Key tips on enabling a biodiversity strategy for financial resilience

Biodiversity is an overlooked yet crucial aspect of a robust sustainability strategy. As ecosystems degrade and species diversity declines, the stability of essential services that businesses rely on—such as water purification, pollination, and climate regulation—is threatened.

Businesses have struggled to properly address their dependencies and impacts on biodiversity because it seems vaguely defined, hard to measure, and therefore, hard to act on.

During our “Kickstarting your biodiversity plan” webinar, we took a poll of over 100 sustainability professionals, and found that less than 35% of them had even put pen to paper on a biodiversity strategy. The good news? If you’re a sustainability professional wondering how to implement a biodiversity strategy, you’re not alone.

The better news? We’re here to help. This article highlights key tips for integrating biodiversity into your business strategy to mitigate these risks, enhance resilience, and support long-term profitability.

Understanding the financial implications of biodiversity loss

“Loss of nature and biodiversity comes with a steep human cost… with an estimated $3 trillion in annual losses by 2030.” – António Guterres, Secretary-General of the United Nations

In order to properly define why biodiversity is such a crucial sustainability pillar, we need to look at how it underpins many businesses’ financial resilience.

When ecosystems degrade, the availability of key resources and services diminishes. Companies that once had reliable supply chains and resources suddenly start to experience issues in getting crucial materials for their operations.

For instance, companies dependent on natural resources may encounter increasing operational costs as they are forced to source materials sustainably or develop substitutes.

And the two biggest impacts for businesses from disrupted supply chains are an immediate loss in revenue, and a corresponding increase in operational costs.

As biodiversity loss becomes a regulatory focus, businesses also face potential compliance costs and reputational risks if they fail to act.

Embedding biodiversity into long-term strategies

Managing biodiversity risks is not only about addressing immediate impacts but about embedding biodiversity considerations into business strategies for financial resilience.

By comparison, something like enabling a decarbonization plan or conducting a double materiality assessment may seem easy. As its name suggests, biodiversity covers a diverse range of qualitative and quantitative areas.

The reason companies need to consider it is for the same reason they need to address the issues above – because biodiversity risk management can be transformed from a compliance task into a powerful strategic tool.

Not only does it help mitigate against severe supply chain disruptions, it also ensures long-term protections for key species, ecosystems and biomes, which elongates and improves the resiliency of life on earth. Acting now not only services customers and investors in the short-term – it also ensures a more stabilized planet and economy for future generations.

“If biodiversity & ecosystems was a material topic from your Double Materiality Assessment, this is a necessary step to take.”

Julia Millot – Senior Manager

Practical tips for integrating biodiversity into your business

The path to a sustainable biodiversity strategy involves several steps, from assessing dependencies to setting measurable targets. Here are some actionable tips for creating a biodiversity strategy that supports financial resilience:

1. Conduct a Biodiversity Impact Assessment:  As Julia Millot, .”If biodiversity & ecosystems was a material topic from your Double Materiality Assessment, this is a necessary step to take.”
   
   Biodiversity assessments allow companies to identify critical dependencies on natural resources and pinpoint areas where their operations contribute to biodiversity loss.

2. Collaborate with Supply Chain Partners: For companies with extensive supply chains, engaging suppliers is essential. Encourage sustainable sourcing practices, and work together to promote biodiversity-friendly methods. By prioritizing suppliers who use regenerative practices, businesses can enhance the sustainability and resilience of their entire value chain.

Invest in Nature-based Solutions: Nature-based solutions, such as reforestation or wetland restoration, provide businesses with sustainable ways to protect and regenerate biodiversity. These initiatives can also yield cost savings by reducing the need for artificial inputs and mitigating risks associated with resource scarcity. The richer the biodiversity, the more robust and adaptable ecosystems become, providing a buffer against environmental shocks.

The financial imperatives for biodiversity

Investors increasingly consider biodiversity risks when evaluating business sustainability. Companies that proactively manage biodiversity risks not only gain favor with investors looking for responsible growth but also reinforce their reputation.

“There are now coalitions and platforms such as the Taskforce on Nature related Financial Disclosure (TNFD) and the Finance for Biodiversity Foundation that bring companies and investors together in efforts to assess and disclose nature-related impacts.” – Jaco du Toit, Biodiversity and Policy coordinator, WWF

Moreover, by transparently reporting biodiversity metrics alongside financial metrics, businesses can demonstrate resilience and adaptability. This reinforces corporate values and demonstrates a commitment to both environmental stewardship and financial stability.

And with the ESRS making biodiversity a core pillar of robust disclosures, we have a solution that can help you get the ball rolling – our dedicated ESRS reporting software.

It’s the all-in-one ESRS solution that automates compliance so you can focus on impact. Designed by Europe’s leading experts on ESRS and the brightest minds in tech, it will help you unlock the sustainable value of your data.

Chat with us to see how it can benefit your teams.