Biodiversity refers to the variety of life on Earth, encompassing all species and ecosystems. This rich diversity underpins the ecosystem services that support human life, such as pollination, clean air and water, nutrient cycling, and climate regulation. Yet despite its fundamental importance, biodiversity is being lost at an alarming rate. According to WWF’s Living Planet Report 2024, wildlife populations have decreased by 73% in just five decades.
The implications of this biodiversity loss for businesses are profound. Industries that depend on natural resources, such as agriculture, pharmaceuticals, and textiles, are particularly vulnerable, facing supply chain disruptions, increased raw material costs, and reputational risks. But even companies without direct links to biodiversity feel the impact, as ecosystem services contribute to more than half of global GDP, amounting to $44tn annually. Without a healthy natural environment, economies falter, and businesses struggle to operate.
As the global crisis of biodiversity loss intensifies, businesses are increasingly recognizing the need to incorporate biodiversity considerations into their strategic planning. However, moving from recognition to action can be difficult, especially for companies whose activities do not seem directly connected to biodiversity.
The corporate world is increasingly addressing climate change, with 83% of Fortune Global 500 companies setting climate-related targets. However, biodiversity action lags far behind, as only 5% of these have biodiversity goals.
Although climate change and biodiversity are often treated separately, they are deeply interconnected. Biodiversity loss is exacerbated by climate change while enhancing biodiversity is crucial for carbon sequestration and climate adaptation. Conversely, focusing solely on climate can harm biodiversity, such as when bioenergy projects clear forests, reducing biodiversity and hindering long-term climate goals.
Unlike carbon, biodiversity is not interchangeable, meaning damaged ecosystems or species cannot easily be replaced elsewhere. Companies must therefore demonstrate genuine commitment to reducing their biodiversity impact to avoid accusations of greenwashing.
Continuing with “business as usual” in this regard is not a viable option. The cost of inaction is significant, with biodiversity loss projected to result in $2.7tn in lost revenue by 2030.
Companies that fail to adapt risk increased regulatory scrutiny, financial penalties, and reputational damage. Conversely, those proactively engaging in biodiversity conservation can strengthen their market position and enhance long-term value.
The World Economic Forum estimates that protecting nature could generate $10tn in business opportunities annually by 2030 and create nearly 400 million new jobs. Companies that prioritize biodiversity can tap into new markets, create sustainable products, and bolster their resilience to environmental and regulatory changes. They can also forge new pathways for growth, mitigate risks, and secure a competitive edge in an evolving marketplace.
By assessing, disclosing, and monitoring their biodiversity-related impacts, businesses can unlock key opportunities in mitigation efforts. These efforts safeguard ecosystems and strengthen businesses in the face of rising environmental concerns.
“The CSRD requires companies to report not only on the financial risks posed by biodiversity loss but also on the impact their operations have on the environment – a concept known as double materiality.”
Regulatory frameworks are tightening, forcing more businesses to account in greater detail for their impacts on the environment. The European Union’s Corporate Sustainability Reporting Directive (CSRD), which came into effect in 2024, is a prime example. The CSRD requires companies to report not only on the financial risks posed by biodiversity loss but also on the impact their operations have on the environment – a concept known as double materiality. This directive covers over 50,000 companies in the EU and sets a new standard for corporate sustainability disclosure globally. Other regulations, such as the EU’s Regulation on Deforestation-free Products, further emphasize the need for businesses to monitor and mitigate biodiversity risks within their supply chains.
Business risks tied to biodiversity are typically evaluated as either dependencies or impacts. Companies are dependent on ecosystems for resources like raw materials, water, and clean air. The degradation of these natural services poses financial risks such as increased supply chain disruptions, rising insurance costs, or tighter regulatory requirements. For investors, these dependencies represent real risks to the long-term health of a business.
Businesses also impact biodiversity, whether through pollution, overexploitation of resources, or land conversion. These impacts can lead to reputational risks and are increasingly under scrutiny. Even companies that believe they are not exposed to biodiversity risks might find themselves vulnerable if the ecosystems they impact begin to collapse.
To fully address biodiversity, companies need to ask themselves where they are most dependent on biodiversity, and how they can mitigate their impacts on it. This shift in focus from mere reporting and disclosure to target-setting and action can empower businesses to anticipate risks and seize strategic opportunities.
For businesses, these risks may manifest as rising costs and shrinking availability of raw materials due to scarcity, or supply chain disruptions resulting from the collapse of critical ecosystems.
According to the World Economic Forum’s 2024 Global Risks Report, biodiversity loss and ecosystem collapse are among the top risks facing businesses over the next decade. In fact, environmental risks dominate the top four concerns for business executives globally.
For businesses, these risks may manifest as rising costs and shrinking availability of raw materials due to scarcity, or supply chain disruptions resulting from the collapse of critical ecosystems. In the worst-case scenario, they may lead to the loss of a company’s license to operate if it is perceived as contributing to environmental degradation.
The International Panel on Biodiversity and Ecosystem Services (IPBES) categorizes biodiversity-related risks into three areas: physical risks, transition risks, and systemic risks:
Businesses that act now to address these risks will not only protect their operations but also enhance their reputation among consumers and investors.
Incorporating biodiversity-positive practices not only leads to more resilient supply chains but also reduces long-term operational risks. Additionally, it can lower costs over time through improved efficiencies and resource management.
Leading companies are already embedding biodiversity into their long-term strategies, recognizing that investing in nature can enhance innovation, market leadership, and resilience. Companies that champion biodiversity are better positioned to access sustainable funding and grow their capital base.
Beyond operational improvements, biodiversity action can strengthen a company’s brand and attract eco-conscious consumers. It also opens doors to new customer segments and markets and has sparked innovation in industries. For example, Unilever generates €1.2bn ($1.5bn) annually through plant-based offerings that replace animal-derived proteins, highlighting how protecting nature can drive profitability and open new markets.
Businesses must shift from reactive biodiversity strategies to those that position them as leaders in future markets. The path to success lies not in playing catch-up with regulations, but in seizing first-mover advantages in biodiversity-driven markets. Future-focused strategies will unlock growth, secure competitive advantages, and ensure long-term business sustainability.
A successful biodiversity strategy must be comprehensive, aligning with broader business goals while addressing the root causes of biodiversity loss. To guide this process, we recommend focusing on five key enablers:
By applying these enablers, businesses can navigate the complexities of biodiversity action and position themselves for success in a nature-positive future.
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Nature’s ROI, Five key enablers for building a nature-positive business strategy
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