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Deforestation

Leadership

We need to move fast to build a ‘nature positive’ economy

Published 20 September 2021 in Leadership • 7 min read

The destruction of natural ecosystems poses major risks for businesses and could wipe $10 trillion from the global economy. The time to act is running out.

Many companies have woken up to the systemic risks posed by climate change and have made attempts to mitigate its most deleterious effects. However, global warming is not the only environmental crisis that poses major risks for businesses, financial institutions and global markets.

The private sector is becoming increasingly concerned about the destruction of natural ecosystems including forests, grasslands and coral reefs. Nature is at a tipping point, with the loss of biodiversity forecast to wipe $10 trillion from the global economy by 2050, according to the WWF, the leading conservation group.

This cost would stem from the erosion of the benefits that nature provides to all nations and industries through “ecosystem services” — such as the pollination of crops, protection of coasts from flooding and erosion, supply of water, timber production, marine fisheries and carbon storage.

According to the World Economic Forum, more than half of the world’s GDP – an estimated $44 trillion of economic value generation – is moderately or highly dependent on nature and its services. And we cannot solve the climate crisis without nature as our ally. Natural climate solutions can provide 37% of the emissions reductions needed by 2030 for a 66% chance of keeping global warming below dangerous levels of 2°C. 

Rain ForestA palm tree plantation: aerial view of rainforest deforestation in Indonesia

Natural resources are an important input in the production process that raises economic output, but the depletion of natural resources is raising concerns about the sustainability of our economic model, contributing to calls for a “great reset” for capitalism. We need to start rewarding long-term sustainable performance beyond short-term financial returns.

That may already be changing, as more than 900 companies including Citigroup, Microsoft and IKEA have signed Business for Nature’s Call to Action, urging governments to adopt ambitious policies to reverse nature loss. Forward-thinking companies recognize that while they might have been part of the problem, they must now be part of the solution.

Already, the G7 leaders have adopted a Nature Compact and committed to halting and reversing biodiversity loss by 2030. Separately, 88 heads of state signed the Leader’s Pledge for Nature and vowed to reverse loss of biodiversity by 2030. The race is now on to build a nature-positive global economy, which means halting and reversing biodiversity loss in this decade and enhancing the resilience of the natural world to live in harmony with nature by 2050. 

Many businesses are making commitments and taking action. Unilever is investing €1 billion in a new fund focused on landscape restoration, reforestation, carbon sequestration, wildlife protection and water preservation. Walmart and its Foundation have committed to help protect, manage or restore 50 million acres of land and a million square miles of ocean by 2030.

Forward-thinking companies recognize that while they might have been part of the problem, they must now be part of the solution

The economic imperative for a healthy planet is becoming increasingly evident. The World Economic Forum believes a nature-positive economy can unlock an estimated $10 trillion of business opportunities by transforming the three systems that are responsible for 80% of nature loss (food, infrastructure and energy), and could create 395 million jobs by 2030.

But business leaders and governments need to scale and speed up efforts if we are to have any chance of reaping these rewards, along with reversing biodiversity loss and mitigating climate change. Businesses must act now, and there are four steps they should take:

 

 1. Companies must assess their most material impacts and dependencies on nature, climate, natural capital and people across their production and consumption value chain. Tools such as the Natural Capital Toolkit are available to support the assessment and to help business leaders understand and manage the risks and opportunities identified.

More widely, companies need to strengthen accountability systems to avoid “greenwashing”, and to ensure that businesses measure their performance not just in terms of the financials but also their social and environmental contributions. The newly established Taskforce on Nature-related Financial Disclosures, a market-led initiative, will help direct investments towards a nature-positive future.

 

 2. Companies should commit to setting measurable, science-based targets for how much they will contribute to restoring natural ecosystems, including forests, soils, freshwater systems, and marine environments. They should further ensure that these targets are ambitious, made public, and are backed up with clear timelines.

For example, a government-endorsed global goal to halt and reverse nature loss by 2030 will give business the confidence to act. It also aligns with the widespread net-zero emissions goal. But it’s important that companies monitor, report and improve on progress towards these targets.

 

 3. Increase investment to protect, restore and sustainably use nature. Immediate action is required to eliminate or reduce the impact on nature entirely, and regenerate and restore natural ecosystems. This requires transforming business models to become nature-positive across the value chain by giving back more than we take.

For instance, firms could invest in circular business models and products, such as buildings that absorb pollutants, or investments in restored mangroves that act as insurance against flood damage. Moreover, companies should divest from assets that over-exploit nature and redirect resources towards sustainable projects. We need to mainstream green finance and make all investments sustainable by default.

The wider finance sector has a critical role to play in resource mobilization, large-scale investments and adaptations. The United Nations is calling for investments in nature-based solutions to triple by 2030 and increase to $536 billion by 2050, if the world is to meet biodiversity, climate change and land degradation targets. There is still much further to go. Current investments amount to $133 billion, most of which comes from public sources.

An obvious move would be for governments to make nature action core to the economic recovery from the pandemic in order to catalyze private-sector investment. Another step would be to eliminate harmful subsidies or redirect them towards protecting nature. The OECD estimates that governments in developed and emerging economies hand out $345 billion of potentially harmful agriculture subsidies each year.

 

 4. Companies need to advocate for more ambitious policies on nature, such as mandatory nature-related disclosures and green taxes that incentivize companies to act positively. This would create a stable operating environment and a level playing field for business. I have observed a recent groundswell of interest from business and finance, but voluntary action alone is not enough. To rapidly scale current efforts, governments need to create a more integrated climate-nature policy framework.

The United Nations is calling for investments in nature-based solutions to triple by 2030

Businesses can also contribute to key upcoming negotiations. At the UN Convention on Biodiversity (CBD) conference in China – which will be staged in two parts in October 2021 and April-May 2022 – governments have a unique opportunity to reach a transformative global agreement on nature, the equivalent of the ground-breaking 2015 Paris Agreement on climate change. This would give governments, businesses and the finance industry a clear mission to rally behind. One way for companies to contribute to the momentum is by signing up to the “Nature is Everyone’s Business” Call to Action, and advocate for policies to reverse nature loss in this decade.

The 2021 UN Climate Change Conference, known as COP26, in Glasgow is another critical opportunity to integrate climate and nature-based solutions. Businesses must be part of the solution, not the problem, so executives should raise their voices publicly to ensure their national governments adopt a transformative deal. Even if globally there is support for a nature-positive future, it’s at the level of national government where the rubber really meets the road.

A huge amount of work lies ahead, but I am hopeful that humanity will be able to head off this planetary emergency. If the COVID-19 crisis has shown us anything it’s that people around the world when faced with a collective threat can put our minds together quickly and find global solutions. The same international effort will be needed to create a net-zero, nature-positive and equitable world.

Authors

Eva Zabey

Eva Zabey

Eva Zabey leads Business for Nature, a coalition that drives nature-positive business action and policy ambition. Previously, Eva spent 15 years at the World Business Council for Sustainable Development (WBCSD), leading work on natural, social and human capital measurement and valuation for business decision-making and disclosure, including the Natural Capital Protocol. 

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