It’s taken decades for companies to put the operational, financial and systemic risks posed by climate change front and centre on boardroom agendas. Can they shorten the time it takes to do the same thing to recognize and address the serious global loss of nature and biodiversity?
Enabling that goal is the objective behind the Business and Biodiversity Assessment report, a first-of-its-kind publication released on February 9 by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), an independent organization created in 2012.
A product of nearly three years’ work by 80 scientists and private-sector experts, the report was endorsed this month by representatives of the more than 150 IPBES member countries at a week-long plenary session in Manchester, United Kingdom. It is intended to serve as a key reference on nature-related risks for business – and how alleviating those risks hinges on policy change by governments.
“From my perspective, it plays a role for nature similar to what the [Intergovernmental Panel on Climate Change] has played for climate change,” says Thomas Walker, special projects lead at the Institute for Sustainable Finance at the Smith School of Business, Queen’s University, in an interview with Corporate Knights. “Canadian business leaders should pay attention because of Canada’s resource-based economy and because nature underpins the productive capacity of said economy.”
Stark warning
The report begins with a stark warning to businesses: they can either lead transformative change or “risk extinction.” The authors cite evidence of significant declines over the last 50 years in many categories of the natural “ecosystems services” on which business and economies depend. This includes things like raw materials from nature, pollination and seed dispersal, air and water quality, soil fertility, and amenities for tourism and recreation. Altogether, they underscore just how much business is at risk from nature’s collapse. The report presents a detailed guidebook of more than 130 actions that companies, along with policymakers and other enabling actors, can take to reverse it.
“What’s really fundamental here is that our experts looked at the methods and approaches that are available to understand what [risk from biodiversity loss] means in an individual business context. How you can, as a business, understand your exposure to that. How you measure your impacts and dependencies and therefore how you can understand your risks,” said Matt Jones, one of three report co-chairs and a senior officer at the UN Environment Programme, at the launch press conference.
The report’s release (for now, just the policy summary, with remaining chapters to follow in a few weeks) was well-timed, coming just one week before governments convened in Rome from Feb. 16 to 19 to begin the first global review of nature action under the Kunming-Montreal Global Biodiversity Framework (GBF) since it was created in 2022. Mark Carney’s Liberal government is also expected to soon unveil its revised 2030 Nature Strategy, replacing the previous Nature Accountability Bill that failed to pass before the last election. The new strategy will spell out how Canada intends to meet its commitments under the GBF to halt and reverse biodiversity loss and protect 30% of lands and waters by 2030.
In an email to Corporate Knights, Samantha Bayard, a spokesperson for Environment and Climate Change Canada emphasized the role of nature disclosure in addressing the role of business in biodiversity loss. “While adoption of nature-related disclosures is still at an early stage in Canada—hindered by, for example, capacity, expertise, and data limitations—a growing number of companies and municipalities have begun to address nature-related risks in their portfolios and integrate natural assets (e.g., wetlands) into their financial disclosures.”
Delivering transformative change
A core tenet of the GBF is that reversing biodiversity loss requires the “involvement of all society,” including companies. Significantly, among the GBF’s 23 targets is a call for government action to encourage and enable companies to better manage their impacts on nature and more accurately assess – and disclose – their risks and dependencies. Both sides of that equation are squarely addressed in the new IPBES report.
For businesses, it lays out actions at four decision-making levels: corporate, operational, value chain and portfolio. Asked to suggest some critical first steps, report co-chair Ximena Rueda, dean of the School of Management at Universidad de los Andes in Bogotá, Colombia, urged companies to choose their battles. “What is their highest dependency [on nature] or highest impact? Start from that.”
Government’s responsibility
However, the report also makes clear that voluntary efforts alone won’t be enough to deliver the kind of “transformative change that will halt and reverse biodiversity loss,” added co-chair Stephen Polasky, professor of ecological and environmental economics at the University of Minnesota. That will occur only if governments also step in “to change the set of conditions in which businesses operate.”
A key target here are the massive subsidies currently directed toward business activities that drive biodiversity loss. In 2023, according to the report, subsidies of US$2.4 trillion contributed to the estimated US$7.3 trillion in public and private finance flows that had direct negative impacts on nature. In contrast, just US$220 billion in private and public funds were directed to the conservation and restoration of biodiversity. “There is a big role here for governments and the financial system to provide incentives for business to do actions that are beneficial for biodiversity and to take away incentives to business to do actions which are harmful,” Polasky said.
The challenge of subsidy reform
According to the ISF’s Walker, the report’s concern about harmful subsidies “resonates” in Canada. Government fiscal and tax policies designed to encourage resource development and production have often failed to reflect environmental externalities or cumulative ecological impacts, he says.
While reforming subsidies will be “politically complex,” Walker says there is nothing to stop Canadian companies, which have “ample experience with climate disclosure frameworks,” to immediately start considering biodiversity in corporate decisions and disclosures. The disclosure framework established by the Task Force on Nature-Related Financial Disclosures in 2023, which is now being implemented through the work of the International Sustainability Standards Board, provides a blueprint for companies and their boards to follow.
“Structured disclosure can help integrate biodiversity into enterprise raisk management,” Walker explains. “Once nature dependencies are identified and quantified . . . they can be considered alongside climate, market and operational risks.”
Brian Banks is a writer in Cobourg, Ontario, who specializes in environment, business and sustainability.
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