Comment: Ahead of this year’s momentous COP summits, action to tackle biodiversity loss must be at the heart of both government action and corporate strategy, write Pietro Bertazzi and Helen Finlay of CDP
Since the IPCC released its Sixth Assessment Report in August, global attention has been focused on the COP26 Conference, due to take place in Glasgow in November. The summit is being heralded as a final chance for countries to commit to action to tackle climate change and avoid some its most catastrophic impacts.
However, the range of environmental challenges facing us is huge, and extends beyond only climate: The World Economic Forum’s 2021 Global Risk Report highlights the environmental risks that are rapidly increasing: biodiversity loss, extreme weather events and infectious disease. These risks are linked to, and often cannot be separated from, the climate crisis.
These wider environmental issues should and will be at the heart of negotiations at COP26, and the private sector will have an important role to play. Protecting and restoring nature must now be the heart of corporate strategy.
Nature provides ecosystem services worth at least $125tn per year globally, which businesses benefit from at no cost
The benefits that nature provides to the economy is something that often goes unrecognized, but it must be celebrated in order to be preserved. Nature provides ecosystem services worth at least $125tn per year globally, which businesses benefit from at no cost, for example through waste decomposition, flood control, pollination of crops, water purification, carbon sequestration and climate regulation.
These services yield significant value. Losing nature means losing these services, creating extra costs and vulnerability for businesses. Failure to act on biodiversity and ecosystem loss presents real and immediate economic risks. More than half of the world’s GDP – an estimated $44tn of economic value generation – is moderately or highly dependent on nature and its services.
Mitigating against these risks requires a significant shift away from business as usual. Companies must now act to integrate nature-related actions into their business strategies. Unfortunately, we are still a long way from where we need to be to meet the scale of the challenges we are facing. Only 15% of companies disclosing through CDP’s forests questionnaire were implementing any sort of nature-related actions.
There are very real steps companies can and should take now. Companies must assess impacts and dependencies on nature to ensure they are committing and acting on the most material ones. Ambitious goals and science-based targets must be set. Companies must develop robust environmental strategies with science-based indicators and metrics to measure the effectiveness of the interventions made.
Once a plan is in place, companies must ensure transparency and accountability by disclosing through CDP and tracking their progress.
Acting now will also allow corporations to get ahead of regulation. There has been a wave of support for mandatory environmental disclosure in the past year and this is expected to increase in the run up to COP26. Initially focused on climate-related financial risk, more countries and regions are regulating for disclosure that also incorporates impacts on people and planet (increasingly referred to double materiality), looking at a wider range of environmental issues alongside climate. This includes the European Union and more recently Switzerland. It is expected that more will follow suit.
Nearly half of the world’s biggest companies potentially face $1tn costs within five years unless they take proactive steps to prepare for climate change
These regulatory developments are putting more pressure on businesses to identify credible indicators for their biodiversity performance that can be shared publicly. And we expect this to only increase as we look beyond COP26. COP15, its nature-focused sister summit, will take place in October 2021 and May 2022, aiming to raise government ambition to protect and restore nature. It will see corporate disclosure discussed in the context of biodiversity for the first time. This is sure to move governments even closer towards mandatory disclosure regimes that incorporate more than just climate.
More ambitious policy is needed now, more than ever. Science has made clear that we will not reach net zero by 2050 without tackling emissions from nature. Acting now will be significantly less costly than delaying action further: nearly half of the world’s biggest companies potentially face $1tn in costs within the next five years unless they take proactive steps to prepare for climate change. We also can’t just artificially manufacture the complex, unique, natural ecosystems that we will have destroyed. We must conserve and protect what we already have. Increased corporate investment and supportive government policy must go hand in hand to make this happen.
At CDP, we are also continuing to progress on the journey to a more holistic approach to tackling the climate crisis. Our disclosure system has its roots in climate but has evolved to water security and forests. On the horizon, we’ll be adding biodiversity, land use and oceans to our remit, ensuring that we continue to empower investors, companies, cities, states & regions to measure and manage their environmental impact.
Pietro Bertazzi is global director of policy engagement and external affairs at CDP and Helen Finlay is CDP’s senior global policy manager for forests.
COP26 net-zero natural capital WEF COP15 biodiversity