Biodiversity loss could be a bigger risk to business than climate change, yet poor understanding and a complex business case are denying it the attention it deserves


Biodiversity loss could be a bigger risk to business than climate change, yet poor understanding and a complex business case are denying it the attention it deservesFruiting banana trees, hemp and olives are flourishing in a reclaimed quarry pit on the south-west coast of the UK. Cornwall’s Eden Project houses thousands of other plant species too.

In the centre’s temperature-controlled biomes, the world’s plant life is thriving. That is fortunate, because elsewhere it’s not looking so rosy.

Conservationists have always pointed to the interconnected nature of the natural world. Now, as land-use pressure and global warming begin to put the world’s biodiversity under pressure, people are beginning to listen. Business included.

The risks associated with biodiversity depletion are potentially crippling. As natural habitats are lost or irreparably degraded, the chances of negative consequences such as contaminated water supplies, draught and loss of productive land increase exponentially.

Only recently are efforts to cost out the economic impacts of biodiversity loss emerging. And the initial numbers make for startling reading.

Expect a hit of $2tn and $4.5tn per year, warns the UN Environment Programme in its seminal The Economics of Ecosystems and Biodiversity (Teeb) report last year. That’s roughly 7.5% of global gross domestic product.

The world’s biodiversity has decreased by almost a third since 1970, according to UK conservation charity WWF. Its authoritative, science-based Living Planet Index shows that the tropics have been hit even further, experiencing depletion rates of up to 60%.

A difficult place

“We are starting from a difficult place. Our reports show that biodiversity loss is still very dramatic over recent decades,” warns Dax Lovegrove, head of business and industry relations at conservation charity WWF.

And there is no promise of a slowdown. The world’s ecological footprint is exceeding the planet’s biocapacity by 50%, WWF estimates. That is to say, it takes the world 18 months to replenish what society uses in 12. Do the maths – it ain’t pretty.

An “absolute crisis” is the verdict of Craig Bennett, policy director at the environment group Friends of the Earth, for the state of the world’s biodiversity.

“Unless business engages fully and is made to understand that it has to play a role … there will be no biodiversity left,” he says.

Research by professional services firm PricewaterhouseCoopers finds that more than one in four (27%) chief executives are “extremely” or “somewhat” concerned about biodiversity loss as a threat to business growth.

The numbers hide a significant disparity, however. The proportion jumps significantly in Latin America (53%) and Africa (45%), where biodiversity is shrinking much faster. In contrast, the ears of European (18%) and North America (14%) business leaders seem tuned out.

“Unfortunately many companies often fail to make the connection between the health of ecosystems, utilisation of the services they provide and the business bottom line,” observes James Griffiths, managing director of ecosystems at the World Business Council for Sustainable Development.

A recent study – COP Out? Biodiversity loss and the risk to investors – by specialist investor group Eiris backs up the view. Only 6% of companies with high impacts on biodiversity are judged to have sufficiently robust policies.

The reason for the tardiness in take-up comes down to a lack of conceptual understanding. That is partly down to language. Too often in the past, it has been natural scientists or ecologists making the case for biodiversity. Business, as a rule, likes its science simple.

The fragility of the business case also plays its part. The relationship between biodiversity and the bottom line is not a straightforward one. Unlike carbon dioxide, where a tonne is a tonne across the world, biodiversity is locally specific.

The business case also suffers from not being a very exciting one. To date, the emphasis has leant predominantly on risk. Little is said about opportunities.

The scenario is changing slowly. Increasingly, biodiversity specialists are beginning to talk in terms of related functions that have existing traction in the private sector. Water scarcity and climate change management are two such examples.

Monetisation could be another game changer. Experiments to put a monetary value on biodiversity and ecosystem services are slowly emerging.

A major boost to such efforts came last year with the publication of the Teeb report and its endorsement at the Convention on Biological Diversity in Nagoya, Japan.

“Valuation models are helping put nature into terms that are a little more tangible for those who are trying to interpret the complexity of systems thinking,” says Pippa Howard, director of charity Fauna & Flora International’s business and biodiversity programme.

Conservationists are hoping it is not too little, too late. In March, WWF will be hosting its annual conference at the Eden Centre. The theme is decoupling economic growth from environmental degradation.

Only if that circle is squared can the centre’s plants hope to fare as well in natural biomes as artificial ones.

Decline in biodiversity (since 1970)

By biome
35%: fall in freshwater species
25%: fall in marine species
24%: fall in terrestrial species

By geography
60%: fall for tropical species
29%: fall for temperate species

By income area
58%: fall for low-income countries
25%: fall for middle-income countries
5%: rise for high income countries.

Source: WWF’s Living Planet Index, based on population figures for 2,500 vertebrate species.

Core definitions

Biodiversity: Biological diversity means the variability among living organisms from all sources, be they terrestrial, marine or other aquatic ecosystems. This includes diversity within species, between species and of ecosystems

Ecosystem: A dynamic complex of plant, animal and microorganism communities and their non-living environment interacting as a functional unit. Examples include coral reefs, rainforest and deserts.

Ecosystem services: Ecosystem services are the benefits obtained by people from ecosystems. Typically these fall into one of four main categories: 1) provisioning services, such as food, water, timber, fibre, and genetic resources; 2) regulating services, such as the regulation of climate, floods, disease, and water quality; 3) cultural services, such as recreational, aesthetic and spiritual benefits; and 4) supporting services, such as soil formation, pollination, and nutrient cycling.
Note: biodiversity underpins ecosystem services but is not an ecosystem service in itself.

Source: Convention on Biological Diversity, Article 2

Nagoya in a nutshell

At October’s UN COP 10 Convention on Biological Diversity in Nagoya, Japan, environment ministers agreed to cut the loss of forests and other natural habitats by half, increase the amount of land designated as nature reserves from 13% to 17% by 2020 and to raise the amount of marine and coastal areas protected by reserves from 1% to 10%.

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