Nature encompasses the Earth’s natural resources and systems and, as stated by Delphi Group in a recently released report, we are currently facing an unprecedented decline in these natural systems and a depletion of natural resources. This loss presents serious systemic and material risk to economies and businesses because of the erosion of the intrinsic and monetary value dependent on nature. In fact, the World Economic Forum asserts that over half of the world’s GDP, $44 trillion of economic value, is at moderate or severe risk due to nature loss.
As we begin to realize the impact of nature loss on climate and economic resiliency, many businesses will soon find themselves asking: What can we, and should we, be doing to address this issue? This is the right question to ask ourselves now because organizations that fail to incorporate nature-positive strategies into their operations today will expose themselves to financial and environmental risk tomorrow, pushing our world closer to fully realizing the impacts of this loss.
But, while independent action is an important part of the puzzle, it may not be enough. We will only halt and reverse nature loss with collective action that moves the dial toward measurable, transformative impact. At Manulife, we believe companies can take steps to drive progress aligned to three big actions: invest in nature-based solutions, measure and report on nature’s value, and engage with local communities to build climate resiliency and improve access to nature.
Many businesses will soon find themselves asking: What can we, and should we, be doing to address nature loss?
Investing in Nature
Investors should work to address their impacts and dependences on nature and add nature-based assets to their portfolios where possible. This will help to offset material risks, decrease carbon footprint, and contribute to strong performance.
Nature-based investment products are increasingly being made available within private and public markets, providing investors with options to invest in alignment with their business strategy. IPE Real Assets recently listed the top 25 global natural capital managers, which collectively manage billions of dollars in nature-based assets. The UN Principles of Responsible Investment estimates that nature-based solutions could be valued at over US$1.2 trillion by 2050, creating many opportunities for businesses to invest in natural carbon removals in the coming years.
Leaders in nature-based investing can take this approach one step further by exploring more cutting-edge strategies. For example, emerging biodiversity credits is an innovative mechanism businesses can consider as a nature-positive solution for building climate resiliency to accelerate a more sustainable future.
Valuing Nature
We must work toward measuring and reporting nature’s true value, much like our considerable progress on demonstrating the value of carbon. However, unlike climate change, which is measurable by a single metric of CO2 equivalent, no singular metric exists that allows us to value nature because of how complex and place-based nature is.
Therefore, businesses must work to establish nature-positive operational excellence and best practices, which will allow them to better measure their impact on nature. As important to improved operations is the development of natural capital accounting. The Dasgupta Review, a seminal paper on the economics of biodiversity, highlighted the importance of natural capital accounting, which provides a standardized approach to measuring the assets that constitute nature, the services those assets provide, and the value we derive from those services whether qualitative, quantitative, or monetary.
Organizations also must be held accountable for reporting on this progress, and the Taskforce on Nature-related Financial Disclosures is developing a framework to do just that, which enables organizations to disclose and act on nature-related risks.
By taking these steps, businesses will be better positioned to value and report on their own contributions to a nature-positive world, in anticipation of forthcoming regulation and disclosure requirements.
Engaging Communities
Climate change and nature loss are global challenges, but their impacts are felt locally on communities. Businesses should partner with local community members and other stakeholders most at risk, taking actions that promote biodiversity and mitigate nature loss impacts.
One approach could be making an effort to improve access to nature for communities where an organization’s people and customers live and work, which not only benefits the mental and physical health and well-being of humans but also helps foster education and awareness on the inextricable linkages that exist between our planet and the people who call it home.
Nature is all around us—it is made up by the air we breathe, the water we drink, and the food we eat. Every day, organizations and individuals benefit from the intrinsic and monetary value of nature, so we must put in the required effort to combat nature loss to protect and build resilient societies and economies.
And we must act now.