What does biodiversity have to do with business? – I by IMD

Why should businesses act?

The corporate world is increasingly addressing climate change, with 83% of Fortune Global 500 companies setting climate-related targets. However, biodiversity action lags far behind, as only 5% of these have biodiversity goals.

Although climate change and biodiversity are often treated separately, they are deeply interconnected. Biodiversity loss is exacerbated by climate change while enhancing biodiversity is crucial for carbon sequestration and climate adaptation. Conversely, focusing solely on climate can harm biodiversity, such as when bioenergy projects clear forests, reducing biodiversity and hindering long-term climate goals.

Unlike carbon, biodiversity is not interchangeable, meaning damaged ecosystems or species cannot easily be replaced elsewhere. Companies must therefore demonstrate genuine commitment to reducing their biodiversity impact to avoid accusations of greenwashing.

Continuing with “business as usual” in this regard is not a viable option. The cost of inaction is significant, with biodiversity loss projected to result in $2.7tn in lost revenue by 2030.

Companies that fail to adapt risk increased regulatory scrutiny, financial penalties, and reputational damage. Conversely, those proactively engaging in biodiversity conservation can strengthen their market position and enhance long-term value.

The World Economic Forum estimates that protecting nature could generate $10tn in business opportunities annually by 2030 and create nearly 400 million new jobs. Companies that prioritize biodiversity can tap into new markets, create sustainable products, and bolster their resilience to environmental and regulatory changes. They can also forge new pathways for growth, mitigate risks, and secure a competitive edge in an evolving marketplace.

By assessing, disclosing, and monitoring their biodiversity-related impacts, businesses can unlock key opportunities in mitigation efforts. These efforts safeguard ecosystems and strengthen businesses in the face of rising environmental concerns.