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Sustainability
Understanding how biodiversity matters for your business strategy
As the global environmental crisis accelerates, biodiversity often plays a hidden role for companies. This article examines how businesses can address this risk through an effective nature-based strategy.
Business operations fundamentally depend on nature’s resources and services in ways that still mostly go unrecognized on balance sheets. Given the growing impacts of climate change and the speed of biodiversity losses, understanding these dependencies is especially important for businesses today. Put simply, biodiversity’s importance for companies extends far beyond compliance or reputation – it’s a matter of operational resilience and future profitability.
Natural systems provide the essential inputs for production: raw materials, water, energy, and arable land. They regulate key processes like water purification, climate stabilization, and soil fertility. It has been estimated that over half of global GDP – $44tn annually – is highly or moderately dependent on nature.
Consider how your business relies on the natural world: Does your supply chain depend on agricultural products vulnerable to pollinator decline or soil erosion? Do you depend on new molecules being found? Will your operations suffer from water scarcity? Are your factories, offices, or suppliers exposed to extreme weather events?
Here are five ways in which nature plays a business-critical role:
- Supply chain security: Biodiversity loss threatens agricultural productivity and raw material availability, even our health. The decline in pollinators, for example, threatens three-quarters of our critical food crops.
- Innovation potential: Biodiversity is a source of biomimicry inspiration and new product development, particularly in pharmaceuticals, cosmetics, materials science, and agriculture. The loss of species risks cutting us off from unknown molecules with which we might fight diseases like cancer.
- Risk mitigation: Biodiverse ecosystems are more resilient to climate impacts, reducing physical risks to assets and operations. Forests help protect against flooding, and coastal ecosystems like mangroves, kelp forests, or coral reefs protect against storm surges.
- Market access: Customers, investors, and governments increasingly demand biodiversity protection. The EU Corporate Sustainability Reporting Directive now requires biodiversity impact reporting. As nature declines, there is only going to be increased pressure for businesses to act.
- Future-proofing: Like-for-like products that do not deplete natural resources will be best placed in future markets. Companies with strong biodiversity performance, especially in sectors that are highly dependent on nature, will be more future-proof.
Nature's declining health represents material financial risk across industries.
The crisis we face
We are losing nature at a catastrophic and accelerating rate. Human activities have caused a 73% decline in wildlife populations over the past 50 years, with a million species at risk of extinction in the coming decades. A third of fishing stocks are already depleted. By 2050, there will be more plastic than fish in the ocean.
Meanwhile, our emissions of greenhouse gases and the destruction of carbon sinks (forests, peatlands, and other natural habitats) are increasing – and wreaking havoc on our climate. The planet is currently on track to see global temperatures rising by about 3° Celsius by the end of the century, nearly double the target set by the Paris Agreement.
Nature’s declining health represents material financial risk across industries. Three sectors that are highly dependent on nature sectors (construction, agriculture, and food and beverages) alone generate nearly $8tn annually. In 2023, damage from global natural disasters totaled $368bn.
All this threatens the bottom line. Business leaders know this: in a 2024 WEF survey, the top four risks identified by business executives for the next 10 years were environmental.
Research has already revealed that companies with larger biodiversity footprints are increasingly losing market value, indicating that investors increasingly require a risk premium for the prospect of uncertainty about future litigation.
On the other hand, preserving biodiversity can help ensure long-term business revenues. In the context of its biodiversity strategy, L’Oréal, which has developed a Universal Registration Document, is able to trace 92% of its biobased ingredients from sustainable sourcing, since its future revenues depend on the continued availability of these materials. Unilever is already generating €1.2bn in annual sales from plant-based offerings that replace animal-derived proteins, minimizing their nature footprint while expanding their market.
These dependencies are becoming increasingly visible to investors and regulators, who are mandating their disclosure, for example, with the Task Force on Nature-related Financial Disclosures (TNFD) or the EU’s Corporate Sustainability Reporting Directive (CSRD). But stakeholders also increasingly want to know: what impact is your business having on nature?
“Nespresso has relied on bioacoustics to monitor bird populations around its coffee farms in a project called The Sounds of Sustainability.”
Developing an effective business strategy
Businesses have long engaged with the climate agenda through net-zero strategies. The rise of the biodiversity agenda may seem like an additional burden, but it is not. Climate change and biodiversity are deeply and mutually reinforcing.
For companies already working on climate action, incorporating biodiversity is not an extra burden but a complementary strategy that strengthens climate goals while delivering additional benefits. Biodiverse forests, for example, capture 50 to 70% more carbon than monocultures. Taken together, biodiversity- and climate-driven agendas contribute to effective nature-positive agendas.
With global frameworks like the Paris Agreement and the Kunming-Montreal Global Biodiversity Framework, as well as an increasing number of net-zero and nature-positive pledges, should businesses focus on climate, nature, or biodiversity? These agendas may seem confusing or even conflicting, but they are complementary and must be tackled jointly.
With over 500 metrics for terrestrial biodiversity alone, businesses don’t need to become experts in all of them. But biodiversity strategies and objectives can rely on these existing metrics. The key is to move from broad commitments to nature and adopt specific, science-based targets for biodiversity conservation that align with business dependencies and impacts. By focusing on biodiversity and decades of science behind the concept, businesses can ensure their action is targeted, effective, and verifiable.
Biodiversity metrics can also speak to broader audiences. For example. Nespresso has relied on bioacoustics to monitor bird populations around its coffee farms in a project called The Sounds of Sustainability. Their reporting is able to engage readers with the bird songs of local species and total population numbers over time. This can feel more real and relatable than carbon models.
Effective nature-focused strategies for business should accomplish three things:
- Contribute to biodiversity and climate goals. This means being grounded in biodiversity and climate policy, and science.
- Measure results that count by using existing frameworks such as TNFD, GRI, and others.
- Be easily communicable to customers, investors, and stakeholders by reminding them of nature and the reasons for action.
For communication, the terms ‘nature’ and ‘nature-positive’ are valuable frameworks that speak to broad audiences, including within organizations. They help maintain focus on the big picture and connect to something everyone understands and values.
But for implementation and measurement, businesses must embrace the more specific concepts of climate change and biodiversity. Both have established scientific frameworks, metrics, and methodologies that allow for concrete target-setting and progress tracking. These are not distractions. They are not new agendas: they are the key to reversing environmental damage and to a sustainable and resilient future for business.
By addressing biodiversity alongside climate change, businesses can future-proof their operations, meet evolving stakeholder expectations, and contribute meaningfully to preserving the natural systems on which all economic activity ultimately depends.
Three key takeaways for business executives:
- Communicate broadly, measure specifically: Use accessible concepts like ‘nature’ for vision-setting and communication, but ground your strategy in specific, measurable biodiversity metrics that align with your business impacts and dependencies.
- Integrate biodiversity into climate strategies: Recognize that climate and biodiversity are interconnected challenges requiring integrated solutions. Look for high-impact opportunities that deliver benefits for both agendas.
- Leverage expertise: Your business doesn’t need to become an expert in 500+ metrics, but can rely on an entire sector that can: biodiversity science. Partner with specialist organizations to assess your biodiversity impacts, set science-based targets, and measure progress effectively.
By addressing biodiversity alongside climate change, businesses can future-proof their operations, meet evolving stakeholder expectations, and contribute meaningfully to preserving the natural systems on which all economic activity ultimately depends.
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