The Business Benefits of Nature Positive Action: A US$10 Trillion Opportunity
30th October 2024
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Our experts in Nature Positive Solutions recently worked with the University of Vermont Sustainable Innovation MBA program to develop research into the intricate relationship between businesses and nature, exploring the risks and opportunities associated with natural capital and ecosystem services and providing actionable strategies for companies to build resilience and thrive in an increasingly uncertain future.
This article is the final installment in a series showcasing this research and exploring why businesses need to address their nature risk and how they can take nature positive action. Visit the previous articles in the series here:
Risk is Opportunity
Although nearly all business operations have nature dependencies that come with an amount of risk, there is some good news: where there is nature risk, there is equal opportunity to secure natural resources, save costs, engage stakeholders, and manage future risk.
Moving beyond the status quo of extracting from nature without placing value on ecosystem services, there are opportunities for the sustainable performance of both nature and business.
Opportunities can include positive economic drivers for an organisation that benefit nature through positive impacts or mitigation of negative impacts. Organisations can find opportunities in ways that are both profitable today and avoid damage to or even restore nature down the road.
The TNFD looks at nature-related opportunities in two categories, which are often inter-related. The first category of nature-related opportunities focuses on environmental sustainability and includes both the positive impacts on nature and mitigation of negative impacts on nature. Organisations can help avoid the loss of nature and ecosystem services through actions to manage nature-related risks. The second category is business opportunities, though nature opportunities are rarely mutually exclusive between the categories. It’s thought that restoring ecosystems could generate between $7 and $30 in economic benefits for every dollar invested.
Understandably, companies that have a more obvious connection to the ecosystems they rely on have been among the first to act on this opportunity. For example, beverage companies are sophisticated in recognising the need for action as they will not have a future if their water source is contaminated. As additional companies understand the value of ecosystem services they depend on, they too can better plan for their future.
Thinking Beyond Short-Term Financial Impacts
In order to truly unlock nature-related opportunities, companies must understand opportunities and complexities beyond short-term financial impacts.
In 2020, the WEF projected that 15 unique systemic transitions towards a nature-positive direction could create US$10.1 trillion annually in new business value by the end of this decade. For perspective, global GDP is estimated at about $100 trillion annually, with over half of that at risk due to its dependency on nature, as previously discussed.
These transitions – which include shifts regarding food, land, and ocean use, compact built environment, and circular and resource-efficient models of production – could also create 395 million jobs worldwide by 2030 and “together can pave the way towards a people- and nature-positive development that will be resilient to future shocks” (The Future of Nature and Business)
Yet the investment gap remains large in the pivotal years since WEF released this report. Though the organisation still highlights those same statistics, they recognise “as we approach the middle of this crucial decade, the trajectory of biodiversity loss has yet to show a significant shift. There is, therefore, an urgent need to intensify and expand the scope of transition actions toward a nature-positive future.”
However, while much of this new business value may refer to a longer timeframe than a quarterly earnings impact, nature-positive actions can also be advantageous now as they can improve bottom lines, increase resilience, create competitive advantages, and use innovative ways to manage risks. Businesses can harness financial returns by connecting nature-positive outcomes to their business models. Early successes on nature action must then be extended and scaled.
Notably, many benefits of nature action accrue to society at large – rather than solely to the investor – and policy interventions are needed to capture the breadth these benefits in future economic models. Beyond GDP, for example, is a small but growing movement to shift to new models that also capture other important societal factors including nature’s value via measurements such as GEP, Gross Ecosystem Product.
Given this additional hurdle, businesses need to be more innovative in their strategic decisions to harness this value internally. Reputational values, competitive advantage, and regulation preparedness are just some of the factors to be considered in holistic decisions beyond direct financial implications. Businesses can also work with governments and other organisations to support opportunity-linked transitions and other reforms. Once a company understands the risks and rewards at play, they can move on to furthering the business case and taking action for nature.
How to Capitalise on the US$10.1 Trillion Opportunity
Businesses that act on nature risk can gain competitive advantages— from de-risking their supply chains and investment portfolios, enhancing supply chain resilience, and lowering operating costs.
In order to best address nature and capitalise on the opportunities of nature positive action, we recommend:
- Assess & Evaluate: Identify key nature dependencies for your business, and opportunities to protect and secure them. Examples might include implementing circular revenue models, sustainable forest management, regenerative agriculture, or ecosystem restoration initiatives.
- Collaborate Broadly: Collaboration across your supply and value chains is vital for understanding your nature risk. Working together across fields and sectors, on the other hand, can help drive system change and innovation.
- Identify Frameworks and Regulations: Frameworks and reporting requirements can help determine areas of focus for nature action. Become familiar with those that are relevant to your region and industry, and seek necessary support in reaching compliance.
- Prioritise Data Quality and Traceability: Improving the quality of data on your supply chains and business operations opens doors for greater accountability, more informed decision-making, increased stakeholder engagement.
- Lean into Technology: Look for nature-positive solutions that leverage innovative technology to create more efficient and sustainable processes.
Overall, integrating a comprehensive nature strategy isn’t just prudent—it’s a transformative pathway to resilience, sustained growth, and industry leadership amidst the escalating challenges posed by biodiversity loss and ecosystem collapse. By prioritising nature in business operations and decision-making processes, companies not only mitigate risks associated with ecosystem degradation but also position themselves to capitalise on the financial opportunities.
At Anthesis, our Nature and Climate experts offer end-to-end support in the nature positive transition, ensuring you have the information, data, and tools you need to make informed, advantageous, and sustainable decisions.
This article was written in collaboration with Catherine Lange, Claire McCollough, Tyler Moran, and Cate Starmer as part of the University of Vermont Sustainable Innovation MBA program. Our experts in Nature Positive Solutions recently worked with the program to develop research into the intricate relationship between businesses and nature, exploring the risks and opportunities associated with natural capital and ecosystem services, and providing actionable strategies for companies to build resilience and thrive in an increasingly uncertain future.
We are the world’s leading purpose driven, digitally enabled, science-based activator. And always welcome inquiries and partnerships to drive positive change together.
