3: “Biodiversity Crisis is a Business Crisis”

According to the WEF, more than half of the global gross domestic product depends on nature^[3]

In the previous sections, we have clearly outlined the role of biodiversity in business. Businesses depend on nature for a lot of things.
Biodiversity creates a significant impact on the economic value chain in the form of ecosystem services, such as food provisioning, carbon sequestration, water, and air filtration. Business activities related to extraction and cultivation create pressure on the natural ecosystems, driving biodiversity loss. The operation of the four main value chains described below are known to drive more than 90% of the man-made pressure on biodiversity.^[4]

The ecosystem is gradually approaching extinction. Though extinction is a natural process, human actions have hastened the extinction. Our actions have already caused the extinction of many plants and animals which has led to the change in natural composition and processes. The threat of extinction would eventually expose businesses to significant risks such as higher costs and consumer and investor backlash. So, companies should start building business models keeping the environmental effect in mind.

Sustainable development is a fundamental break that's going to reshuffle the entire deck. There are companies today that are going to dominate in the future simply because they understand that.

Francois-Henri Pinault

Biodiversity-related risks

Loss of biodiversity is one of the major problems faced by the planet and is mainly caused by factors like climate change, changes in patterns of land and sea usage, overexploitation and contamination of available natural resources, etc. The loss of biodiversity can impact the business operations. The three major biodiversity-related risks for businesses are given below:

• Supply chain: The decline of the natural ecosystems threatens to disrupt many important supply chains.
  Example: Food production companies are at a greater risk as natural pollinators are vanishing and the soil condition continues to degrade.
• Government Regulations: Government regulations on biodiversity change with the increasing threat to biodiversity. These new amendments and regulations often threaten the operation of existing businesses and the establishment of new businesses. These stringent rules and regulations can increase the cost of investment and operation for businesses in the near future.
• Customers: The increasing threat to biodiversity and the environment made consumers think and become conscious about their actions. The recent time has seen the increased demand for green and sustainable products in the market.

Thus, companies that fail to address the negative impact of their operations on biodiversity and the environment will put themselves at risk of eroding the goodwill of their customers and other stakeholders.

In the midst of every crisis, lies great opportunity

Albert Einstein

While the loss of biodiversity presents a crisis, it also opens the door to numerous opportunities for businesses. Here are a few notable opportunities that arise from this scenario :

• Positioning the company goals and building a sustainable business model to enter a profitable market.
• Embracing biodiversity-friendly practices can help the businesses to sustain in the market and also help them to stay compliant with the regulations.
• They can improve their value proposition and brand by responding to public demand for sustainability.
• Better access to capital and create operation synergies by including strategies like reducing raw material and energy costs.

Businesses need to assess the environmental impact of a plan, project, policy, or program through a streamlined assessment in place.