Just a couple of decades ago, the notion of a major company investing in nature might have seemed absurd – today it is mission critical to the future of the economy
In recent years an increasingly popular school of thought has sought to bang the drum for humanity as a fundamental force for good, in a bid to dispel what its proponents view as the corrosive influence of fatalism on society. A constant stream of negative news risks giving rise to hopelessness and nihilism, it is argued, which benefits nobody and undermines efforts to tackle the very real problems the world still faces.
One of its leading proponents is Steven Pinker, whose 2018 book Enlightenment Now was once described by Bill Gates as “my new favourite book or all time”. In it, Pinker makes the case for reason, science and humanism, arguing these principles are leading to significant increases in human health, prosperity, safety, peace, knowledge, and happiness throughout the world. It is, certainly, a compelling counterweight to the gloomy catalogue of our failures that dominates television screens, smartphones, and social media streams.
Yet, for all our apparent progress, there are some hard truths which urgently need confronting. Take a look outside humanity’s window and it is clear most of our neighbours have been suffering, badly. UN scientists estimated in a landmark 2019 IPBES report that of the eight million plant and animal species on earth – three-quarters of which are insects – around one million are threatened with extinction, many within decades. It amounts to a level of extinction risk that is higher than at any point in human history. Meanwhile, the average abundance of native species in most major land-based habitats has fallen by at least a fifth, mostly since 1900. In all, more than 40 per cent of amphibian species, almost 33 per cent of reef-forming corals, and more than a third of all marine mammals are threatened.
“The essential, interconnected web of life on Earth is getting smaller and increasingly frayed,” is how one leading IPBES scientist, Professor Josef Settele, put it in 2019. “Ecosystems, species, wild populations, local varieties and breeds of domesticated plants and animals are shrinking, deteriorating or vanishing. This loss is a direct result of human activity and constitutes a direct threat to human well-being in all regions of the world.”
It is nothing short of a crisis, and the blame can be placed on the changes in land and sea use, direct exploitation of organisms, pollution, invasive alien species, and climate change that is caused by human activity. But while heartbreaking footage of orangutans confronting loggers as their homes are pulled down or koalas suffering severe burns in unprecedented Australian bushfires have hit news channels worldwide, the extent to which the destruction of nature is a genuine emergency for humanity is arguably less clearly understood than the threat posed by our changing climate. Both biodiversity loss and climate change having been ranked as two of the top five threats facing humanity in the current decade by the World Economic Forum (WEF), which estimates more than half of the world’s GDP – or $44tr – is moderately or highly dependent on nature and its services. But while climate action is now a top priority for thousands of corporates and many of the world’s top governments, few business and political leaders have made a name for themselves by prioritising action to protect and enhance nature.
And yet these leaders risk missing a looming threat that could have an even more immediate impact on their prosperity and security. Indeed, all the apparent societal gains that enlightenment values, scientific progress and economic growth have delivered are under now at severe risk from the wrecking ball humanity continues to swing haphazardly towards its own life support system: the planet. That isn’t necessarily to dismiss Pinker et al’s arguments altogether, more to highlight how that if humanity has shown it can better itself, it must now do better for the planet as a whole.
Two birds, one stone?
But here’s the good news, of sorts: most of these existential environmental threats are all inextricably linked, and therefore can – and must – be tackled together, with many solutions holding opportunities to undo the damage being wrought on both our climate and the natural world simultaneously. Research suggests nature-based solutions to climate change may be able to provide over a third of the cost-effective climate mitigation needed between now and 2030 to stabilise average temperature rise below 2C, with efforts such as protecting and restoring forests, mangroves, and peatland capable of storing an additional 10-12 gigatonnes of CO2 per year. Such projects also support ecosystem services, biodiversity, access to freshwater, climate resilience, improved livelihoods, healthy diets, and food security.
And as evidence of the many economic, social, and environmental co-benefits of conserving nature mount, the private sector is beginning to take note. Apple has just launched a $200m forestry restoration fund alongside Goldman Sachs, Microsoft is building a ‘planetary computer’ to help monitor and protect biodiversity, Unilever is pumping €1bn over the next decade into a dedicated Climate and Nature Fund, and PepsiCo is aiming to spread regenerative agriculture practices across seven million acres, roughly equivalent to its entire agricultural footprint. Even major polluters such as Shell are getting in on the act, investing in forestry protection and management projects in Peru, Indonesia, and Scotland. All of these corporate efforts, on paper at least, promise to both conserve nature and capture millions of tonnes of CO2.
Just a couple of decades ago, the notion of a multinational company with a major CO2 footprint investing in trees and biodiversity might have seemed absurd to boardroom executives and environmental activists alike. But it is now increasingly dawning on the private sector that preservation of the natural world and its critical resources is central to every single one of its top priorities: from keeping investors, customers, and stakeholders on board and reducing supply chain risks, to ensuring a sustainable future for products and services, and, yes, tackling climate change. Meanwhile growing numbers of environmental campaigners, too, recognise that capitalism is not going to disappear any time soon, and that by shifting thinking and priorities, deep corporate pockets can be harnessed for the good of the planet, society, and the economy alike. In short, the Apples of the world are finally beginning to realise real apples have value too.
“Without a doubt, in terms of understanding the risks to nature and biodiversity loss, we’ve seen a huge increase in interest, engagement, and momentum in business specifically,” says Eva Zabey, executive director for Business for Nature, a global coalition of companies and conservation groups launched in 2019 to provide political advocacy and corporate best practice guidance. Thanks to dire warnings from scientists and economists alike, there is growing understanding that nature loss, climate change, and other sustainability priorities, such as social inequalities, need to be tackled together to achieve the UN’s Sustainable Development Goals (SDGs), she tells BusinessGreen.
“There is that duality between climate and nature, and the message there is we can’t solve the climate emergency without nature as our ally,” Zabey explains. “Without keeping carbon in the ground, there’s no way that we can achieve these climate goals. But likewise, we can’t halt the loss of nature or biodiversity without further ambitious climate action.”
Yet so far, climate action and policy appears to be more mature than for nature loss, at both a corporate and political level. Almost every country on the planet is signed up to national and collective action on climate through the Paris Agreement. Now, as a result of that treaty, huge swathes of the global economy have mid-century net zero emissions targets in place. Yet as it stands no such equivalent collective overarching goal or framework exists for reversing nature loss.
That could soon be set to change, however, as 2021 promises to become a defining year in the dual fight against climate change and biodiversity loss. Assuming the ongoing Covid-19 crisis does not force yet more postponements – which sadly remains a distinct possibility – hopes are high that October’s COP15 UN Biodiversity Summit in Kunming, China, could deliver a global agreement outlining what countries need to do collectively and individually to reverse nature-loss. An initial draft agreement includes five long-term goals for 2050, backed by intermediary milestones and 20 targets for 2030, including an overall ambition for nature to contribute “at least [30 per cent]” of efforts to achieve the goals of the Paris Agreement. As those brackets denote, the precise target figure is up for negotiation, and the talks could see the overall framework watered down or enhanced, but an ambitious outcome could have a significant bearing on the outcome at the crucial COP26 Climate Summit, which is pencilled in to take place just a month later in Glasgow. There nature and biodiversity is expected to be more central to the climate conversation than ever before, particularly given the need to secure a deal this year on the way nature-based solutions and carbon offsetting credits can be harnessed to meet the goals of the Paris Agreement through the treaty’s much debated Article Six.
All in all, it means businesses have a major advocacy role to play in pushing for ambitious political agreements in 2021, just as they did in the run up to COP21 in Paris six years ago. Business for Nature is leading a campaign, to which 700 companies with revenues amounting to $4.3tr have already signed up, calling on governments to adopt policies now to reverse nature loss this decade on the path to full recovery by 2050, and for firms to step up their own advocacy efforts.
For Zabey, adopting global goals and targets, aligning them with climate policies, embedding nature in all decision making – such as through natural capital accounting – and getting rid of harmful subsidies and incentives for fossil fuels and unsustainable agriculture, must all be policy priorities worldwide. “We need to scale and speed up action to reverse nature loss and one of the strongest levers to drive that change is going to be policy ambition, that in turn will drive even more business action,” she explains. “Having specific goals and targets that are implementable also by business gives companies long-term certainty to really start investing in the new business models and adapting.”
No time to lose
Still, as UN climate negotiations have demonstrated, geopolitical processes can be slow and arduous, and businesses therefore cannot wait around solely for political actors to set the wheels in motion. In any case, if nature and net zero are rising up the global political agenda, it provides a particular impetus for businesses to capitalise on growing public interest in these issues to try and secure first-mover advantage. Indeed, an IBM research study of almost 19,000 consumers across 28 countries last year found that more than seven in 10 said it was important for brands to offer environmentally responsible products, while almost six in 10 said they were willing to change their purchasing habits to reduce negative environmental impacts.
There is also rapidly growing stakeholder and regulatory pressure for corporate action. Late last year the European Parliament finalised a resolution featuring recommendations that corporate sustainability strategies should include science-aligned targets not just for climate change, but for nature-related impacts such as deforestation. The Biden administration in the US is also eyeing legislative action to strengthen environmental regulations and corporate disclosure rules in line with its national goal to conserve at least 30 per cent of its land and ocean space by 2030, while the UK has also promised to outlaw illegal deforestation in company supply chains. At the same time, the influential investor groups that helped normalise climate-related risk disclosures and net zero transition strategies at many corporates are deploying the same playbook to encourage businesses to get a grip on their nature-based impacts, with tackling supply chain deforestation a particular priority.
Alongside this public, regulatory, and investor pressure, pioneering businesses are starting to demonstrate the commercial benefits that come with nature protection and enhancement programmes. Effective strategies can deliver not just reputational gains, but improvements in operational performance. An expanding library of case studies is now available where projects demonstrate how regenerative agriculture practices improve soil quality, reduce costly fertiliser and pesticide inputs, and ultimately bolster yields. Similarly, forest protection can deliver significant flood resilience, soil quality, and water security benefits, above and beyond the obvious carbon savings. The huge economic gains that flow from healthy habitats through the provision of ecosystem services, which were detailed by the UK’s government’s recent Dasgupta Review, can also be harnessed at the level of individual businesses or industries.
Yet if the case for action is increasingly compelling, developing an ambitious, credible nature strategy remains a complex undertaking for businesses, and guidance and support for companies keen to embark on the process is currently patchy.
That is where the Science Based Targets Network (SBTN) is aiming to fill the void. A distinct – albeit related – entity from the Science-Based Targets initiative (SBTi), the SBTN is looking to develop a similar verified corporate target-setting process across freshwater, ocean impacts, land-use, and biodiversity, and bring such targets into alignment with global climate and nature protection goals.
Erin Billman, SBTN’s executive director, concedes that at present setting business targets for nature can be a “confusing space” – even comparing it to the ‘Wild West’ – but she counters that this “is not an argument for not acting and not getting started, because there’s enough clarity around no regrets actions that companies should be taking”.
To that end, SBTN last year published its initial guidance setting out the first steps companies can take immediately on nature and climate, as the organisation works towards finalising a fully verified target setting methodology by the end of 2022. SBTN is currently working with a raft of companies to develop its target setting process – including the Church of England Commissioners on a finance sector-based process – and the first methodologies for freshwater and land are expected by the end of this year. In the meantime, it encourages companies to begin gathering data on their value chain nature impacts and dependencies, and to develop science-based climate targets for reducing emissions, in order to lay the groundwork for when the final SBTN target setting processes emerge.
Interestingly, however, only around half of the firms approaching SBTN for assistance with developing nature strategies have actually already committed to setting science-based climate targets, which Billman says underscores how the two crises have, somewhat unhelpfully, been siloed by many businesses. SBTN’s task is to bridge that distance between nature and climate action, she explains.
“We need to be looking at more of a jurisdictional or landscape-based approach so that we can be really thinking about co-benefits, as well as the social aspects,” she tells BusinessGreen. “That’s the big potential and promise of our work, but it’s a big nut to crack.”
Nature-based risks and touch points are so vast and varied across different industries and geographies that they can seem even more daunting than addressing climate risks. “It’s complex,” Billman explains. “It isn’t as simple as doing one or two things globally and you’ve got yourself covered, because when you’re talking about risks and dependencies on nature, you’re talking about multiple different risks that vary depending on where you are and at what point in time… Even mapping a value chain and really understanding where key inputs are coming from is a big hurdle when you’re talking about a global company that might make multiple products from myriad different sources around the world.”
But Billman argues the biggest challenge for companies looking to align with a nature and climate-friendly trajectory is recognising it requires “a fundamental transformation of many business models”, and that there are plenty of actions that can be taken right away. “There’s a chasm between that wholesale transformation and incremental change that needs to be closed,” she says.
Do no harm
Eventually, the SBTN is aiming to develop pathways, methodologies, and a verified target-setting process for different major industries, in recognition of the vastly different impacts they can have. After all, a bank or investor will have a very different view and impact on the juncture between nature and climate than a tech company requiring rare earth metals and minerals to make its products.
But while the nature and climate crises impact every single business on the planet in some way, there is arguably one top issue which companies should be looking to confront as an immediate priority: deforestation. The rate of tropical deforestation saw a worrying 12 per cent leap between 2019 and 2020, with an overall loss of 12.2 million hectares of tree cover. And given common commodities such as beef, soy, palm oil and wood products are the biggest drivers of deforestation worldwide, a massive number of companies and practically every consumer are potentially implicated.
Glenn Hurowitz, CEO of Mighty Earth, believes a principle of ‘do no harm’ should be the first rung on the ladder for any business embarking on its nature and climate sustainability journey. That means ending deforestation, only expanding agriculture on degraded land, and then shifting to regenerative farming practices across value chains.
“The great challenge is in the meat industry, which drives more deforestation and human rights abuses than all other agricultural industries combined, and is responsible for more [greenhouse gas] pollution than the entire transportation sector around the world combined,” he tells BusinessGreen.
Yet Hurowitz expresses frustration that many of the major meat producers most responsible for this damage continue to supply supermarkets throughout the world which themselves seek to trumpet their broader sustainability efforts. “If supermarkets even shifted a small amount of their volume away from the deforesters to more responsible companies, you’d see quick movement, so it’s perplexing,” he says. “The frustrating thing for us is there is no need for this deforestation or climate pollution. There are 1.6 billion acres of previously deforested land in South America alone where you can expand crops without sacrificing native ecosystems. Similarly, the shift to regenerative agriculture practices like cover-cropping and precision fertiliser application is a financial winner. But I think these companies are tackling great inertia.”
More positively, he points to the palm oil industry, which has incurred significant criticism in recent years as vast expansion of plantations has been a major driver of deforestation and habitat destruction. There is still a long way to go, but Hurowitz cites it as an example of how the private sector can make a huge difference when it takes strong action. For example, major companies such as Nestlé have enforced strong policies on their supply chains, in addition to joining up with PepsiCo, P&G and the world’s biggest palm oil trader Wilmar to deliver $1bn towards protecting and restoring 500,000 hectares of tropical forwards in Southeast Asia over the next 25 years. It is no coincidence that recent data shows deforestation for palm oil in Southeast Asia fell to its lowest level two decades last year, the fourth year running that less than 250,000 acres were chopped down to make way for palm oil.
“When the private sector acts, it gets results,” says Hurowitz – and those results can also be financially beneficial. “What we see is that when a company shifts to sustainable practices, they often actually save money,” he explains. “They find efficiencies when they take a closer look at their supply chain and the way food is grown. Plus, consumers care about this – nobody wants to think about a jaguar’s home being destroyed when they’re biting into a Big Mac.”
There are signs this argument is gaining traction. Just this week a coalition of leading European supermarkets announced they would boycott Brazilian products if lawmakers there pass controversial legislation that observers fear could trigger a new wave of deforestation in the country.
The fraught world of carbon offsetting
Tackling global deforestation remains an technically daunting and politically explosive challenge, but arguably the most contentious issue relating to nature’s role in the net zero transition is provided by carbon offsetting, or as it is now becoming better known: nature-based solutions. As more and more organisations announce net zero emissions and carbon neutrality targets, interest in projects that promise to mitigate residual emissions have attracted significant interest from corporates, and are fast becoming big business. But this fast accelerating trend is not without its detractors.
On the one hand, protection and restoration of the world’s natural assets is absolutely critical to combatting the biodiversity and climate crises, and are in dire need of investment and support, which net zero-aligned businesses can offer. On the other, controversies both past and present surrounding nature-based carbon credit projects underscore the justified concern of many green groups that poorly-policed carbon offset projects risk providing cover for firms to continue polluting.
Mark Carney, the former Bank of England Governor and chair of the Taskforce on Scaling Voluntary Carbon Markets – which aims to develop a credible market and set of standards for companies to invest in nature-based solutions – is clear about which side of the debate he stands on. He has described carbon credits as “an enormous green investment opportunity” and his Taskforce, which is due to report back with final recommendations later this year, estimates a 15-fold increase in the size of the global CO2 offset market will be needed by 2030 in order to limit average temperature rise to 1.5C. As a result, it calculates the market could grow to more than $50bn by 2030, while Carney has said he believes it could reach $100bn.
Yet Carney himself recently landed himself in trouble for his questionable – to say the least – interpretation of the term ‘net zero’, while his Taskforce has faced fierce criticism from a raft of green groups, which argue its proposals are not nearly strict enough to build a credible market free of corporate ‘greenwashing’.
“The debate around offsets is a very important and healthy one, and has to be taken seriously,” says Zabey from Business for Nature, arguing that while at present the various mechanisms and initiatives aimed at delivering credible carbon offset markets and standards are “still quite experimental”, momentum is growing and each iteration is “a step towards that system, that will ultimately allow companies to invest properly in nature-based solutions”.
“We’re not there yet,” she acknowledges. “And so companies need to be part of those discussions to make sure that the systems that do end up being in place are pragmatic. And those outside that are criticising some of the holes in it should also be brought in to then help fix those systems.”
There are certainly plenty of critics to choose from. As a major new investigation just this week from The Guardian and Greenpeace’s Unearthed outlet concerns over the credibility of even independently verified carbon offset schemes remain widespread, with some experts warning that credits issued by projects that are designed to prevent environmental destruction that may or not take place in the future are inherently flawed. The investigation reported on projects where credits were issued based on predictions that were “were often inconsistent with previous levels of deforestation in the area and in some cases, the threat to the trees may have been overstated”- allegations that were fiercely rejected by the organisations involved.
Where there is broad agreement, however, is around the way organisations should be aiming to reduce their emissions to as close to zero as possible. As such investing in nature-based offset solutions should only be used in the short term to deliver immediate climate benefits while decarbonisation efforts are ramped up, and in the long-term offsets should be reserved for industries such as cement or agriculture with residual emissions that are genuinely impossible to abate. And, where nature-based solutions are supported, projects should adhere to strict, independently-verified, and widely-recognised standards that ensure promised emissions reductions are actually delivered.
Zabey also points to several major corporates that are acting to both reduce their own impact, while regenerating the natural world for the benefit of the climate, without wading into the offsets market. For example, Unilever has committed to a deforestation-free supply chain by 2023, as well as pledging to protect and regenerate 1.5 million hectares of land, forests, and oceans by 2030. Walmart, meanwhile, is targeting net zero emissions – without offsets – by 2040, in addition to helping protect, manage, and restore at least 50 million acres of land and one million square miles of oceans by 2030. The retailer is aiming to become what it calls a ‘regenerative company’.
“I think this demonstrates that, from the nature side, it can be seen as quite a nebulous concept for businesses, and they need to focus on where they can actually protect, restore and sustainably use their most material pieces of the puzzle,” Zabey explains.
The Covid-19 pandemic has brought into focus the deep links between the global economy and nature like never before, while the climate crisis underscores the critical importance of nature’s role as both a climate sink and a means of enhancing climate resilience. Yet, despite widespread calls for ‘building back better’, greenhouse gas emissions are on course to rebound rapidly post-pandemic, and biodiversity continues to plummet. Clearly, if humanity is to truly be a force for good in the world seismic changes are needed in how companies go about their business.
But where political leadership is lacking and progress slow, growing numbers of firms are leading the way, realising that many of the solutions to the existential climate and nature crises need not be vastly expensive, experimental or technological, but in fact lie right under their noses, in the forests, soils, and oceans. Business and nature have been opposing forces for far too long, but a far more intertwined future is now being mapped out.
The days of business mindsets that are purely focused on shareholder value are nigh, according to Zabey. “The social norms have changed,” she says. “We’re transitioning the whole system and systems we operate in, so it’s not a very comfortable time for anyone. But I think it is a transformation and that we are going to end up on the other side, where we’re able to live within the limits of the planet.”
By Michael Holder