In 2020, JBS, the world’s largest meat-packing company, was found to be sourcing its cattle from illegally deforested land in the Amazon. Calls for global supermarket chains to boycott the firm’s produce came swiftly as the company battled with reputational damage. It now faces a series of potential fines running into the millions of US dollars.

In response, JBS launched its flagship CSR programme in September 2020, Fund for the Amazon, ‘dedicated to promoting and financing initiatives and projects whose aim is the sustainable development of the Amazon Biome’. Fast forward to February 2024; the State of New York files a lawsuit, claiming JBS had made ‘sweeping representations to consumers about its commitment to reducing its greenhouse gas emissions,’ adding that the firm has ‘no viable plan to meet its commitment to be “Net Zero by 2040”.’

Along with the reputational damage, JBS could also face civil penalties and be asked to surrender ‘all profits and ill-gotten gains realized from JBS USA’s violations of New York’s consumer protection statute’. Then came pressure from UK and US lawmakers challenging an application from JBS to be listed on the New York Stock Exchange, a move supported by asset managers Vanguard and BlackRock.

JBS is only one of a number of global brands that have come unstuck from operating without sufficient nature-related due diligence and presents a cautionary tale to the corporate world; if JBS is denied its application, the outcome is not only serious damage to the company’s reputation, alongside likely financial penalties from litigation cases, but also the loss of a potential deal valued at around US$20 billion.

While nature-related litigation is less common than lawsuits relating to climate, the situation is changing. “Hundreds of climate-related cases have been filed against companies or their directors to date and the numbers are rising. Nature-related cases used to be much less common but that is changing,” explains Clyde & Co. Partner Nigel Brook. “For example, greenwashing cases are sharply up, and many of these relate to nature-related assertions. Activists are suing companies about supply-chain impacts on nature.”

The interconnection between biodiversity loss and the climate crisis means that climate and nature must be tackled together. This requires businesses to find a new way to address their problem that unifies teams and data; risks and opportunities; and the corresponding financial impacts into a single, connected view that we call Sustainability Intelligence.

This approach requires proactively identifying and managing the potential risks and opportunities arising from climate change and environmental degradation. It means assessing physical risks, such as extreme weather events, the destruction of ecosystem services and resource scarcity, and their impacts on business operations, raw materials and supply chains. It also includes transition risks such as those associated with regulatory changes, litigation, technological disruption and shifting market dynamics in the transition to a low-carbon, nature-positive economy.

Taking a dual approach to sustainability enables organisations to address the associated risks and opportunities effectively, and leverage advanced risk assessment tools, digital twins and predictive-modelling capabilities. Gained insights can then be integrated into enterprise-risk management frameworks and strategic-planning processes to ensure climate and nature are embedded at the core of business decision-making.

Preparing a corporate organisation to become a sustainable business requires time and resource – and the clock is ticking. The global regulatory movement is driving rigorous regulatory pressure to integrate climate-and-nature-related risks into financial reporting. This includes double-materiality reporting that requires organisations to understand and disclose how different futures will have an impact on the business through dependencies but also how the business may have an impact on the outside world. And, for some, noncompliance will bring about risk of reputational damage and financial penalties.

While the challenge is great, the rewards await those organisations that have sown the seeds for future growth that is resilient and innovative, and enables business to become profitably sustainable.

  • Download the latest discussion paper in our Sustainability Intelligence Series, Climate and nature nexus: the business of a dual approach to sustainability here.
  • Dr Andrew Coburn will be introducing ‘Sustainability Intelligence: the opportunities for business at the climate and nature nexus’ at the Sustainable Futures 2024 conference on Wednesday 22nd May at London’s Barbican Centre. See the full agenda and register here.