Biodiversity loss is one of the greatest global risks and companies have a significant impact throughout their value chain. As a result, various regulations are already in place and will continue to be implemented. Companies should prepare by understanding their own impact and making biodiversity measurable.
The biodiversity of our landscape is experiencing a significant and alarming decline, a trend that has been ongoing for decades. Since 1970, global biodiversity has declined by around 70 percent, posing serious risks to ecosystems, human well-being and economic stability. This loss of biodiversity threatens natural systems that provide essential services such as clean air and water, food security and climate regulation. The impact of this decline goes beyond environmental concerns – it also poses significant business risks. Industries that rely on natural resources may face disruption, increased costs and stricter regulation as the consequences of biodiversity loss become more apparent.
Companies have a significant impact on biodiversity along their entire value chain, including upstream and downstream activities. The five drivers of biodiversity change are:
Climate change, e.g. emission production or reduction
Land/freshwater/ocean use change, e.g. degradation of environmental assets due to land sealing or encapsulation
Resource use/replenishment, e.g. negative impacts on the quality and quantity of ecosystem services due to excessive water consumption
Pollution/pollution removal, e.g. pollution of ecosystems by waste
Introduction/removal of invasive species, e.g. spread of invasive species through supply chains (e.g. plant pests)
Companies should not only take action to help conserving natural resources and biodiversity drivers, but also to comply with regulatory requirements. To ensure alignment with the Corporate Sustainability Reporting Directive (CSRD), companies need to take proactive steps to integrate biodiversity into their sustainability framework. This includes establishing an approach to biodiversity parameters that includes setting measurable targets, monitoring impacts on ecosystems and ensuring that biodiversity risks and opportunities are reflected in their sustainability disclosures.
For companies, an effective and comprehensive approach is key. They need to adopt a structured approach to actively manage biodiversity. To achieve this, we see three key steps in establishing a biodiversity management system:
A commitment to biodiversity offers many benefits to businesses, from regulatory compliance to improved market positioning.
License to operate: Regulatory compliance
Companies are increasingly required to comply with various biodiversity regulations, such as the Sustainable Finance Disclosure Regulation (SFDR), the CSRD incl. the biodiversity resilience analysis, and the EU Taxonomy Regulation. Meeting these regulatory standards ensures that companies maintain their legal “licence to operate”, avoid penalties and strengthen their sustainability credentials.
Resilient business model: Awareness prevents emergencies
Being aware of the surrounding ecosystems and understanding the impacts on and from the business model allows companies to respond early to emerging environmental risks. This foresight increases resilience, helping companies avoid potential disruptions and sustain long-term operations.
A competitive advantage: Meeting stakeholder expectations
A company's efforts to measure and improve its biodiversity footprint also create a competitive advantage. As stakeholder expectations for environmentally friendly products increase, companies that demonstrate a strong commitment to biodiversity are better positioned in the marketplace. In addition, this commitment can open doors to favorable financing terms, further strengthening their market advantage.
Palmer, D. / Orléa, K. / Dombrowski, L. / Meurer, P.
