Lost in Nature. Understanding a Company's Impact
You are just getting your head around climate change, and someone throws into the mix, “but what about the impact of your business on nature?”.
It feels like something that should be simple to answer, or at least to understand what is meant by the question. Yet, understanding how a business impacts nature and vice versa, ironically, doesn’t always seem to come to mind that naturally, and key terms have you scrabbling for your school biology books.
For most firms it is not mandatory to report on nature-related impacts. However the market is moving, and the last 12 months have seen several developments aiming to mitigate the loss of nature.
As a topic that is climbing up the ESG and sustainability agenda, we've written a starter for 10, introducing the key concepts, recent developments and a summary of reporting requirements and trends, and some links to resources for those companies looking to investigate further.
Why is nature important?
Nature has largely taken a backseat to climate change, however, the current degradation of nature as a result of human activity could have a much larger impact on the planet and people.
Nature loss has far-reaching effects. The resilience of the natural world is reduced, and the likelihood of disease and pandemics increased. Nature is critical in the provision of clean air, medicines, food security, and fresh water, as well as playing a vital role in stabilising the climate.
What’s the status today? There’s approximately 9 million plant and animal species on Earth and around 1 million are currently under threat of extinction, many within decades.
What do we mean by nature?
To understand its interdependencies with nature, a company needs to understand how it uses natural capital in its products and services.
Key terms, as described by the Taskforce for Nature-Related Disclosures (TNFD):
Nature refers to the natural world, the diversity of living organisms, including humans, and their interactions with each other and their environment.
There are four realms: land, ocean, freshwater, and atmosphere. Society is central in its interaction with all four realms.
Natural capital (plants, animals, air, water, soils, minerals) exists in ecosystems, the dynamic communities of plants, animals, microorganisms, and non-living components, that interact as a functioning unit.
Earth’s ecosystems depend on biodiversity, the variability among living organisms which underpins all life of Earth.
Ecosystems produce flows of benefits to people, called ecosystem services and include: 1. provisioning services e.g., water supply, timber. 2. maintenance services e.g., bee pollination, air filtration by trees, soil regulation. 3. cultural services, e.g., coral reef tourism, spiritual value of land
Understanding a company’s ecosystem services is the key to understanding its impact on nature
Climate change is one of the key drivers of nature change, alongside: land, freshwater, ocean use and change; resource use and replenishment; pollution and pollution removal; invasive alien species introduction and removal.
For some firms, understanding its relationship with nature will be simpler, for example those in extractive, agriculture, tourism, and the food and drink industries. For others the interaction may be removed from day-to-day operations, and include the use of water to cool cloud-based servers, for example.
A landmark global agreement
In December 2022, a landmark agreement at the UN’s Biodiversity COP15 was reached. The agreement saw 188 governments, including the UK, agree to the adoption of the Kunming-Montreal Global Biodiversity Framework (GBF), which will guide a global action plan on nature through to 2030. You can think of this as nature’s equivalent to the Paris Agreement on climate change.
The GBF has four overarching and ambitious goals:
Halt human-induced extinction of threatened species and reduce the rate of extinction of all species by tenfold, by 2050.
Sustainable use and management of biodiversity to ensure that nature’s contributions to people are valued, maintained, and enhanced.
Fair sharing of benefits from the utilisation of genetic resources.
Adequate means of implementing the GBF, ensuring accessibility to all parties, including least developed countries and small island developing states.
The framework has 23 targets for 2030 which include: restoration of 30% of terrestrial and marine ecosystems; halving global food waste; mobilising at least $200bn annually from public and private sources for biodiversity-related funding; require transnational companies and financial institutions to monitor, assess and transparently disclose risks and impacts through their operations portfolios and value chains.
To understand more, please get in touch with the team.
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