Is nature-positive business a possibility or paradox?

The world is facing an $8.1trn financing gap in nature to help combat the climate crisis and ecological breakdown, according to the UN, which also warned that annual investments into nature-based solutions (NbS) need to increase fourfold by 2050.

It is clear that business as usual is no longer an option. Urgent corporate action is needed to solve the interconnected climate and biodiversity crises – from redesigning business models and value chains to embracing biodiversity net-gain principles and scaling up nature-based solutions.

During an edie roundtable held in London in May,  a selection of sustainability and environmental leaders from a mix of industrial sectors met for a much-needed dialogue around how businesses can restore nature and enhance biodiversity through impactful corporate sustainability strategies and effective collaboration.

Language and definitions

For businesses, there is a need to articulate these issues in a succinct and easy-to-explain way, rather than venturing down the road that sees biodiversity and nature compete for attention as separate issues. Some businesses should consider adapting their language to focus on nature, which is easier to understand, while incorporating the holistic ecosystems that makeup biodiversity as a topic.

Participants noted that green groups and green-focused businesses can be their own worst enemies when it came to jargon and splitting parts of the biodiversity topic into different segments. Treating nature as the umbrella topic to get more interest and understanding from the outset opens the door for other conversations on biodiversity, they argued.

In broad terms, nature positive alludes to an entity, region or space where nature, including species and ecosystems, is being restored and regenerated rather than in constant decline. On the surface this seems doable, and a goal that any business with sustainability leadership aspirations should be considering.

A question was posed at the start of the discussion as to whether a business can truly be nature-positive. While many are focusing on “stopping the loss” of nature, very few are turning their attention to reversing the loss of nature across value chains and supply chains. Some argued that to avoid greenwashing, claiming to be nature positive was a paradox. Instead, businesses should look to act as contributors to global efforts to halt and reverse nature.

Retreating and retracting communications on nature, however, poses the risk that businesses stop talking about the issues of ecological decline and sharing the best practice and actions they are taking to act as contributors. Participants agreed that businesses needed to find a “safe space” where they can accurately outline their impacts on nature and how they are responding as contributors to regenerating the planet.

If a common language can be agreed upon, then businesses can start to connect the dots between a nature-focused strategy and a climate or decarbonisation strategy. Some businesses may not believe that they have a big impact on nature, but with the climate crisis being the main cause of nature loss and degradation, participants noted that every company had a duty to reduce those main drivers causing nature loss, and net-zero carbon targets can start them out on that journey.

It is important that businesses take these discussions to a local level, to ensure they’re collaborating and problem solving with the communities that they rely on.

Some businesses will be very interested in the Dasgupta Review on valuing biodiversity. Published in February 2021, the finished Review provides guidance on how policymakers can account for the economic, social and environmental value of nature when making decisions and aims to create a more accessible language as to how biodiversity can be valued. Commentators have dubbed the piece of work the nature-related equivalent to the Stern Review on climate change.

Strategy

Businesses need more guidance on how best to address their impact on biodiversity and nature loss, a new CBI Economics report has revealed. Only 14% of businesses surveyed by CBI said their businesses had no role in supporting nature beyond their legal and regulatory requirements.

Plans to address biodiversity impact were reported to be in place among 62% of firms. This was more likely to be the case in big firms (83%) than in SMEs (53%). Worryingly, across businesses of all sizes, only 15% of business leaders said plans were already being implemented. In comparison, 74% of business leaders said their firms had net-zero carbon emissions plans in place, with 23% saying these plans were already underway.

Additionally, CDP has revealed that 18,600 companies disclosed data on climate in 2022 – a 42% year-on-year increase. Yet less than half of this amount disclosed on biodiversity, and only 1,000 disclosed information on forests.

CDP is warning that, unless nature-related disclosures become far more common and the quality of disclosures improves steeply, businesses will not be prepared for forthcoming regulatory changes.

Participants noted that metrics and reporting requirements are on the horizon and many businesses may have some painful times ahead as they catch up in reporting on and developing nature-based strategies.

Bodies including the Science-Based Targets Initiative (SBTi) and the Taskforce on Nature-Related Financial Disclosures (TNFD), which are developing corporate nature reporting frameworks, have contributed to the WBCSD resource. The TNFD notably launched a third beta version of its framework last month and is aiming for a final version launch in 2023. Science-based targets for nature may also be forthcoming next year. A new global initiative has been launched to enable corporates to set science-based targets for nature restoration and protection, with the likes of Nestlé, Kering, Tesco and H&M all pledging to set targets later this year.

While these landmark frameworks are welcome, roundtable participants noted that current metrics are hard to define, and that while a company may be performing well across some biodiversity metrics, their material impacts, such as infrastructure, may still offset some of the positive changes they are driving. At a glance, this can look like the business is performing poorly on nature, which could shut them off from future collaborative partnerships.

Participants, which consisted of end-user businesses and nature-focused NGOs, expressed frustration that partnerships and collaborating on nature were fraught with risk, namely due to reputational repercussions. If a business with a big climate and nature footprint, for example, wants to collaborate on NBS they may well get turned away due to reputational concerns, despite those companies having the biggest scope to drive change, provided that their overall approach to sustainability is focused on incremental change, but rather transformative.

Fortunately, more bodies of work are emerging to address these imbalances. Last year, for example, the World Business Council for Sustainable Development (WBCSD) launched a set of guidelines for businesses looking to deliver a net-positive impact on nature.

Developed in recognition of the fact that more and more large businesses are pledging to go beyond doing less harm to nature and to achieve net-positive impacts, the resource is designed to ensure that businesses take the necessary actions to ensure these goals are credible and to deliver them to time. It is in a draft format at present.

Policy

It is also worth considering that the regulatory backdrop is changing, which will force many businesses to act.

One such regulatory change gathers pace is the global agreement on new biodiversity goals for nations. The Treaty, agreed upon by more than 180 countries at the UN’s 15^th biodiversity COP in December 2022, includes commitments for nations to mandate nature-related reporting from larger companies by the end of the decade. Such a commitment was advocated for by hundreds of businesses.

In the UK, the headline commitment from the Government is to leave nature in a better state for the next generation, which is not being delivered. A preliminary report from the Green Finance Institute (GFI) last October highlighted how planned public spending on nature conservation and restoration in the UK for 2022-2032 is up to £97bn short of the levels needed to deliver commitments made by the UK Government and devolved governments.

It bears noting that the Government’s current target is to unlock at least £500m of private finance annually for nature restoration by 2027. This is less than one-tenth of what the GFI has estimated is likely to be necessary.

So what change is happening at a corporate level as policy plays catch up and is it enough to meet the metrics of a “nature-positive” business?

Well, we are seeing the early adopters of bespoke environmental accounting, which can essentially place biodiversity into corporate financial results.

Businesses such as Kering, for example, have introduced an Environmental Profit & Loss (EP&L) methodology that measures carbon emissions, water consumption, air and water pollution, land use, and waste production along the entire supply chain. Similar methods are being used by the likes of Puma and a wider business collaboration on this topic is being steered by the Cambridge Institute’s Investment Leaders Group (ILG).

Then there is the fledgling movement of “environmental personhood” whereby businesses can give non-human entities like nature legal status and protections. This is far less common but is being used by some companies to give nature “a seat in the boardroom” and can inform business decisions that in turn safeguard the natural environment. It is the next wave of environmental activism that is shaping corporate actions. Environmental law experts, Lawyers for Nature, will act as the first representative for nature on beauty product brand Faith in Nature’s board, for example.

So yes, perhaps a nature positive is in the direct juxtaposition of business as usual. But redefining the metrics and language used around nature and biodiversity does not mean lessening ambitions. Businesses can unlock new avenues for collaboration based on a heightened understanding of the subject that catalyses the movement to not just reduce nature loss, but reverse it.

So a nature-positive business is a paradox right now, but as business as usual is eradicated and better metrics and frameworks emerge, a nature-positive future for the planet could be unlocked and businesses hold the key.