Minding your business: nature needs nurture
The Environmental Improvement Plan, announced to mixed reactions last week, updates the 25 Year Environment Plan setting out how the UK government will work with landowners, communities and businesses towards a green future. These pledges mark the latest government commitment to enhancing nature – the UK recently signed-up to international targets agreed as part of the Global Biodiversity Framework. Dr Clare Allen, Risilience Senior Environmental Risk Analyst, explains why nature matters and is increasingly on the business agenda.
Response to the UK government’s Environmental Improvement Plan (EIP) is decidedly mixed with campaigning organisations calling for more funding and meaningful action to restore nature. The new strategy updates the 25 Year Plan, committing the government to creating and restoring at least 500,000 hectares of wildlife habitat, and highlights subsidy plans to incentivise farmers to embrace green practices.
This latest initiative to nurture nature is one of several UK government commitments. The ink is barely dry on the Kunming-Montreal Global Biodiversity Framework (GBF), the international agreement that emerged from COP15, the UN Biodiversity Conference held in Canada in December last year. But the implications of the framework’s four goals and 23 targets for business are clear. In short, nature is a valuable resource and governments, businesses and citizens have a responsibility to look after it better to ensure our future is nature positive.
The Global Biodiversity Framework
With its mission to halt and reverse biodiversity loss by 2030, the GBF provides an official biodiversity framework for the next seven years. The high-profile target from the framework is ‘30x30’, which intends to conserve 30 per cent of the world’s land, freshwater and ocean by 2030. This has huge implications for land use in relation to increasing populations and areas of land reserved for nature. It also points to challenges for businesses, especially agriculture and fisheries. Target 15 of the GBF speaks to accountability – specifically legal measures to encourage businesses to transparently disclose their financial risks, nature dependencies and impacts on biodiversity. Implementation will depend on national legislation but disclosure is likely to remain on the table.
Targets and implications for business
Among the targets are actions relevant to investors as well as investees including Target 7 that references the reduction of pollution, including pesticides and plastic waste. This has implications for businesses where there is a relationship between the volume of products made and pollution – and provides a potential metric for investors. Reducing the impact of pesticides also features in the EIP which champions the sustainable use of pesticides and anticipates a new Chemicals Strategy later this year. New policy to discourage nature-negative practices is already emerging, including the Sustainable Farming Incentive. However, transition will likely bring additional cost challenges to businesses required to cut pollution, which could trigger reduced yields and volumes. Combine this evolving financial and regulatory landscape with the ‘exponential rise in global climate litigation’ and the resulting critical spotlight on business is bright.
Addressing the challenge
Ignoring the problem is not wise. According to Risilience analytics, the value of businesses failing to take climate action could be eroded by as much as 30 per cent over the next five years. Climate net zero cannot be achieved without nature but businesses squaring up to the problem will need to quantify the risks of transition. Nature is more complicated than climate in many respects. Business depends on nature as well as having an impact on nature – consider processes involved in securing certain raw materials. However, there is not a clear metric for benchmarking and measuring whether actions and activities are nature positive or nature negative, and there are no clear, meaningful targets for business to achieve nature-positive outcomes or enhance biodiversity.
The value of nature
The value of nature is material to many businesses, through physical risks directly influencing revenue and through nature-related transition risks where, for example, policy, reputation and litigation can force change. Calculating the worth of nature enables decision makers to appraise natural capital, such as clean water and air, and fertile soil, through the same lens as human and manufactured assets. This value can be expressed financially – the World Economic Forum has calculated the cost of depending on nature as $44trn of economic value generation.
Identifying touch points
Transitioning to a nature-positive future requires thinking about nature now – collecting the data needed to better understand the relationship and geo-specific points of interface between a business and nature. Identifying these touch points better positions an organisation to have a line of sight to the regulation and legislation that will affect business, and prepare to align accordingly. This is not only important for compliance but because climate litigants are widening their targets to include action that harms biodiversity. Only organisations proactively preparing to disclose their financial risks, dependencies and impacts on biodiversity will be fit for a nature-positive future – and sustainable business growth.
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