Large-scale environmental degradation has been one of the unintended consequences of the period of unprecedented population growth and industrial advancement that started in the early 1800s. Loss of biodiversity, pervasive pollution, and natural resource depletion are exacerbating many critical challenges associated with human health, supply chain reliability, and food security.
Nature loss is not a recent issue, but the scale of the challenge has reached unprecedented levels. Nature-related risks are material to businesses, with key sectors already negatively impacted. The complex interactions between environmental decline and climate change threaten to bring economies and societies ever closer to dangerous tipping points, with unpredictable, irreversible, and catastrophic ramifications. In response, global commitments to tackle environmental degradation are increasing in number and ambition as nature loss is recognized as an issue of national resilience by a growing list of countries. The first signs of a paradigm shift in risk management and reporting are also underway, with nature emerging as one of the pillars of ESG disclosures and increasingly often on the agenda of central banks and regulators.
For corporates and financial institutions, environmental degradation translates into direct and indirect risks, affecting business models, value chains, investment portfolios, market strategies, and stakeholder relations. However, despite their significance, nature-related risks are rarely accounted for by businesses, as organizations are often at an early stage in understanding the complex interdependencies between ecosystems and their assets and operations. Responding to the challenges posed by environmental degradation requires businesses to become familiar with new terms and concepts and to harness new frameworks, data, and technologies.
Embracing Nature provides an overview of nature-related risks and opportunities, highlights how these are already material to businesses, discusses recent market and regulatory developments, and describes key concepts, tools, and frameworks used for assessment and reporting.
The piece also elaborates on the strategic issues businesses need to prepare for, and presents four imperatives for organizations to incorporate nature in their agenda: