Why Biodiversity May Be More Important to Your Business Than You Realize

In a recent article posted by EY Global, Alexis Gazzo, EY France Climate Change Leader, points out that “the impact of biodiversity loss can be extensive and often unrealized, causing disruption to supply chains, increasing regulatory compliance costs and potentially eroding social license. However, many companies have only just begun to explore their impact on biodiversity loss and only a small number of pioneering companies have published credible biodiversity strategies with robust biodiversity goals aligned to the Science-Based Targets Network.”

 

Investors are also increasingly considering how to address biodiversity as part of their assessments and how they direct capital toward companies that can demonstrate and report on their biodiversity strategy. Alongside this, the Taskforce on Nature-related Financial Disclosures (TNFD) has recently launched the beta version of the TNFD framework, which is designed to help businesses understand their biodiversity risks and opportunities, and how to disclose their performance. This is expected to catalyze investor action in a way similar to what the Task Force on Climate-Related Disclosures (TCFD) aims to achieve.

It could easily be assumed, says Gazzo, “that biodiversity risks are confined to heavily impacted sectors such as mining, forestry and agriculture. In these industries, unsustainable business practices can lead to environmental degradation, supply-chain disruptions, fluctuating prices, smaller crop yields from overused land and a loss of pollinators.”

But, he adds, “many companies likely rely on natural capital and this can impact them in some way. Therefore, business should consider including biodiversity and natural capital into their mainstream risk register.”

In brief, Gazzo concludes that:

  • Capital could be diverted away from businesses that deplete natural resources or cause adverse biodiversity impacts.
  • Managing biodiversity risk can improve productivity and resilience, and underpin a social license to operate.
  • Businesses should act now to understand their biodiversity risks and opportunities, build internal accountability and disclose their actions.

Get the whole story at Why biodiversity may be more important to your business than you realize | EY - Global.