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How can you truly futureproof your company? Give nature a seat at the boardroom table. Just as you expect your board to build in oversight of financial and non-financial KPIs, any company should plan for its nature-related dependencies to avoid increasing exposure to risk. Here are four reasons why your organization should treat nature as one of your most important stakeholders.
1. Our economies depend on natural resources; securing them is smart business.
The World Economic Forum reports that over half of the world’s GDP (around $44 trillion, a phenomenal value) is at risk due to the private sector’s dependence on nature and its services. With nature declining at an unprecedented rate, we must rethink the way we produce and consume. Management teams and boards of directors must recognize this urgency to bring meaningful change and manage the organization’s long-term viability and sustainability.
Considering what nature gives us for free — clean air and clean water, fertile soils, building materials, pollinated crops, food and fiber, a stable climate, and green spaces for human recreation and wellbeing — it’s easy to see why depleting this ‘natural capital’ poses an existential risk to a business. Therefore, it’s critical for businesses to monitor and maintain the natural capital they depend on, just as they would for other types of capital.
2. More informed decision-making will futureproof your business.
There are five main drivers of nature capital loss: land/sea use change, overexploitation of resources, pollution, climate change and alien invasive species. Having top leadership explicitly tapped to champion this will create a pull for ‘nature literacy’ in the entire company. It can help a company’s stakeholders understand the interactions between drivers of nature loss, how a business impacts and depends on these interactions, and how nature-related issues might develop into operational concerns.
Therefore, mapping these impacts and dependencies needs to be become a part of day-to-day activities, enabling companies to better understand the nature-related risks their operations and value chains are exposed to and start managing them.
There are many challenges in managing a business’ dependencies on natural capital, from evolving regulatory guidance and policies, a lack of standardized metrics to measure and monitor impacts, and a lack of funding and financial incentives to take action, to a shortage of skills in interpreting and using relevant data to inform decision making. Having your Chief Sustainability Officer explicitly champion this can also guide the organization in discovering opportunities for developing nature-based solutions, innovate ways to produce or develop partnerships with co-benefits.
3. Transparency will unlock pathways to financial transformation.
With companies being subject to growing scrutiny from clients, stakeholders and the public, their efforts may be construed as greenwashing — a real reputational risk. Many businesses also see a growing demand for transparency and sustainability engagement, specifically around impacts on nature, in anticipation of upcoming policies such as the EU's Corporate Sustainability Reporting Directive and frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD). Businesses must therefore set meaningful targets and action plans that avoid degradation of natural capital, ensure their approach is robust, and be transparent about their progress.
But implementing action plans that transform a business and its value chains requires a lot of money. And although there is increasing support from financial institutions and investors, providing ‘green’ financial products requires complex work, using standardized metrics and reporting frameworks to make business disclosures consistent and comparable amid a rapidly evolving landscape.
By giving nature a voice at the boardroom table, the organization allows itself to better understand the steps needed to develop robust strategies and action plans to protect their natural capital. The board can allocate resources to keep track of the latest developments and support disclosure of how such dependencies are managed — helping build trust, and giving the organization a competitive edge in attracting investment.
4. Businesses must tap into the growing momentum and act now.
The Global Goal for Nature that envisions a nature positive world by 2030 calls for actions to halt and reverse today’s catastrophic loss of nature. To do this, we need to preserve areas with significant biodiversity, limit nature loss, and offset unavoidable losses through ecological restoration.
The nature positive approach has been picking up momentum since its inception, with growing interest among businesses and governments to embrace this approach. The EU Business & Biodiversity platform, for example, supports discussions defining nature positive in a business context, to help businesses integrate natural capital and biodiversity considerations into their operations.
Last fall’s European Business and Nature Summit called for companies to act — assess, commit, transform and disclose — now, starting with understanding businesses’ impacts and dependencies on nature. The December 2022 COP on biodiversity concluded in the adoption of the Kunming-Montreal Global Biodiversity Framework, which aims to address biodiversity loss, restore ecosystems and protect indigenous rights. This plan outlines concrete measures, including putting 30% of the planet and 30% of degraded ecosystems under protection by 2030, and proposals to increase financial support for developing countries.
Many companies have also begun working on science-based sustainability strategies. Nature targets and plans must be a key part. Future-forward organizations in business and the finance sectors are making good progress in aligning these requirements to accelerate the implementation of nature-positive business strategies.
At Arcadis, we are helping businesses navigate this complex landscape, measure and assess nature-related impacts and dependencies, and build robust strategies and action plans. Leading by example, Arcadis has joined the Science Based Targets Network (SBTN) corporate engagement program to set science-based targets for nature. By leveraging our experience in this space, we can also support your boardroom to set and realize your organization’s goals toward true sustainability.