Biodiversity in crisis: what companies can do

All companies derive benefits from biodiversity to function, be profitable and have a positive impact on society. They also have an important role to play in finding solutions to the alarming scale of loss of biodiversity, now aptly called the biodiversity crisis. Fiona Zerbst investigates.

Biodiversity loss is one of the three planetary crises we are faced with, but it has received less media attention than both climate change and pollution – perhaps because the economic and social costs and threat to human livelihoods have not been clearly articulated and are considered complex.

What is often underappreciated, however, is how interdependent climate and ecosystems are. Both have been
put under severe pressure by our current economic model (see ‘Capitalism: do we need a new paradigm?’), and climate change is one of the major factors contributing to biodiversity loss.

At the same time, biodiversity offers nature-based solutions to the climate emergency, such as carbon sequestration, which is why we cannot afford to view these crises in isolation. Rather, rewilding land is a good example of a solution to both stabilising the climate and providing new economic models based on the sustainable use of biodiversity.

At a global level, leaders and policymakers have agreed on an ambitious plan to reverse biodiversity loss and secure a nature-positive world by 2030. Companies can play their part by helping to keep production and consumption within planetary boundaries and making an equitable transition to nature-positive economies, according to WWF South Africa.

The United Nations Biodiversity Conference (COP 15), scheduled to take place in December 2022, will be the largest biodiversity conference in more than a decade where parties to the UN Convention on Biological Diversity will meet to determine the post-2020 Global Biodiversity Framework.

It is expected to officially give biodiversity and ecosystems the same international protection as the climate, according to the World Economic Forum. As such, we can anticipate intensifying action to achieve nature-positive outcomes, with companies playing a major role in achieving this.

For Matthew Child, biodiversity economy scientist at the South African National Biodiversity Institute (SANBI), a radical mind shift needs to take place among business leaders.

“They need to realise that biodiversity is not an externality to the economy – it is the economy,” he stresses. There is simply no business without renewable natural resources.”

Child says companies should not only be thinking about how they can minimise their impact on biodiversity – they should be actively thinking about how to create new enterprises and economies from biodiversity itself, with a self-renewing paradigm at the heart of such business.

“A good example of this is the wildlife economy, where wildlife ranchers have taken often degraded and marginal land for agriculture and converted it into thriving wildlife-based enterprises, such as hunting, ecotourism, wildlife breeding and game-meat sales,” he says. “Hunting in particular has proven to be a huge boost to natural capital and rural development as the annual hunts are designed to stimulate population growth and health while generating revenue that can be used to employ people from local communities and restore the habitats that enable wildlife populations to thrive.”

The issue is contentious among conservationists, but from the perspective of a biodiversity economy, it can drive new nature-based enterprises.

The business case for biodiversity

The Taskforce on Nature-related Financial Disclosures (TNFD) – a global, market-led initiative established in 2021 with the mission to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks and opportunities – points out that more than half of the world’s gross domestic product (GDP) – US$44 trillion of economic value – currently relies on nature, and if ecosystem services
collapse there could be a $2.7 trillion decline in global GDP each year by 2030.

The recorded extinction of 83% of wild mammals and 50% of plants represents significant risk to corporate and financial stability as it reduces both the raw diversity of natural resources as well as the ability for ecosystems to produce essential services such as soil formation, water flows and purification, pollination and climate stabilisation.

However, there is an upside to reversing biodiversity loss that companies have not necessarily considered: nature-positive transitions could generate up to US$10.1 trillion in annual business value and create 395 million jobs by 2030, according to the TNFD. For this reason, companies have every incentive to invest in ‘nature-positive’
initiatives.

A good example of the extent to which business relies on nature is the story of pollinators. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has pointed out that more than 75% of fruit and vegetables, as well as cash crops such as coffee, cocoa and almonds, rely on animal pollination, yet
pollinators are threatened by intensive agricultural practices and climate change.

Around 200 000 to 350 000 animal species contribute to pollination, primarily bees, and they are indispensable to our food systems. Without them, farmers would have to pursue ever more intensive farming practices to meet demand, increasingly relying on machinery and thus increasing carbon emissions.

However, the fact that some pollinators may be going extinct is not regarded as a dire threat to both humanity and the planet. A Forbes article attempted to quantify the contribution pollinators make to the economy, estimating that honeybees would have a market capitalisation of US$20 billion.

It is often difficult to attach a value to natural capital, yet this is just what the TNFD is trying to do, allowing companies to understand how their success is underpinned by natural assets.

Because companies have an intimate reliance on nature, whether acknowledged or not, nature needs to become part of the broader solution. Shifting towards a low-carbon and socially inclusive business model is the first step, but company strategy needs to be aligned with climate, nature and development goals, and corporate reporting on climate-related and nature-related risks must become standard practice.

To this end, TNFD is working to develop a comprehensive set of guidelines that companies can use to determine nature-related risks and opportunities that can inform their business strategy and decision-making.

It has released a beta version of its Nature-Related Opportunity Management and Disclosure Framework on an interactive online platform, which stakeholders can test and provide feedback on. The framework harmonises more than 3 000 existing indicators and metrics (including guidance from the Natural Capital Protocol, a
framework devised by the Capitals Coalition) and looks likely to be solidified as a global standard by September 2023. Examples of metric categories include the amount of natural resources that are used as an input to business activity, and the extent of ecosystem assets, including positive or negative changes.

“The beta framework will most likely improve assessment and disclosure, although it may not be a magic bullet given the slow pace of adoption of the climate equivalent, the Taskforce on Climate-related Financial Disclosures (TCFD)”, says Wendy Engel, senior manager of sustainable finance at the World Wild Fund for Nature (WWF).

The TNFD will assist companies to transition to a nature-positive economy, setting and achieving corporate targets that are aligned with broader national and global goals. One of these goals is the post-2020 Global Biodiversity Framework, which aims to set global biodiversity targets.

It is hoped that this framework will do for nature what the Paris Agreement has done for climate change, bringing it fully into mainstream economic decision-making, according to Thomas Brookes, chief scientist at the International Union for Conservation of Nature (IUCN). However, achieving the proposed targets could mean increasing investment in nature by around 0.7–1% of global GDP. “Without this investment, none of the United Nations Sustainable Development Goals can be achieved,” the IUCN points out.

Science-based targets for nature

The post-2020 Global Biodiversity Framework will help countries to develop national or regional goals and targets that will allow us to understand the area, connectivity and integrity of ecosystems, the abundance of species within those ecosystems, and the percentage of species threatened with extinction. Using science-based targets (SBTs) will help to reduce the risk of nature loss in four key realms – general biodiversity, land, oceans, and freshwater regions.

The Science Based Targets Network – a consortium of organisations including the UN Global Compact, WWF, the World Resources Institute and the Carbon Disclosure Project – will oversee how to translate these global goals into fair company-specific targets based on their activity and footprint, according to The Biodiversity Consultancy.

“Unlike SBTs for climate, which are measured in standard units of carbon and are applicable globally, there is no single unit of measurement for SBTs for nature, as nature is geographically diverse and locally complex,” it points out. However, there are metrics to assess biodiversity, such as the Species Threat Abatement and Restoration (STAR) metric, which measures the contribution that investments can make to reducing species’ extinction risk. SBTs for biodiversity are currently in development.

A South African partnership for biodiversity

Statistics South Africa (Stats SA) have worked together to develop a Natural Capital Accounting (NCA) strategy in South Africa. This strategy will support both the post-2020 Global Biodiversity Framework and the Sustainable Development Goals. It will also provide national environmental indicators as identified in South Africa’s National Development Plan (NDP) 2030.

The aim of NCA is to track where the natural environment is improving or declining and analyse what this means for people and the economy. Already the NCA approach has revealed that for every one job dedicated to conserving biodiversity, five jobs can be created through downstream sustainable use of biodiversity; and that the total number of biodiversity-related employment is tantamount to the entire employment scope of the mining industry in South Africa.

The NCA approach has also revealed the significant decline in the capacity for our freshwater systems (rivers and wetlands) to provide ecosystem services as these ecosystems are most at risk to collapse. As such, government has designated Strategic Water Source Areas (SWSAs) – the 8% of land area generating more than 50% of South Africa’s surface water availability; and companies can be part of investing in enterprises that help restore SWSAs rather than degrading them.

A biodiversity toolkit for companies

• The Integrated Biodiversity Assessment Tool: This subscription-based service provides open and free access to biodiversity maps, integrating three biodiversity datasets: the IUCN Red List of Threatened Species, the World Database of Key Biodiversity Areas, and the World Database of Protected Areas.
• The Biodiversity Sector Investment Portal, championed by the Department of Forestry, Fisheries and the
  Environment (DFFE), facilitates private investment into biodiversity-based enterprises looking for capital to
  expand their operations. It is not a philanthropic portal, but an opportunity to support biodiversity-based
  businesses by assessing the potential for return on investment as well as leveraging environmental, social
  and governance (ESG) indicators for companies’ due diligence.
• The National Biodiversity and Business Network (NBBN) at the Endangered Wildlife Trust (EWT) launched the Biological Diversity Protocol (PD Protocol) in 2021, to help companies understand and measure their impacts on biodiversity.
• The World Wildlife Fund for Nature (WWF) report ‘A Biodiversity Guide for Business’ sets out WWF’s
  approach for identifying, assessing and addressing biodiversity risks as well as the opportunities that come from conserving, sustainably using and restoring biodiversity.

Source: The Trialogue Business in Society Handbook 2022 (25th Edition)