Climate change is one of the most high-profile issues in the world today, with an increasing number of political, social and corporate movements tackling rising emissions and delivering on commitments to achieve net zero. COP27 will be highly scrutinised at Sharm El Sheikh this month, attended many heads of state and corporate leaders. But why is there less focus, and so little clarity among decision-makers, on biodiversity? Identified as one of the World Economic Forum’s top five threats to humanity, biodiversity loss, as detailed in a ground-breaking IPBES report, is stark and chilling:
- around 1 million species are at risk of extinction within decades
- more than 75% of our land and two-thirds of our seas have been significantly altered by our actions
- plastic pollution has increased tenfold since 1980
- the “dead zones” in our oceans cover an area greater than the UK and
- our global food system is the primary driver of biodiversity loss.
We have failed to meet previous UN targets for protecting biodiversity, despite knowing that this is key to achieving sustainable development goals related to poverty, hunger, health, water, climate, oceans and land. We continue to allow industry associations to oppose almost all major biodiversity-relevant policies and regulations, and we do not debate nature-positive plans with the same urgency as our net-zero transition. With the clock ticking, is there time to change course?
A new nature economy
With the UN Biodiversity COP15 due to take place in Montreal in December, LBS’s Wheeler Institute for Business and Development – as part of the Business Schools for Climate Leadership initiative – hosted a webinar on the private sector’s role in halting and reversing nature loss. The key speaker was Mark Gough, CEO of Capitals Coalition, a global collaboration uniting natural, social and human capital communities, and the conversation was moderated by Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship.
Just as financial capital varies in quality and can be converted to greater or lesser flows of benefits, so natural capital can produce differing levels of benefits for people. Gough advised that we should think about biodiversity as a factor affecting the quality of natural capital and the benefits that the capital can produce. Where biodiversity is high, the benefits of nature are greater.
Gough highlighted a series of reports produced by the World Economic Forum, which call attention to the 1 million species facing extinction because of human activity and the tripling of global resource extraction since 1970. The reports estimate that $44tn of economic value generation – over half of the world’s total GDP – is moderately or highly dependent on nature. In a UK context, Gough referred to the findings of The Stern Review (2006) and The Dasgupta Review (2021), the latter of which estimated a decline in the stock of natural capital per person of nearly 40% between 1992 and 2014 and current extinction rates 100 to 1,000 times higher than the baseline rate. These same reports estimate that, if we look after nature, a new nature economy could generate up to $10.1tn in annual business value and create 395 million jobs by 2030.
Costs and benefits
Equally startling are the estimated costs and benefits associated with biodiversity. The cost of natural disasters is around $300bn annually; the cost of harmful human interventions in the ocean could rise by 2050 to $428bn annually; and the level of environmentally harmful subsidies is at least $1.8tn a year. By contrast, the benefits of nature are substantial: the World Wildlife Fund’s Living Planet Index argued that nature underpins economic activity worth an estimated $125tn. Gough also cited the world-leading work of Stanford’s Natural Capital Project in developing a new metric for measuring nature’s contributions to economic activity, Gross Ecosystem Product (GEP).
Full recovery of nature by 2050
One concept being used to promote this new nature economy is that of a “nature-positive” future. The Nature Positive goal has three milestones: zero net loss of nature from 2020; net-positive improvement in nature by 2030; and full recovery of nature by 2050. Earlier this year, CEOs from 14 of the largest environmental organisations called for this goal to become the overarching mission of the new 10-year Global Biodiversity Framework, to be agreed at COP15.
A stepping-stone approach
As was the case with climate change, where there has recently been a gradual move to standardise approaches to measurement and reporting, there is currently a range of frameworks and methodologies related to biodiversity. These include the Taskforce on Nature-related Financial Disclosures (TNFD), the Science Based Targets Network (SBTN), Business for Nature (BfN), the World Economic Forum’s Champions for Nature, and the World Business Council for Sustainable Development (WBCSD). Gough acknowledged that the range of options may be confusing for the corporate sector, who are waiting for a clearer indication of which to follow.
To clarify the common ground between these frameworks, Capitals Coalition launched a set of high-level business actions on nature at Davos in May this year. This model outlines the actions required of business, finance and government if they are to have adequate regard for nature in their decision-making.
In the model, businesses are expected to: assess (measure, value and prioritise impacts and dependencies to focus on the most material ones), commit (set transparent science-based targets), transform (restore and regenerate), and disclose (track performance and report publicly) their impacts and dependencies on nature.
Gough believes this framework will support a stepping-stone approach from one source of best practice to another as an organisation moves through its nature-management journey.
Hopes and expectations
COP15 and COP27 are taking place just a month apart. It’s not just their timing, Gough said, that makes these two conferences so closely connected.
While the climate change COPs have a higher profile, the biodiversity meetings are also of critical importance. Without success in agreeing an overall biodiversity framework at COP15, Gough said, it will be hard to achieve the goals of COP27. He added that 92% of the NDCs (nationally determined contributions) agreed at COP26 in Glasgow included nature as part of their solutions.
When asked about his three priorities for COP15, Gough defined them as: agreeing an ambitious global biodiversity framework that includes a nature-positive approach; making the assessment and disclosure of impacts and dependencies mandatory for large businesses and financial institutions, and natural capital accounts mandatory for governments; and reforming, redirecting or eliminating harmful subsidies.
Reaching a nature-positive future
Gough hopes that greater awareness will encourage the corporate sector to mobilise in support of a nature-positive future. He highlighted three industries he felt could be doing more: food and agriculture, which need to address the related challenges of emissions and land-use change; construction and infrastructure, particularly in their supply chains; and energy, where he hoped to see greater investment in renewables and local generation. On the other hand, he cited the corporations Patagonia, Olam International, Natura and Kering as examples of best practice.
Gough believes that COP15 offers the chance to make real progress towards an equitable, nature-positive and climate-neutral world. We will be watching COP15, as well as COP27, to see whether these hopes are realised.