For companies that depend heavily on natural ecosystems, nature loss is a problem as urgent as climate change. And no business is immune to the risk.
Where nature is in peril, these industries are too
November 7, 2023
How much does global business depend on the natural world? A lot, according to new PwC research. Defining nature dependence as the extent to which the economic value generated by business activity is exposed to the risk of ecosystem disruptions, the research shows that 55% of the world’s GDP, or US$58 trillion, is moderately or highly dependent on nature. That dependence can extend across a company’s entire value chain and stem from, say, the need for raw materials like wood and rubber, or a reliance on fertile soil for crop production, or even the flood protection provided by natural wetlands. In the case of the five industries shown in the chart above, which together produce 12% of global GDP, 100% of direct operations are highly dependent on nature—which is to say, highly exposed to the risks posed by nature loss.
Regardless of the extent of a company’s nature-risk exposure, reducing it comes down to three critical actions.
- Assess your dependence. Various resources can help leaders measure the extent of their organisation’s nature dependence. The Integrated Biodiversity Assessment Tool (IBAT), the ENCORE database, and Aqueduct water-risk tools can help identify potential impacts and dependencies at the regional level, and new technologies such as low-cost environmental DNA (eDNA) sampling can enable accurate site-level monitoring of changes in biodiversity. Executives can then translate these material dependencies and impacts into risks and opportunities.
- Get better data. Reliable data sources, systems and controls will help companies meet disclosure requirements and help executives explain to investors and other stakeholders why the company is choosing to pay attention to nature issues. CDP, an organisation that benchmarks corporate sustainability reports, estimates that companies need 12 to 18 months to prepare for partial nature-related disclosures, and two to three years to get ready for full disclosure.
- Set your ambitions. Once you know your company’s baseline levels of nature dependence and impact, you can set goals for mitigating risk and creating value by better managing interactions with nature. The Science Based Targets Network (SBTN) provides one framework for companies to formalise their nature ambitions using scientific measures of various outcomes. In more general terms, levels of ambition range from ‘do less harm’ to ‘cause no net biodiversity loss within our operations’ to ‘achieve a net positive impact on biodiversity along the value chain.’
The decline of natural ecosystems is a reality. These moves can help your company withstand the business risks that nature loss creates.
Continue reading about how companies can manage risk while working toward a nature-positive future.
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