Biodiversity is moving up the regulatory agenda: What does this mean for your business?
According to the latest UN Sustainable Development Goal progress report, more than 40,000 species are at risk of extinction in the coming decades. Many experts believe we are in the midst of the sixth mass extinction in the Earth’s history. Unlike previous extinction events caused by natural phenomena, the sixth mass extinction is being driven by human activity.
While climate change has been at the top of mind for business leaders and governments around the world when thinking about environmental challenges, last year biodiversity emerged as a key topic in the lead up to COP15 which took place in Montreal in December.
It is essential to understand the outcomes from COP15 and consider the business case for biodiversity. This insight will answer key questions for businesses looking to learn more about biodiversity, the impact of its losses and how the global community is responding.
What is biodiversity?
Biodiversity refers to the variety of life in the world or in a particular habitat or ecosystem, which can be broadly categorised into three types: Species diversity, Genetic diversity, and Ecosystem diversity.
Biodiversity forms the base of global natural capital. Natural capital is the world’s stock of natural resources, including geology, soils, air, and water. Many natural capital assets provide people with goods and services, known as ecosystem services.
Why biodiversity matters to businesses?
Most – if not all – businesses depend on the ecosystem services underpinned by biodiversity. The 2020 World Economic Forum risk report found that more than 50% of the world’s GDP ($44 trillion) is moderately or highly dependent on nature and its ecosystems. Species do not exist in isolation; they are interconnected so when one species goes extinct in an ecosystem it cannot sustain its functions and the benefits it provides.
The WWF Global Futures report estimates that current levels of biodiversity loss and the consequent damage to ecosystems could drain nearly US$10 trillion from the global economy by 2050. The deterioration of crop yields, buffers against the physical effects of climate change, soil and water quality, and other biodiversity-related forms of natural capital depreciation translate into lower productivity, supply chain disruptions, higher raw material costs, and social instability.
As beneficiaries of biodiversity and a primary contributor to its loss, businesses play a critical role in protecting natural capital. Investment in nature provides a cost-effective and even profitable solution for addressing the broader societal objective of preventing biodiversity loss.
What were the key takeaways of COP15?
The meeting of the Conference of the Parties (“COP”) to the Convention on Biological Diversity takes place every two years with a view to advancing biodiversity goals.
On December 19th 2022, representatives from 188 countries adopted a new agreement at COP15 to guide global action on nature. The Kunming-Montreal Global Biodiversity Framework (“GBF”) is a landmark agreement resulting from several years of negotiations under the UN Convention on Biological Diversity.
The GBF includes 4 overarching global goals and 23 targets for 2030, many of which will be relevant for the private sector in creating both risks and opportunities. Although the GBF is not a legally binding international treaty, it will affect national policies, regulations, and plans globally as governments seek to action new biodiversity commitments.
It will be imperative for individual businesses, management, and boards to track and proactively consider the potential impact of these developments on their operations, investment decisions, and compliance. For example, the GBF Target 3 to expand global protected areas to at least 30% of the world’s land, coastal areas, and oceans by 2030 may result in the contraction of areas available for the operations of particular sectors such as agriculture, fisheries, and mining. However, other sectors including tourism and pharmaceuticals may have an opportunity for growth.
The Global Biodiversity Framework reflects an important milestone in the journey towards biodiversity protection. While governments will now be developing their national biodiversity action plans in ahead of COP16, the private sector is rightly taking note of the key emerging operational impacts on business as well as its corresponding complexities and costs of implementation alongside the growth opportunities.
To find out more about how biodiversity loss and the new Global Biodiversity Framework will affect your business please contact Erika Furbert.