5 reasons why CEOs must care about safeguarding nature

.jpeg

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Akanksha Khatri, Head, Nature and Biodiversity Initiative, World Economic Forum


  • A new series – the New Nature Economy reports – is being launched to make the business case for safeguarding nature.
  • The first, Nature Risk Rising, explains why nature-related risks have direct relevance for business through their impact and dependency on nature.
  • Here are five key lessons from that first report.

At the World Economic Forum’s Annual Meeting in Davos in January this year, there was unprecedented interest in and commitment to fighting the climate and nature emergencies facing humanity. Although the world’s 7.6 billion people represent just 0.01% of all living things by weight, humanity has already caused the loss of 83% of all wild mammals and half of all plants. Supporting the concept of stakeholder capitalism, leading CEOs, government leaders and heads of civil society organizations came together in the Swiss Alps to galvanize support for an integrated nature action agenda across the issues of climate, biodiversity, forests, oceans and sustainable development.

Despite increasing attention on the topic of nature loss, there is still limited understanding on how nature loss can be material to businesses and what the private sector can do to address this challenge. The World Economic Forum is launching a series of New Nature Economy (NNE) reports in 2020, making a business and economic case for safeguarding nature. Nature Risk Rising, the first of the NNE series, aims to show how nature-related risks are material to business and why they must be urgently mainstreamed in risk-management strategies.

Here are the five key lessons from the Nature Risk Rising report:

1. Economic growth has come at a heavy cost to natural systems

The economic growth model of the 19th and 20th centuries has brought remarkable development and prosperity. Globally, we produce more food and energy than ever before. The human population has doubled, the global economy has expanded four-fold and more than a billion people have been lifted out of extreme poverty.

However, we have caused great harm to the planet. Three-quarters of ice-free land and 66% of the marine environment have been altered and 1 million species are at the risk of extinction in the coming decades, mostly due to human activities.

2. Five direct drivers are responsible for 90% of nature loss

Five direct drivers of change in nature have accounted for over 90% of nature loss in the past 50 years. Namely, land-and-sea-use change, natural resource exploitation, climate change, pollution and invasive alien species. These five drivers ultimately stem from a combination of production and consumption patterns, population dynamics and other human activities.

There is often a dissonance between economics and earth system science. While present economic frameworks see nature as an externality, nothing could be further from the truth. The global economy is embedded in Earth’s broader ecosystems and is dependent upon them.

When focused on measuring progress against the single indicator of gross domestic product (GDP), we risk failing to recognize and prevent the loss of our ecological foundations.

3. Nature loss is often hidden

Nature is often hidden or incorrectly priced in supply chains, blurring the link between nature loss and the bottom line. There are three ways in which the loss of nature creates risks for businesses:

i. Dependence of business on nature: Businesses depend directly on nature for their operations, supply chain performance, real estate asset values, physical security and business continuity. Our research shows that $44 trillion of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services, and is therefore exposed to risks from nature loss. Together, the three largest sectors (construction, agriculture, and food and beverages) that are highly dependent on nature generate close to $8 trillion of gross value-added (GVA). This is roughly twice the size of the German economy.

ii. Fallout of business impacts on nature: The direct and indirect impacts of business activities on nature loss could trigger negative consequences, such as losing customers or entire markets, costly legal action and adverse regulatory changes. Consumers and investors are becoming increasingly aware of the environmental damage caused by industries and are demanding action. Companies that stay at the forefront of this shift in consumer consciousness and preferences stand to benefit.

iii. Impacts of nature loss on society: When nature loss aggravates the disruption of the society in which businesses operate, this can in turn create physical and market risks. For instance, the degradation and loss of natural systems can affect health outcomes. The onset of infectious diseases has been connected to ecosystem disturbances, including the strong links between deforestation and outbreaks of animal-transmitted diseases such as Ebola and the Zika virus.

Five direct drivers of nature loss have accelerated since 1970
Five direct drivers of nature loss have accelerated since 1970
Image: Nature Risk Rising report

4. A risks framework for nature

As the global community works towards transitioning to a nature-positive economy, an urgent reframing of the financial materiality of nature risks is required. The climate change agenda leveraged the Task Force on Climate-related Financial Disclosures (TCFD) framework to tackle this issue. Over 870 organizations – including companies with a combined market cap of over $9.2 trillion and financial institutions responsible for assets of nearly $118 trillion – have signed up to support the TCFD. A similar initiative – that draws lessons from the TCFD and which is backed by public and private stakeholders – is now needed for nature.

5. Business as champions for nature

As we are facing an unprecedented planetary emergency, businesses have an important role to innovate and advance solutions for a nature-positive economy and society. Some economies have shown how nature and business can work hand in hand. Costa Rica, for one, has in the last three decades stopped tropical deforestation, doubled its forest cover and reached near 100% renewable electric energy while GDP per capita has tripled. By realizing how nature-loss is material to their operations and growth models, businesses can and must be a key part of the solution. As the trend for greater transparency and accountability continues, costs are likely to rise for businesses which have not begun to include nature at the core of their enterprise operations. The World Economic Forum along with key partners and constituents will be furthering a business for nature mobilization to halt biodiversity loss and invest in nature over the coming years. The next steps are to identify the areas where strategic transformation of current business models can contribute most to halting and reversing nature loss, and the ways to finance this transition.

Please reach out to Alexia.Semov@weforum.org if you want to learn more about the New Nature Economy report series and engage in the process.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Who gains when the US and China fight over trade?

Indigenous peoples ‘lag behind on all social and economic indicators’: UN deputy human rights chief

Dieselgate: Parliament calls for mandatory retrofits of polluting cars

Why COVID-19 could mean a new dawn for Nigeria’s manufacturing sector

Affordable, accessible and safe medicines for all: the Commission presents a Pharmaceutical Strategy for Europe

Fake news: What it is, and how to spot it

Eliminating hepatitis calls for ‘bold political leadership, with investments to match,’ UN health chief says

Making the move to more sustainable mobility – three steps for companies

Statement on the Code of Practice against disinformation: Commission asks online platforms to provide more details on progress made

The hidden risks nature loss poses for businesses

5 ways to break down the barriers for women to access leadership roles

Why is Grexit again in the news? Who is to pay for Eurozone’s banking problems?

Environment and health at increasing risk from growing weight of ‘e-waste’

Who is to lose from the 6-month extension of the EU economic sanctions against Russia?

5 lessons from China on how to drive sustainable growth

Coronavirus: the truth against the myths

How can we overcome the racial barriers to global health parity?

What happiness can teach us about how we measure human development

The world invested almost $2 trillion in energy last year. These 3 charts show where it went

90% of fish stocks are used up – fisheries subsidies must stop

“We always honor our words, and in that respect we expect our partners to honor their words as well”, China’s State Councillor and Foreign Minister Wang Yi highlights live from Brussels

Medschool 4.0: how to succeed in the smart revolution of healthcare

From fishing village to futuristic metropolis: Dubai’s remarkable transformation

Is the ECB ready to flood Eurozone with freshly printed money?

What people want – ignore at your peril

Crimea, a wicked game of political chess and a ‘big’ coincidence

EU unfolds strategy on the Egypt question

Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising

Promoting Primary Health Care to the Young Health Workforce: a new approach

Back to the future: flying cars are becoming a reality

Iraq: Over 150,000 children endangered by ‘freezing’ temperatures, warns UNICEF

The world’s most expensive places to own a home

FROM THE FIELD: Keeping Morocco’s indigenous culture and conservation in balance

Wednesday’s Daily brief: Day 3 of anti-hatred summit, UNFPA turns 50, Ben Stiller #WithRefugees, updates on Abyei

Civilians ‘continue to pay highest price’ in Ukraine conflict, with peace prospects losing ‘momentum’

EU approves close to €240 million to strengthen resilience in neighbouring countries hosting Syrian refugees in light of the coronavirus pandemic

“Health and environment first of all”, EU says with forced optimism after 7th round of TTIP talks

Four ways we can fix economics in 2019

The Sahel is engulfed by violence. Climate change, food insecurity and extremists are largely to blame

IFMSA and IPSF on the Health of Migrants and Refugees

Ukrainian civil war: Is this the beginning of the end or the end of the beginning?

Why South Africa is on a path of economic renewal

What is hydroponics – and is it the future of farming?

Will Qualcomm avoid Broadcom’s hostile takeover post the 1 bn euro EU antitrust fine?

Eurozone’s bank resolution mechanism takes a blow

How data residency laws can harm privacy, commerce and innovation – and do little for national security

This project wants to bring broadband – and hope – to rural India

This massive project in Spain is the latest milestone in Europe’s solar power boom

Trump: Hostile to Europe, voids Tillerson’s “ironclad” ally pledge

‘Embrace the transformation’ to a carbon-neutral world by 2050, UN chief tells COP25

Juncker Plan reaches almost €410 billion in triggered investment across the EU

Here are 4 ways investors can influence more secure and responsible innovation

Ben Stiller’s new role, more about hope than humour, as he’s named Goodwill Ambassador for UNHCR

The best companies to work for in 2020, according to Glassdoor

5 ways to integrate Syrian refugees into the workforce

The EU prepares for the end of LIBOR: the Commission welcomes the agreement reached between the European Parliament and the Council on financial benchmarks

Global public-private collaboration tackles cybersecurity skills gap

EU Budget 2021 deal: supporting the recovery

Managers’ pay under fire

What little Cameron got in Brussels seems enough to keep Britain in the EU

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s