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Making the business case for biodiversity

by | May 15, 2024

Green Chronicle

Making the business case for biodiversity

by | May 15, 2024

We are on the brink of a biodiversity crisis. Global wildlife populations have plummeted by 69% on average since 1970 (WWF Living Planet Report) and in the UK nearly one in six species are threatened with extinction (State of Nature Report 2023). It’s not just about wildlife; it’s about the ecosystem processes that underpin our functioning planet. We have already surpassed six out of nine of our planetary boundaries, risking the very operation of Planet Earth. We need 1.6 earths to maintain humanity’s current way of life.  

Dystopian images of complete ecosystem collapse, exceeded tipping points, and natural system breakdown are not far from a very imaginable reality. Why are we on the brink? Because nature has been seen as something for society to limitlessly extract and plunder, rather than being accounted for as the natural asset that is integral to our existence.

The Green Finance Institute recently calculated that nature degradation could cause a 12% loss to UK GDP, which would trigger an economic slump bigger than those caused by the 2008 global financial crisis and the COVID pandemic. This research highlights the serious risk that nature degradation could pose to the UK’s economy and financial sector. The 2021 Dasgupta Review described nature as a “blind spot” in economics, stating that we can no longer afford for nature to be absent from our accounts; instead, nature must be put at the heart of economic decision making.

It’s clear that it is no longer about what your business can do for the environment, but instead it’s about what the environment will do to your business if you fail to take account of it.

That’s pretty gloomy stuff and won’t come as a surprise to any of my fellow generation of eco-anxious Attenborough-addicts who grew up on a curriculum of climate catastrophe and nature crises.

But things are changing, and exciting moves are being made. Forward-looking businesses are starting to account for their impacts and dependencies on nature. Unilever, GlaxoSmithKline, Nestle, Tesco, H&M Group and many others have set themselves nature-positive targets, and in December 2023 McKinsey reported an increase in nature-related commitments being made by Fortune 500 companies. It’s so important that we resist carbon tunnel vision when it comes to understanding sustainability; it’s more than just electric cars and vegetable fuelled planes!

So why are organisations starting to get to grips with nature? Unsurprisingly there are several different drivers: the relatively new Taskforce on Nature-related Financial Disclosures encourages businesses to assess, report and act on their nature related dependencies and impacts, and the Science Based Targets Network has released guidance on corporate target setting for nature.

For some organisations, positive action for biodiversity is part of the company’s social license to operate. Prioritising nature not only reduces operational risks but also reduces reputational risks; doing good for nature can do good for client and staff satisfaction and retention.

These drivers all have the potential to create demand for projects that can generate biodiversity uplift. This is where things get exciting for those of us working on the ground to restore nature. Demand for biodiversity uplift – whether in the form of biodiversity credits or project partnership alternatives – can start to be monetised. By selling the biodiversity uplift that is generated, we can create income streams for nature restoration.

To bring global biodiversity back from the brink, nature needs to be seen as more than a charity case; it should be seen as an investible, revenue-generating asset class with a strong business case.

This theory is being put into practice with the arrival of a shiny new English law: Biodiversity Net Gain (BNG). BNG requires developers to demonstrate at least a 10% uplift in the biodiversity levels of their development site, in order to be granted planning permission. It’s all about creating genuinely nature-positive development – to make up for all the habitats that development has destroyed. If developers can’t deliver BNG onsite, they can purchase offsite BNG units, so this new regulation creates an income stream for land managers and farmers with exiting nature restoration plans that can generate BNG units. BNG helps create the business case for nature and shifts environmental management from a fluffy, philanthropic “nice to have”, to something that generates a revenue stream for ecosystem services that have previously been undervalued.

I’m not saying that BNG alone will solve the global biodiversity crisis; it’s only relevant to England and developers are the only buyers of units so it’s a relatively small marketplace. As a new market, it’s not without its teething problems, and there are gnarly complexities to smooth out. So it’s not a silver bullet solution, but it is an important and exciting piece in the puzzle of nature markets.

About Molly Biddell

About Molly Biddell

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