenges this sector-focused approach and argues that transitions are needed across all industries rather than just a few because each contributes to biodiversity loss. Indeed, companies in various industry sectors — e.g., forestry, food, fashion, finance, and technology.

In a recent commentary published in the journal Biodiversity and Conservation, he writes that while there is an uptick among businesses worldwide to focus on biodiversity conservation, this dynamism is unlikely to engender desired impact because of two reasons.

First, the ongoing efforts have a narrow scope in that they are mainly limited to large corporations in developed countries.

Second, they are shallow in that they are often add-ons to business-as-usual models and rarely lead to changes in corporate strategies.

For businesses to meaningfully contribute to the 2050 vision for biodiversity, we should quickly transition to a stage of profound and substantive business engagement in biodiversity conservation. (The vision of this Strategic Plan is a world of “Living in harmony with nature” where “By 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people.”)

Five approaches, Dr Panwar argues, could facilitate that transition:

Making biodiversity protection every business’s business: Currently, most voluntary business initiatives to conserve biodiversity are led by large multinational companies, often in consumer-facing industries of developed countries. This is a small niche because 99% of all businesses worldwide are micro, small, and medium enterprises (MSMEs). And these need to be helped by the MNCs to join the biodiversity conservation efforts.

Correcting the “carbon tunnel vision” of corporate sustainability: Despite growing recognition among businesses that biodiversity loss is a critical existential and economic threat, discourse on the role of business in achieving sustainability continues to be dominated by an excessive focus on carbon emissions at the expense of other environmental issues, including biodiversity loss. Countries with regulatory requirements for corporate sustainability and corporate social responsibility reporting could add a mandatory category related to biodiversity and, thus, mainstream business engagement with biodiversity through mandated disclosures.

Holding companies accountable for biodiversity impacts across supply chains: A company’s true impact on nature cannot be assessed through its direct operations alone. Rather, it requires considering the biodiversity impacts incurred from the energy production the company purchased as well as from activities across the company’s up and downstream supply chains. Extensive background work is required to overcome data, methodology, and boundary challenges to develop robust protocols for assessing and minimising impacts.

Developing biodiversity‑friendly organisational cultures: Just as corporate sustainability teams sought to develop energy usage thinking among employees through such behavioural nudges as turning the lights of when leaving office, businesses now should inculcate biodiversity thinking among employees so that biodiversity conservation and restoration become part of employees’ day- to- day thinking and personal behaviours. This behaviourial disposition will help create enabling organisational cultures to catalyse efforts to correct the “carbon tunnel vision” of corporate sustainability and help mainstream business engagement with biodiversity.

Creating third‑party certifications to benchmark biodiversity‑friendly business practices: Business initiatives to conserve biodiversity could be expanded and strengthened through market-based mechanisms, mainly through third-party certification programmes. These voluntary certifications can help companies assure consumers that their products do not cause harm to biodiversity and enable responsible companies to reap marketplace rewards.

Developing standardised certifications, Dr Panwar writes, can be challenging for biodiversity given the contextual variability, but umbrella certifications that use universal templates while providing space for local adaptations could be a viable option. The third-party certification could be an effective complimentary strategy to sensitise markets and consumers about the need for companies to conserve and restore biodiversity. Indeed, this sensitisation is not sufficient to tackle the challenge at hand, but it is necessary.

The views expressed are personal