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Planet Earth

Sustainability

How companies can stabilize the patient called planet Earth

Published 17 September 2023 in Sustainability • 9 min read

With the Earth well outside the safe operating space for humanity, according to a new report, here’s how companies can take action.  

We’re two-thirds of the way towards an unlivable planet. That was the stark headline from a new study released in mid-September, showing that six of the nine planetary boundaries that are important for maintaining the resilience and stability of the Earth have been breached due to human-caused destruction. 

Scientists involved in the study described the current health of Earth as like a “patient with very high blood pressure”. While that does not necessarily mean the planet is about to keel over from a heart attack, it does greatly raise the risk, explained Professor Katherine Richardson from the University of Copenhagen. 

With the majority of business leaders focused on climate change, this report should serve as a cruel wake-up call that if humanity as a species wants to survive, environmental sustainability needs to go well beyond reducing CO2 emissions to net zero. It’s time to put the other important services provided free of charge by Nature, such as biodiversity and freshwater, on our radar.  

What are the nine planetary boundaries? 

First proposed in 2009 by a group of scientists led by Johan Rockström, the planetary boundaries, simply put, are nine thresholds within which humanity can continue to develop and thrive for generations to come. The framework, which has been quite influential among scientists, policymakers, and the general public, sheds light on the key factors that ensure the resilience and stability of the Earth’s systems. 

The report concluded that six of the nine planetary boundaries – biosphere integrity, land-system change, biogeochemical flows, freshwater change, novel entities, and climate change – have been crossed. It’s important to understand that all the boundaries are interconnected and that a transgression of one can hasten a further deterioration of the others. 

The planetary boundary framework offers a good starting point for firms to gain a bigger-picture understanding of the impact of human activity on the Earth system.

Biosphere integrity refers to the healthy functioning of ecosystems and has been severely compromised by the destruction of the natural world and the resulting loss in wildlife. Scientists now say we are experiencing an historic loss of biodiversity, known as the sixth mass extinction. 

The razing of forests for agriculture has broken the boundary for land use, while excessive use of fertilizers is pushing up levels of biogeochemical flows of phosphorus and nitrogen. This may increase agricultural yields in the short term, however it comes at a cost of our ability to grow food in the future. 

The freshwater boundary measures both green water (found in soil and plants) and blue water (lakes, rivers, etc.) Given that water is essential to keep humans alive and involved in almost every single production process, this is a particularly pressing issue. 

Novel entities quantifies and assesses the introduction of all novel chemical compounds from synthetic chemicals, to microplastics, pesticides, heavy metals, and even radioactive waste that can have a detrimental effect on environmental and human health. 

You may remember the award-winning movie Erin Brockovich, based on the true story of an environmental activist who fought against a Pacific Gas and Electric power plant, which had polluted the drinking water of a town’s 2,000 residents with hexavalent chromium. The Chernobyl nuclear catastrophe or the Bhopal gas tragedy are other examples of the disastrous effects of novel entities. Alarmingly, most people are unaware of this planetary boundary, meaning more and more novel substances are released into the environment every day. It is thought that microplastics are now present inside every human. 

For the time being, boundaries for atmospheric aerosol loading (minute particles suspended in the atmosphere which affect cloud formation) and ocean acidification (decrease in the pH of the Earth’s ocean due to the uptake of carbon dioxide from the atmosphere) have not been crossed, although the latter is under severe pressure. 

The French company performed a risk assessment using a tool developed by the World Wildlife Fund to identify which of its factories are at high risk of water scarcity.
Danone performed a risk assessment using a tool developed by the World Wildlife Fund to identify which of its factories are at high risk of water scarcity

On a positive note, the boundary for stratospheric ozone depletion – previously exceeded in the 1990s – is no longer transgressed, thanks to global regulation that phased out the production of ozone-depleting substances that were commonly found in refrigerators, air conditioners, and aerosols. 

Last, but not least, there is climate change. This can be considered as the archetypal planetary boundary  – the one that is best understood by the public. What’s more, climate change significantly adds fuel to the fire, making every other planetary boundary worse. While it undoubtedly remains important to take action to limit climate change, this doesn’t mean we should neglect the other planetary boundaries. 

Why do we focus so much on climate change? 

A 2022 McKinsey analysis of Fortune Global 500 companies’ Nature-related targets found 83% had set targets for climate change, but that corporate actions to tackle the other planetary boundaries remained rare. For example, just 25% of companies had set targets to reduce freshwater consumption, 20% for chemical and plastic pollution, 9% for forest cover loss, 5% for biodiversity loss, and less than 1% for nutrient pollution. 

To be sure, the discrepancies in targets could be explained by companies operating in different sectors. If you are a company that uses a lot of water in your production process, you are more likely to have set a target to move towards water circularity than for deforestation. 

Yet it is clear that every company, in some capacity, impacts biodiversity loss, making it more important than ever that this boundary is elevated to the level of climate change. There is some hope. The world is finally waking up to the need to come together to halt and reverse Nature loss, thanks to a breakthrough agreement at the UN Biodiversity Conference in Montreal. A growing number of companies are making biodiversity pledges and new regulation following on from the agreement will likely pile on the pressure for further action. 

Part of the problem is a lack of tools and metrics to accurately measure companies’ direct impact on the different planetary boundaries. For climate change, it took decades to develop a measure for greenhouse gas (GHG) emissions. Today, we translate all our GHG emissions into CO2 emissions to have a fairly reliable reading. The lack of tools should not, however, serve as an excuse for inaction given the scale and urgency of the problem. The planetary boundary framework offers a good starting point for firms to gain a bigger-picture understanding of the impact of human activity on the Earth system. 

How can companies engage with the planetary boundaries? 

We mustn’t forget that many of the raw materials essential for the products made by companies come from natural ecosystems. Organizations also benefit from many of the ‘free’ services provided by Nature, whether this is carbon sequestration or crop pollination. A failure to protect our natural capital might well mean that companies can no longer keep doing business in the future. 

Assess the inward risks 

As a first step, companies should conduct risk assessments to understand which aspects of their business operations are most at risk from the breaching of the planetary boundaries. For example, if you rely on a lot of water to produce your goods, the breach of the freshwater boundary may be concerning.  

footprint environment
“McKinsey estimates that the annual opportunity for businesses to reduce operating costs while benefitting from the environment is worth around $700bn. ”

Take the example of Danone. The French company performed a risk assessment using a tool developed by the World Wildlife Fund to identify which of its factories are at high risk of water scarcity. At its factory in Rotselaar in Belgium, it now reintegrates and reuses 75% of its water in operation, reducing overall water consumption and pressure on groundwater supplies.  

Assess the outward impact (or your Nature footprint) 

The next step is for organizations to assess how their business operations impact natural capital, before designing a mitigation strategy. For companies working in retail, this may be in reducing chemical and plastic pollution, while a livestock agriculture firm may have the biggest impact on forest cover loss or land use. 

Consumer goods giant Unilever has committed to a deforestation-free supply chain by 2023, meaning that by the end of this year, all its palm oil, tea, soy and cocoa, as well as paper and board, will come from places that are deforestation free and haven’t been grown on formerly natural ecosystems that were converted into farmland. 

The business opportunity of a Nature-positive economy  

It is important to stress that taking measures to mitigate our impact on the Earth’s system represents a huge opportunity for companies, not only to improve their performance, but also to unlock new business opportunities. McKinsey estimates that the annual opportunity for businesses to reduce operating costs while benefitting from the environment is worth around $700bn.  

In many cases, deploying technologies that already exist could provide a positive return on investment. While the agricultural sector is one of the biggest contributors to the loss of natural capital, it also has the most potential to make the biggest contribution to abating Nature loss. Here are just a few examples of tech-enabled solutions: 

Agrisolar: Also known as agrivoltaics or solar farming, agrisolar is an innovative practice that involves the co-location of solar panels or photovoltaic systems with agricultural activities. This dual-use approach can maximize land utilization, enhance resource efficiency, and provide sustainable benefits to both energy production and agriculture. 

Vertical farming: This involves growing crops in stacked layers, often indoors or in controlled environments. It uses significantly less water and land compared to traditional agriculture and can be more resource efficient. 

Aquaponics and hydroponics: These soilless cultivation methods use water recirculation systems and organic nutrient solutions to grow plants. Aquaponics combines plant cultivation with fish farming, creating a sustainable, closed-loop ecosystem. 

Precision agriculture: This uses technology such as GPS, sensors, and data analytics to optimize farming practices. Farmers can precisely apply inputs like water, fertilizers, and pesticides, reducing waste and environmental impact while improving crop yields. This could help reduce levels of nitrogen and phosphorus.  

And it’s not just tech. Adopting regenerative agriculture approaches, such as regenerative livestock farming, including rotational grazing and pasture management, can improve soil health and help sequester carbon. The same is true for agroforestry, which involves planting trees in cropland and could also help revive biodiversity. 

There are also opportunities for innovative startups. Take the example of DyeCoo, a Dutch company that has developed a technology to dye textiles without using water or chemicals. This represents a massive competitive advantage and business opportunity, as their technology could have a positive impact on the freshwater consumption boundary and help reduce the spread of novel entities. 

In sum, the latest warnings about the health of our planet make for dire reading. But there is no space for fatalism. While there is undoubtedly a huge sense of urgency to act, this is matched by the scale of opportunity. With more technologies now available than ever before, and new ones emerging, business has a chance to move from being part of the problem to being part of the solution. 

Authors

Julia Binder

Julia Binder

Professor of Sustainable innovation and Business Transformation at IMD

Julia Binder, Professor of Sustainable Innovation and Business Transformation, is a renowned thought leader recognized on the 2022 Thinkers50 Radar list for her work at the intersection of sustainability and innovation. As Director of IMD’s Center for Sustainable and Inclusive Business, Binder is dedicated to leveraging IMD’s diverse expertise on sustainability topics to guide business leaders in discovering innovative solutions to contemporary challenges. At IMD, Binder serves as Program Director for Creating Value in the Circular Economy and teaches in key open programs including the Advanced Management Program (AMP), Transition to Business Leadership (TBL), TransformTech (TT), and Leading Sustainable Business Transformation (LSBT). She is involved in the school’s EMBA and MBA programs, and contributes to IMD’s custom programs, crafting transformative learning journeys for clients globally.

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