Image credit: South Pole
The loss of biodiversity and the degradation of ecosystems pose a major risk to human survival and development. It falls to all of us to act together, and urgently turn the Earth into a beautiful homeland for all creatures to live in harmony.
Sir David Attenborough, September 2020
Our societies are intimately linked with biodiversity. We depend on it. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), less than 25% of the Earth's land surface has escaped substantial impacts of human activity. Things aren't getting better either, with this number estimated to fall to under 10% by 2050. This issue is of course intimately linked to climate change and there are significant effects on people, animals, and the planet. Many ecosystems are at imminent risk of reaching tipping points. To name just a few of the effects we are currently facing:
On top of all this, COVID-19 has been an eye opener for how we need to restore and respect certain limits on our relationship with nature. Human pressure on biodiversity through land use change and the illegal wildlife trade is a common driver of infectious disease appearance and can play a direct role in pandemics and other outbreaks.
With the EU Green Deal and its Biodiversity Strategy 2030, the EU strives to become a world leader in addressing the global biodiversity crisis. The strategy states that “protecting and restoring biodiversity and well-functioning ecosystems is therefore key to boost our resilience and prevent the emergence and spread of future diseases." But we need to start acting today.
The United Nations has stated that we have 10 years to transform our world - a decade of action. The achievement of the Sustainable Development Goals requires all hands on deck. Different sectors and actors must work together and pool financial resources, technology, knowledge, and expertise, with multi-stakeholder partnerships playing a key role as strategic impact vehicles, particularly in developing countries.
For biodiversity specifically, the challenge is immense. As identified in the
Dasgupta Review on the Economics of Biodiversity, we have collectively failed to engage with nature sustainably, to the extent that our demands far exceed its capacity to supply us with the goods and services we all rely on. There is, however, a solution, which depends on rethinking our economic and financial decision-making to realize that our economic activity depends on natural capital. Indeed, half of the world's gross domestic product (GDP), €40 trillion, depends on our natural environment.
Knowing what's at stake, the Convention on Biological Diversity (CBD) is setting the stage for action with the forthcoming Post-2020 Biodiversity Framework to direct the international community to set clear targets, establish indicators, and improve the measurability of our influence on nature. It is of highest importance that the framework sets a clear roadmap with standards that allow the private sector, NGOs, and public entities to internalize considerations and financial risks related to biodiversity in their decision making processes, define clear targets to halt biodiversity loss, promote actions for ecosystem restoration within the framework of their decisions, and help achieve national and international goals by 2030.
Image credit: South Pole
The EU Biodiversity Strategy 2030, a key element of the Green Deal policy toolbox of the EU, states that the business case for biodiversity is compelling and that biodiversity conservation has potential direct economic benefits for many sectors of the economy.
The strategy includes objectives on restoring degraded ecosystems across the EU through the EU Nature Restoration Plan and on mobilising both public and private funding at the national and regional level at scale, through the development of programmes that are funded by the EU budget and that leverage additional private finance. However, the distribution of funding often does not match conservation needs in practice.
So how can companies, governments, and institutions accelerate action and bring their investments in biodiversity conservation and restoration up to the scale we need? Three main aspects are crucial in moving forward:
1) The landscape approach: Only by thinking and acting at a landscape level is it possible to realize the full potential of biodiversity investments by linking more stakeholders, promoting connectivity, and making long-term commitments for the management of a territory.
2) Mainstreaming biodiversity: Every sector and every person has a role to play. If any actor fails to take action there are huge risks and added costs on the horizon for institutions and people around the world. Markets and financial instruments need to shift their approach and do more to promote conservation and ecosystem services enhancements, which will also contribute to rural development and livelihood improvement at a scale that matters.
3) Large scale and long term perspective: It is extremely important that private and financial actors engage in conservation initiatives on a large scale and for the long term, not only from an awareness and visibility point of view, but also when analysing the risks related to their operations. Isolated actions are not enough to tackle the enormous challenges we are facing and fully operationalizing biodiversity in business and finance is the starting point for the required transformation. This comes along with a need to enable businesses to include biodiversity in their decision-making processes and accounting by also including the accounting of natural capital.
Image credit: South Pole
Despite the widespread interest in the biodiversity and ecosystem restoration in the EU, there is still the need for more practical solutions and approaches using effective financial mechanisms and schemes to deploy and scale up the restoration of biodiversity and ecosystem services. Innovative financing approaches should take advantage of new opportunities to use voluntary (philanthropic) and government funding sources to leverage private sector investment through a blended-finance approach that enables EU countries to deliver high-impact results aligned with the EU Biodiversity Strategy for 2030, the Green Deal, the Nature Restoration Plan and the UN Decade on Ecosystem Restoration from 2021–2030.
At the EU level, the interest is high in linking national natural capital accounting schemes with the corporate world by integrating natural capital accounting schemes into business accounting. This is an exciting window of opportunity for forerunner companies to explore and shape the way. Industries and corporations around the world are increasingly interested in making biodiversity a priority in their business planning and incorporating indicators that will allow them to redefine the concept of success beyond simply profit, and at the same time help them meet their climate action targets. The beauty and fashion industries, to pick just one of many examples, have already made first steps to protecting natural resources - an important step for an industry whose products and operations depend on healthy ecosystems.
Companies engaging in this future-proof thinking recognize that biodiversity is not only key to life in general, but also the success of their business.
Most of the commitments on biodiversity made around the world seek to address environmental goals that go beyond carbon and include other dimensions, such as seeking to gain an understanding of the territory, including the relationship and responsibility that communities share with the land. Understanding this key point and addressing related issues can have important benefits for the long-term survival of business. Not only from a reputation or risk management standpoint is this important, but taking this into consideration can represent direct cost reductions in the medium term by allowing companies to spearhead more efficient and sustainable practices or to secure a consistent supply of raw materials in the future. The benefits are multiple: greater security in ecosystem services supply, better continuity of operations, enhanced access to public and private funding, access to new markets, increased market share through achieving better corporate practices, and more. For every strategic business leader who is serious about success in the long term, it is essential to wrap their head around how businesses can understand and redefine their approach, and to act on the crucial insight that conservation and restoration of biodiversity can provide significant business opportunities along with multiple co-benefits for current and future generations.
Image credit: South Pole
For those companies ready to take action, where is the best place to start? Doing a thorough assessment is a great first step to be aware of the relationship between your business and nature. After that, you need to look at how your investments are affecting that relationship.
South Pole has developed a model around the Post-2020 Global Biodiversity agenda to prove how implementing integrated nature-based solutions can accelerate action for the protection and restoration of ecosystems:
Biodiversity credits are a new kind of investment vehicle in line with emerging biodiversity markets. One biodiversity credit is equivalent to one hectare (1ha= 2,5 acres) of land subject to conservation, restoration, and sustainable land management activities with solid monitoring, verification, and reporting systems. The goal is to drive net gains for biodiversity within the credit area. Importantly, the creation of credits seeks to incorporate the social dynamics of a territory and to build up long-term conservation projects, while working hand in hand with local communities.
With the implementation of strategic biodiversity credit projects, companies and investors can capitalize on their environmental investments while protecting ecosystems and the services they provide. Biodiversity investments and project development can reinforce a company's role as a leader in the field with real, lasting, and marketable results, all while contributing to national, regional, and global sustainability targets. These investments are a good basis for a comprehensive corporate natural capital accounting pushed by progressive governments.
At the end of the day, it is crucial to develop schemes with the right combination of financial leverage, science and policy, so people, business and nature can thrive together. Biodiversity credits have been designed to strike this balance and serve as a keystone mechanism on the path to positive growth.
In September 2020, U.N. Secretary-General Antonio Guterres said a million species were at risk of extinction and that climate change and the loss of biodiversity were “destroying Earth's web of life":
Humanity is waging war on nature, we need to change our relationship with it.
- U.N. Secretary-General Antonio Guterres
The cost of inaction on biodiversity loss is great. The good news is: we can act now to halt and reverse its effects. Restoring biodiversity is vital to achieving nearly all of the Sustainable Development Goals, meaning that action on biodiversity has enormous potential to make the entire world a better place. For companies around the world, action on biodiversity is an emerging opportunity and those who move first will be the winners of tomorrow.
The private sector needs to step up its role in increasing concrete action to preserve biodiversity. Change and impact are only possible if we work together. That way, the 2021 Conference of the Parties of the CBD in China can become the turning point for biodiversity action towards 2050, when all of the world's ecosystems shall be restored, resilient, and adequately protected.
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Biodiversity and ecosystem services are critical to ensure human well-being, maintain and improve production systems, and add value to businesses large and small.