Every business needs a nature strategy. Here’s how to build one.

In brief:

• The rapid decline of our natural ecosystems is a major risk for business continuity. Companies are already being significantly impacted by nature loss, with mounting pressure to act from regulators, the business community and civil society. 
• Fortunately, several recently developed frameworks and tools, combined with international, commonly agreed upon frameworks, are making it easier for companies to quantify their impacts on nature — and set targets to address and reverse nature loss. 
• Companies need to widen their sustainability focus, shifting from climate-centric to holistic, integrated approaches to addressing nature. 
• Systems-level transformation is necessary — incremental change will not suffice on the road to a nature-positive world. 
• Successfully tackling nature loss requires a different approach than companies are used to taking with climate initiatives, including problem solving through a local lens. 
• Companies must understand their reliance and impacts on nature, and accelerate action to address them, in order to mitigate serious physical, regulatory, reputational and market risks. 

Nature is in freefall. Around the world, almost a million species are on the verge of extinction. A third of the land we depend on to grow crops and feed animals has been degraded. Every year, 400 million tonnes of toxic sludge, plastic and heavy metals are dumped into our oceans.  

All of this is catastrophic for business. Most industries rely on biodiversity, not least farming and agriculture. More than half of the world’s GDP is ‘highly’ or ‘moderately’ dependent upon nature. This 50% of GDP provides the key goods and services on which we all depend – and without which the other 50% cannot function. It comes as no surprise that the World Economic Forum has repeatedly identified biodiversity loss and ecosystem collapse as major risks in its annual Global Risks Reports. 

Nature is finally having its moment

The business case for looking beyond climate action to address the wider range of nature issues is clear. Nature loss is physically impacting companies, from supply chain disruptions caused by soil degradation and water scarcity to facility damage and loss of production caused by flooding, and beyond. And the pressure to act is mounting, both from the outside (in the form of more interested and informed investors, legislators and consumers) and from within (in the form of more vocal and passionate employees). 

Fortunately, the world is finally waking up to the need to act. On the global stage, the Kunming-Montreal Global Biodiversity Framework was adopted by UN Parties in late 2022 as a means to stop and reverse biodiversity by the end of this decade, setting a global framework to guide nature action. In parallel, progress has been made in developing assessment and reporting tools, as well as more robust regulatory frameworks:

• Science-based targets for nature: Last year also saw the Science Based Targets Network (SBTN) launch the first version of its guidance for setting science-based targets for nature for corporates, enabling companies to set more ambitious and measurable targets on both climate and nature in tandem.

• The Taskforce on Nature-related Financial Disclosures (TNFD): These recommendations provide organizations with guidance for reporting and acting on nature-related dependencies, impacts, risks and opportunities, so that nature is fully integrated into decision-making.

•  The Corporate Sustainability Reporting Directive (CSRD): Applicable to all listed companies that are active in the EU, the CSRD strengthens the rules concerning the social and environmental information that companies are required to report.  

• The International Financial Reporting Standard (IFRS): The IFRS, which provides accounting standards for public companies, is beginning to release sustainability guidelines through its International Sustainability Standards Board (ISSB). General sustainability and climate disclosure guidelines were published mid-2023 and it plans to add other environmental aspects, including nature. 

As frameworks start to create operational guidance based on the standards set by international bodies like the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), it’s now more straightforward for companies to examine the pressures they put on nature and set targets to reduce – and ultimately reverse — those impacts it by making a positive contribution. 

The increase in frameworks and guidelines provide companies with much-needed clarity, especially since addressing and quantifying impacts on nature is a more complex undertaking than with climate impacts. The actions required are often multi-dimensional; dealing with nature loss means tackling land use change, controlling pollution, protecting and restoring biodiversity, and more — all of which require detailed traceability of raw materials and visibility across complex, global supply chains. This is due the fact that local context needs to be considered to meaningfully address nature impacts. The good news is that tackling one impact can often help address other 

How companies can contribute to a nature-positive world

Integrating nature into corporate strategies is critical, but hardly a mainstream practice. While nature loss is a global phenomenon, it requires a local lens. Protecting a local water basin, for example, requires on-the-ground assessment and intervention. Companies can, of course, set global corporate targets on nature, but they must be informed by examining their operations’ hotspots and confirmed by setting some targets locally. At the same time, they’ll need to pursue transformational change to the business model, shifting from extractive to restorative practices. 

To get started, it’s important to set a common understanding of what nature means to your business, your employees and your wider stakeholders.  As with carbon, nature is relevant to every business function, and it’s critical to build cross-departmental buy-in to ensure that action doesn’t happen in silos but rather is spread throughout all departments. Procurement teams will need to engage suppliers of key priority commodities and materials; enterprise risk management will want to include nature-related financial risks into their business strategy and continuity planning; marketing and communications teams will need to develop new product mixes, and articulate the corporate approach to addressing nature-based risks in a way that avoids greenwashing; and operations teams will need to engage with site managers to find local solutions. 

But before assigning the actions required of each department, you’ll want to conduct a thorough nature assessment. This involves measuring and identifying your most at-risk areas – areas with the highest pressures on nature (whether that be land use change, water, biodiversity, etc) – and tackle these. You’ll need to collect data on the origins and quantities of your raw materials, assess the pressure that these activities put on nature and, lastly, look at the state of natural ecosystems and resources to determine whether these pressures have a high impact on nature. This exercise will provide visibility into whether, for example, a factory is running water-intensive operations in a water scarce area, or raw materials are being sourced from a region known for deforestation – and make decisions about where to focus action so that you can create the most positive impact. In addition to assessing the risks of your nature dependencies, you’ll be able to identify the opportunities that come with nature interventions, placing a financial value on taking action — or not.  

As with any sustainability initiative, setting ambitions and targets is key, as is communicating them to and building engagement with the relevant stakeholders within the business who will need encouragement and incentive to make change happen. The SBTN framework emphasizes the need for nature to be assessed with a local perspective, advising companies to set targets at a local level across different impacts. For large companies, gathering local data and setting targets for all commodity and location pairings or for each site can be quite the undertaking. To set nature targets that are relevant for such companies, Quantis recommends setting up a target framework: setting local targets for hotspot sites and commodity and location pairings, and using these to inform more global nature targets applicable to all commodities and sites (which are not hotspots or do not have the traceability data). This way, companies can set science-informed targets covering all operations and purchases, moving towards set impact-reducing actions as fast as possible. Waiting for the perfect data never justifies stalling action.  

Activate your nature strategy and correct course along the way

As mentioned earlier, a successful nature strategy must be embedded across the business, with every department responsible for implementing change. In practice, actions will need to be prioritized and stakeholders given guidance for execution — especially product design, sourcing and procurement and marketing teams. Finally, you’ll need to create an effective way to track progress so that you can communicate success and fuel further action on nature. Unlike reducing greenhouse gas emissions, nature interventions require more creativity and dynamism when it comes to measuring progress. Again, understanding how impacts are being felt locally is crucial. Local stakeholders are increasingly willing to help, given they are the ones feeling the impacts of nature loss the most. Local factories are witnessing how water shortages are gravely affecting their business, and farmers are trying to improve their soil quality to remain as productive as possible.  

In fact, to make truly meaningful progress on nature companies will need to develop strategies that look beyond their own operations and even value chains to work in collaboration with other companies that face similar nature challenges, NGOs, governments and academics. Industries will need to come together to rethink the future and transform value chains, embracing circularity and decoupling business activity from natural resource use. 

The natural world offers businesses priceless assets, ecosystem benefits and innovative solutions, not to mention boundless resources. However, to adequately address nature-based risks, companies must elevate the issue to the forefront of corporate strategy, affording it equal importance to climate action. Embracing and leveraging nature’s potential enables us to expedite our journey towards achieving net zero while preserving the vitality and adaptability of ecosystems for generations to come.