Tackling biodiversity challenges (Imperial College Business School)

Our key takeaway: We’ve spoken many times about how rich and diverse ecosystems underpin all life on earth, and the goods and services we use in surplus. These two things cannot co-exist. Our consumption now requires the natural resources of 1.75 earths, instead of one, which means our demands significantly exceed nature’s capacity to continue providing us with resources. Up to 1 million out of 8 million species are threatened with extinction, many within decades. This will directly impact human health and wellbeing and companies’ ability to operate now and in the future. Despite this, the share of corporate initiatives targeted at biodiversity loss is minimal relative to the importance of diverse ecosystems, and even declining over time. We do know, however, that there is corporate appetite to tackle biodiversity loss given the upward trend of business model transformation initiatives aimed at integrating biodiversity-related risks and opportunities into business strategies and operations. What can companies do now? Scale up their impact-driven biodiversity-related initiatives. Involve key stakeholder groups, such as local communities, in the development of nature-based solutions. Work with others to leverage resources and knowledge so as to incentivise value chain partners to set their own biodiversity targets.‍

Imperial College Business School published The evolution of corporate behaviour to tackle biodiversity challenges (2023):

• Companies are driving biodiversity loss: The report highlights how biodiversity loss is inextricably linked to companies’ activities: “Biological resources directly account for 40% of the world's economy.” Companies’ activities are driving biodiversity loss, such as land use and overexploitation, high levels of pollution, and global warming. Not only does it lead to species decline (69% between 1970 and 2018), it also threatens human health and wellbeing and companies’ ability to operate now and in the future. Of note is the World Economic Forum’s Global Risks Report which ranks “biodiversity loss and ecosystem collapse as one of the top four global risks we should expect over the next ten years along with climate action mitigation and adaption failure and extreme weather events.”
  

• Corporate initiatives targeting biodiversity loss is declining: The findings show that the share of sustainability initiatives directly addressing biodiversity loss is small and declining over time: “On average, biodiversity-related initiatives account for 6% of all business initiatives targeting the SDG challenges” and “the concentration of biodiversity initiatives reduced from a peak of almost 8% in 2007 to 4% of total initiatives in 2021.” Only 4% of biodiversity-related initiatives target SDG14, which aims to preserve ocean life despite the “central role that ocean plays in preservation of life on earth, biodiversity, and climate regulation.” More positively, however, is the progression from philanthropic initiatives to those aimed at business model transformations to “integrate environmental regeneration within strategic and operating change.” All this is to say is that there are both positive and negative trends in the way that companies are addressing biodiversity loss. One thing for sure is that companies must act now by “expanding and integrating their sustainability strategies to target nature and biodiversity losses more directly.”
  

• Recommendations for companies: The report outlines key actions that companies can take to address biodiversity loss, which includes: 1) “Develop operating capabilities, incentive systems and leadership mindsets to sense and address biodiversity-related challenges and opportunities.” Key stakeholder groups, such as local communities, must be involved in developing programmes on “the development of nature-based solutions by designing, testing and scaling services and products for and with stakeholders, including value chain partners and communities”; “products and services that save, protect and regenerate natural capital”; “incentive and control systems that reward business decisions and actions that save, protect and regenerate natural capital”; and “learning interventions that are scientifically tested and proven effective in nurturing mindsets and values consistent with regenerative logics of business”; and 2) “Building integrative strategies for and with key stakeholder groups.” For instance, companies can integrate strategic stakeholder groups, such as clients, employees, suppliers, investors and communities, throughout the business model transformation process. 3) Work with key stakeholder groups to incentivise action. For example, larger companies can work with financial institutions to incentivise value chain partners to address their own biodiversity-related impacts: “large firms can work with financial institutions to offer their suppliers better terms and access to finance, as well as collaborating with them on product design, circularity or sharing knowledge and resources.” They can also “take a leading role in driving systems-level collaboration to propagate innovation and adoption of new technologies.”