Three reasons why protection of nature is a corporate imperative

Corporates tend to view nature only in the context of resources needed for business. An economic value of $44 trillion could be attributed to nature - this is equal to half of global GDP. Hence if nature is in peril, companies’ drawing from it will be impacted. The top 3 sectors that draw the most are: 1) Construction 2) Agriculture and 3) Food and Beverage.

Imagine a world when natural resources are impacted adversely due to business activities that it not possible to extract any further. Our biomes (tundra, equatorial forests, deserts, savannahs) have been pushed to a tipping point. Tipping points indicate point of no return and irreversible loss. It is only now that we have to understand the risks that businesses could face as nature faces a point of no return.

From depleting resources, impacting operations, to losses in supply chain and markets, the very premise of our linear economy is based on nature’s role of invisible giver. The key question is that if natural equilibrium is disturbed and resources are depleted who will give and how do we generate economic value? Nature provides services such as air/water pollution dispersion, composting, flood control, rain cycle and fertile land for our food. The Economics of Ecosystems and Biodiversity (TEEB) was a study led by Pavan Sukhdev from 2007 to 2011. It is an international initiative to draw attention to the global economic benefits of biodiversity.

Nature is a furious destroyer: Natural disasters globally account for losses that run over $250 billion annually. The year 2019 saw record extreme weather events, triggered by climate change. This July was the hottest July ever recorded, the summer monsoon season saw 74 percent excess rainfall events, forest fires were 113 percent more prevalent year-on-year and seven cyclones hit India.

Successive disasters are helping the exchequer and businesses make money. An analysis of disasters since 1993-2018 indicates that there were losses of more than $45 billion from flooding and cyclones. Urban centres face increased flood risks due to unplanned growth and mismanagement of water bodies and cutting of trees. This is compounded by loss of life, productive days lost, and impact on businesses. The key question is – in the face of intensifying extreme weather events, how do we cope and are we adapting to nature’s furore? This will result in physical risks and market risk.

Nature is regenerative: Throughout the history of mankind, we have seen the destruction of civilisations due to the interplay between the inability of land to cater to growing population and that of water to sustain life. Wars for new land used to be the norm. Colonialism and post-industrial revolution has hastened the rate of extraction of natural resources. This has led to deep impacts on the environment. History has also shown that natural ecosystems can regain their equilibrium, if given enough time. Time is thus the key to regeneration. Pollution mitigation techniques relied on carrying capacity of nature i.e capability of air and water to disperse pollutants.

The limits of pollutants in water and air are levels at which human harm is negligible. However, now with increased pace and volume of resource extraction and pollutant load – natural carrying capacity (the numbers of people, animals, or crops which a region can support without environmental degradation) has been severely disturbed. Time and volume - prerequisites for carrying capacity - are missing elements. For example, instead of one sewer line into a river, we now have 100s and 1000s – the river’s volume cannot disperse the large pollutant load. However, the good news is that a net positive nature’s economy, which is regenerative, is possible:

1. If we understand that externalising impacts for immediate gains will come back to bite business.

2. If we focus on cleaner technologies – we can’t pollute anymore.

3. Only if we do not exceed its carrying capacity, thus allowing nature to regenerate.

It’s imperative to all businesses draw plans not only to limit climate change, but also to move towards a net nature positive economy. The WEF report on New Nature’s Economy 2020 outlines what steps businesses can take to create a world which is healing, self-sustaining and regenerative. The time is now to move towards embracing the wealth of nature and creating a regenerative economy.