Nature Action is Critical to Protecting US$58 Trillion at Risk

Betsy Hickman

Nature Lead

Contents

• Nature Positive Action
• Nature Risks are Business Risks
• Sector-Specific Risks
• Key Drivers for Action
• How Anthesis Can Help
• Contact Us

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Over half of the world’s GDP, estimated at US$58 trillion, is moderately or highly dependent on the natural world and the vital ecosystem services it provides. With nature and biodiversity loss becoming an ever-present challenge, we need to take action and find solutions that embrace and work toward a nature positive future.

A “nature positive” business landscape is grounded in the vision of creating more nature by 2030 than existed in 2020, requiring businesses to actively contribute to the recovery and richness of ecosystems. This article examines Nature Positive approaches to mitigating nature-related risks, and how business can better understand their nature dependencies.

What Does Nature Positive Business Look Like?

While it is highly challenging for any single business to achieve a net-positive impact on nature, each business can make significant contributions to accelerating a nature-positive future.

This often involves setting clear, measurable goals to protect natural areas and restore degraded ecosystems, and investing in nature-based solutions, utilising key metrics such as species richness and ecosystem integrity to measure impact.

Collaboration across sectors is also essential, with businesses integrating nature-positive strategies into their operations, supply chains, and investments while adopting science-based targets and transparent reporting. This approach not only benefits the environment but also enhances business reputation, reduces risks, and opens new market opportunities, all while supporting sustainable development goals.

By 2050, the goal is for nature to fully recover, with thriving ecosystems that support future generations and play a critical role in addressing climate change. Ultimately, achieving a nature-positive business landscape necessitates a transformative shift in how we value and interact with nature, ensuring a healthier planet and a sustainable future for both nature and humanity.

This means that embracing a nature-positive approach is not simply a matter of corporate social responsibility, but also a strategic imperative for businesses seeking to thrive in a world increasingly shaped by environmental challenges.

Understanding that Nature Risks are Business Risks

Businesses understand the importance of enterprise risk management and yet nature action, even more so than climate action, is often overlooked. Broadly, nature risks are underestimated, unseen, and unfamiliar, so it’s not initially surprising that companies continue to prioritise quarterly earnings over long-term strategy for nature risk.

This lack of visibility and urgency is likely because nature-related risks are often indirect, and there are lag times between risks and impact. For example, while releasing PFAS into a watershed may not immediately contaminate it and make its ecosystem services unavailable, contamination will eventually rear its head, and offending companies will likely face mounting litigation as a result, putting a high price tag on ignoring and overlooking this impact and dependency.

Once a business evaluates their impacts and dependencies on nature, their associated risks become clearer. Exposure analysis, the process of identifying and evaluating risks, is thus a critical step in building the business case for nature action – especially in businesses highly impacted by, and dependent on, nature.

Additionally, inaction on nature can lead to risks beyond simply financial ones. While these risks can be classified in a variety of ways, they can largely be categorised as:

• Legal Risk: the potential for financial or reputational loss resulting from the failure to adhere with laws, regulations, or contractual obligations that govern a company’s business activities, such as the EU Deforestation Regulation.
• Operational Risk: the risk of loss that occurs to a business’s physical locations and/or their broader supply chain; for example, the risk of infrastructure integrity due to destruction of coastal wetlands caused by storm damage. 
• Reputational Risk: the potential damage to a company’s public perception from, for example, releasing pollutants into local communities.
• Financial Risk: underlying all of the above are changes to a company’s own financial situation, such as having to truck in water to a factory, essentially paying directly for once-available ecosystem services.

Understanding Sector-Specific Nature Risks and Dependencies

It’s important to note that risks and dependencies, whether related to nature or not, are unique within different sectors. For example:

• Agri-food companies’ dependencies include freshwater use, land and soil quality, pollination, disease and pest control. Some associated targets include reducing freshwater use, avoiding the degradation of land and ecosystem use, and reducing GHG emissions across the value chain.
• Fashion and apparel industries have dependencies on fiber and other material resilience, freshwater consumption, soil health, and energy use. Associated targets include avoiding and reducing the use of hazardous chemicals, avoiding and reducing freshwater use through strategies such as re-using effluent water, restoring degraded land, and transforming business models to include circularity.
• Cement and concrete sectors report dependencies include water, natural resource, and energy consumption. Some targets for the industry include improving water stewardship across the supply chain, strengthening reclamation, rehabilitation and biodiversity management, and expanding circularity across the value chain.
• Household and personal care products have dependencies on water use and other resource use, land-use change, pollution, and GHG emissions. Some targets to mitigate nature risk in this sector include improving water stewardship by working with suppliers to encourage them to minimise freshwater consumption, improving responsible sourcing, increasing nature conservation and restoration, and expanding circularity across the value chain.

Understanding sector-specific, nature-related dependencies can create financially beneficial opportunities to translate risk into value by developing new business models, products, and services that restore nature.

Helpfully, Business for Nature has developed a dozen Sector Actions Toward a Nature-Positive Future, and Ceres collaborated with input from Anthesis on Exploring Nature Impacts and Dependencies: A Field Guide to Eight Key Sectors. The TNFD have also developed guidance specific to: Aquaculture, Biotechnology & Pharmaceuticals, Chemicals, Electric Utilities & Power Generators, Financial Institutions, Forest, Pulp & Paper, Food & Agriculture, Metals & Mining, and Oil & Gas, and are developing guidance for Apparel, Beverages, Construction, and Fishing. Meanwhile, the WBCSD maintains three sector-specific nature positive roadmaps: Agri-Food System, Built Environment System, Energy System.

Managing Nature Risk & Key Drivers for Action

Risk management frameworks initially developed for the Task Force on Climate-related Financial Disclosures (TCFD) can be effectively broadened to address both climate and nature risks in an integrated manner. By leveraging the same domains used for managing climate-related risks, companies can enhance their approach to include environmental considerations such as biodiversity and ecosystem impacts.

This integration allows for a comprehensive strategy that not only addresses climate change but also supports sustainable management of natural resources, leading to more resilient and holistic risk management practices. Building on the same structure as the TCFD, the four core pillars of the Taskforce on Nature-Related Financial Disclosures (TNFD) are:

• Governance: This involves establishing a communication process from business units to management (and the board), along with specifying the frequency of these communications.
• Strategy: Businesses also need to grasp the implications and anticipated evolution of nature-based risks across short, medium, and long-term horizons, actively utilising this insight to shape their business planning and strategy.
• Risk Management: It’s important to explore ways to integrate significant risks into Enterprise Risk Management (ERM) and risk processes, including connections to climate risk management. Additional approaches can include understanding organisational resilience and conducting analyses of material risks and opportunities effects on organisations balance sheets.
• Metrics and Targets: Businesses should develop metrics and targets to monitor significant nature-based risks and measure progress against strategic objectives. While specific metrics will vary across sectors, there may be overlaps with climate-related metrics already reported by various organisations. For example, The SEC climate change disclosure rules will require companies to disclose climate related risks and the associated impacts on the business. Building on this, companies can expand the scope of their required climate reporting to include reporting on the status of the natural resources that they are dependent on.

Utilising these pillars as a guide, companies are starting to advance quickly into nature action, and they are spurred on by various regulations and reporting frameworks, including the:

• European Union Deforestation Regulation (EUDR): Beginning on December 30, 2024, seven commodities and their derived products will be banned from sale in the EU unless relevant operators can verify that they are deforestation-free. The seven commodities are cattle, cocoa, coffee, palm oil, rubber, soy, and wood. Non-compliance could result in fines of up to 4% of annual sales and could cause the relevant product to be prohibited from the market.
• Corporate Sustainability Reporting Directive (CSRD): Starting in 2025, large companies in the EU must disclose a broad range of environmental, social, and governance data including nature-related risks, opportunities, policies, processes, and transition plans for biodiversity. Non-compliance can result in fines for companies not following technical rules known as the ESRS, including two specific nature categories: water and biodiversity.
• Taskforce on Nature-related Financial Disclosures (TNFD): In September 2023, this global initiative released their version 1.0 recommendations for transparent disclosures. While it is distinct from its carbon equivalent (TCFD), it is structured around the same four pillars (above) and could lead to more integrated disclosures. The TNFD is aligned with international policy goals and targets and uses a science-based approach, balancing complexity with usability.
• Science Based Targets Network (SBTN): Science-based targets (SBTs) are defined as “measurable, actionable, and time-bound objectives, based on the best available science, that allow actors to align with Earth’s limits.” The SBTN alliance released updated targets for nature in July 2024. These are inherently more complex than climate targets because there is no single global goal; nature drivers are complex, and nature impacts are location specific.

Better yet, these initiatives are gaining momentum. In October 2024, the TNFD reported a 57% increase in adopters of their corporate reporting recommendations since their first formal announcement in January 2024 – bringing the total number of companies to 502. These companies represent 62 of 77 SICS sectors and the publicly listed companies represent over US$6.5 trillion in market cap – a 60% increase since January 2024. Additionally, 129 companies are financial institutions representing US$17.7 trillion in assets under management.

A growing number of companies are also setting targets to mitigate their nature impacts, with the SBTN reporting that 160+ companies are preparing science-based targets for nature. Frameworks like this help contextualise information in a way that is comparable across organisations, and they are critical tools as nature shifts from voluntary to mandatory reporting.

How Anthesis Can Help

Our Nature and Climate experts work directly with companies to develop customised plans of nature action that support a transition towards a nature-positive future. We hold in depth expertise on the latest regulatory and reporting requirements, including the EUDR and CSRD.

Within the framework space, Anthesis is a trusted partner of the TNFD as an advisory member and an expert on their LEAP framework. We are also a pioneer member of the SBTN Corporate Engagement Program, a trusted facilitator during the latest technical guidance revision process, and are recommended by SBTN as a qualified solutions provider.

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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.