A planetary boundaries approach is the only way for business to tackle nature-related risks

In brief:

• The impacts of business activities go beyond climate; and many companies are dependent on other Earth systems for raw materials and ecosystem services.

• Climate, biodiversity, water and other environmental challenges can’t be addressed in silos.

• Companies that focus solely on climate ignore other important environmental impacts and dependencies that they need to address.

• The planetary boundaries framework allows companies to apply a wider lens to evaluate their exposure to nature-related risks and understand how they’ll need to adapt in a changing world.

• A planetary boundaries approach can help companies think about problems differently and drive innovation.

Environmental risks go far beyond climate change, and companies are increasingly expected to report and act on a broad range of nature-related risks. These risks equate to $44 trillion of economic value generation, roughly half of global GDP. Nature loss and degradation isn’t just an environmental problem — it’s a business problem.

Managing and mitigating nature-related risks and thriving in a resource-constrained world will require companies to take a more holistic approach. Operating within planetary boundaries is the only way businesses will be able to protect themselves from nature-related risks and navigate uncertainty.

Carbon tunnel vision is blinding business to major risks

Climate change is undoubtedly one of the most pressing challenges of our time, and is the source of a vast array of physical, financial and transition risks for organizations. Yet a mistake many companies make in attempting to solve this incredibly complex problem is focusing their sustainability efforts solely on reducing greenhouse gas (GHG) emissions (a phenomenon known as “carbon tunnel vision”). 

By putting all their eggs in one basket, businesses are missing out on important opportunities and eroding their long-term ability to create value.

Climate is just one piece of the puzzle. All of Earth’s systems (atmosphere, biosphere, cryosphere, geosphere and hydrosphere) overlap and are deeply interconnected through mechanistic links and feedback loops; what affects one can affect another. Climate change can alter biodiversity, the water cycle, etc. and vice versa. 

The impacts of business activities go beyond climate; and many companies are dependent on other Earth systems for raw materials and ecosystem services. Companies suffering from carbon tunnel vision miss other important environmental impacts and related business challenges and risks that they need to address. For example, a food company that directs all of its sustainability efforts towards reducing GHG emissions is effectively ignoring the key issues that may be affecting yields and causing price hikes, such as a loss of pollinators, habitat destruction and invasive species and pests. Looking at these other drivers of impact is necessary for businesses to ensure that their efforts lead to more sustainable outcomes in the long run, while enabling them to thrive in a changing world with new environmental and regulatory constraints.

Sustainability strategies developed through a lens of carbon tunnel vision are incomplete. Companies need integrated strategies that address all nature-related impacts and dependencies to accelerate progress on environmental goals and mitigate key business risks. 

Planetary boundaries: a framework for sustainable business transformation

Developed in 2009 by a group of international researchers led by Johan Rockström of the Stockholm Resilience Centre, the planetary boundaries concept offers a holistic framework for businesses to evaluate their exposure to nature-related risks and guide decision-making. 

A safe operating space for humanity

In a nutshell, planetary boundaries is a scientific framework that defines how human activities can operate within the limits of Earth’s capacity to avoid destabilizing the processes that regulate the delicate balance and resilience of the entire Earth system.

There are nine planetary boundaries: climate change, biosphere integrity, land-system change, novel entities (such as toxic substances), freshwater change, stratospheric ozone depletion, atmospheric aerosol loading, ocean acidification and biogeochemical flows. 

Six of these boundaries have already been exceeded: climate change, biosphere integrity, land-system change, green water (i.e., terrestrial precipitation, evaporation and soil moisture), biogeochemical flows (nitrogen and phosphorus cycles) and novel entities (pollutants including plastics, pesticides, industrial chemicals, antibiotics and other pharmaceuticals). The accelerated growth in chemical and plastic pollution and overfishing have put additional pressure on marine ecosystems, further limiting the ocean’s capacity to sequester carbon (already limited by increased acidification), pushing us closer to exceeding the boundary for ocean acidification. 

The consequences of crossing planetary boundaries are complex, and increase the risk of generating abrupt or irreversible environmental changes on a large scale. 

Defending the status quo is no longer an option; we must learn to live within planetary boundaries. Companies must think about how business activities impact and rely on each of the boundaries. If they don’t integrate nature and climate considerations into transition and business continuity plans now, they may find themselves in dire straits, exposed to significant risk and needing to revise their plans.

Working smarter, not harder: from environmental efficiency to an integrated approach 

For many companies, applying a planetary boundaries lens to sustainability activities means dividing their attention and resources to address nine different topics at the same time. And that means more effort and higher costs — a hard sell, particularly in organizations where the budget for sustainability efforts is already hard won. It’s a common misconception that holds companies back from making real progress on environmental goals and puts a 1.5˚C future at risk.

Most companies approach sustainability from an “environmental efficiency” standpoint. They focus on reducing impacts (doing less bad) and frame strategies and actions around quantifiable figures or easily communicated targets, such as cutting X tonnes of CO2 per product or reducing the amount of water it uses. Environmental topics are addressed in silos, with separate strategies and action plans. This tactic can lead to trade-offs and unintended consequences; some actions taken to address climate may put biodiversity, water or soils at risk — resources that companies are dependent on. For example, displacing farms or deforesting land to install solar farms to meet demand for more renewable energy, rather than using already developed or degraded land, not only undermines the original intent of the action, it creates other issues, such as biodiversity loss, soil erosion, changes to local climate and watersheds. Failing to recognize how these different pieces fit together will have long-term effects on companies’ value chains.

A planetary boundaries approach requires businesses to look at the big picture to find synergies and win-win situations. Rather than having nine different action plans, companies have one integrated plan that simultaneously addresses climate, biodiversity, water, land use, and beyond while minimizing trade-offs. And because it’s built on science, it enables companies to make decisions based on what is needed, rather than what feels good or seems interesting at the time. 

Thinking beyond impacts: reducing dependencies to build resilience + spark innovation

Working with planetary boundaries is about much more than reducing impacts and what’s best for the planet. It’s about laying the foundation that will enable businesses to thrive in the future. 

This necessitates a shift in mindset; rather than thinking solely about how to reduce the impacts of their products, companies will need to consider their resource use too — what natural resources and ecosystem services do we depend on? Considering these questions are key for identifying key areas of risk and understanding how companies will need to adapt in a changing world. A good example of this is water. All companies rely on water in some way; it’s central to nearly every stage of the value chain. Companies that adopt water management strategies that help reduce their dependency will also reduce their exposure to physical risks, such as droughts, as well as transitional risks, such as a rise in prices. 

While the long-term benefits of operating within planetary boundaries are clear, the short-term benefits of this approach shouldn’t be underestimated. A company that addresses its contribution to nitrogen and phosphorus pollution by reducing its use of fertilizers also decreases its dependence on external inputs they have little control over (while simultaneously cutting its climate, water and biodiversity impacts). In the event of an energy crisis or high inflation where the cost of fertilizer may rise, their operating costs won’t increase as significantly.

A planetary boundaries approach helps companies think about problems differently, enabling them to become more agile and open the door to new opportunities. Rather than viewing boundaries as barriers or markers for danger and disruption, businesses can use them as a jumping off point for innovation. How can we generate value while reducing our dependence and impacts on natural resources? Does our current business model facilitate that? What needs to change?

Those that continue on a business-as-usual path are putting their market share at risk, as other companies come in with more sustainable options that are more appealing to consumers. By adopting a planetary boundaries approach now, there’s an opportunity to be a first mover, developing ideas and gaining market share over competitors. 

A planetary economy or bust

2030 is fast approaching and a wave of regulatory changes are on their way. Climate, biodiversity, water and other environmental challenges can’t be addressed in silos. An integrated approach is needed now to tackle the environmental crisis. 

Now is the time for companies to adopt a planetary boundaries approach.