Here we explain nature risk, and share five things Australian businesses can do right now to support the environment we all depend on — and ensure a strong economic future.
In 2022, the World Economic Forum listed destruction of biodiversity as the third most severe risk in the next decade, just after climate action failure and extreme weather.
Around the same time, koalas were officially listed as an endangered species in some states. Just like the rhinos and tigers in far-off places. Except this is not some far-off place. This is Australia.
We have fast become a country that destroys nature, when we all need nature to survive. And the business world is no exception.
What is nature risk?
Nature risk comes from the impact and dependencies of a business on nature.
Impacts can be positive or negative. For example, financing the restoration of a wetland or logging a rainforest.
Wetland restoration. Photo: Erwin Jackson
Dependencies are things from nature that businesses rely on. They are essentially nature’s contributions to people (and business), also known as ecosystem services.
Common dependencies might be access to fresh water, pollination or flood mitigation.
Read more about types of nature risk in detail.
How does nature damage create risk for business?
The decline in nature can be a big risk to a business’s strategy or bottom line because of nature dependencies.
For example, there is less fresh water, depleted soils and a decline in pollinator insects that help grow most of our food: all of which have big impacts on agriculture and food industries.
Photo: Kerry Trapnell
A business's impacts on nature can also damage their reputation, and lead to legal costs or loss of customers as Australians increasingly demand products that don’t harm nature and push for better nature laws.
Natural places of beauty and wildlife — like the koala we all hold dear — are also under threat. And the destruction of nature makes pandemics like COVID-19 more likely.
Why protecting nature is good for business
Lots of business practices are destructive and polluting. But we can only go on doing this for so long.
This isn’t just about protecting iconic species like koalas. Everything in our society and economy is connected to having a healthy environment. So thriving nature and rich biodiversity are necessary for business too.
In fact, more than half of global GDP — US $44 trillion — directly depends on nature through its reliance on nature’s contribution to people (ecosystem services).
A global shift to business practices that support nature would generate US $10 trillion in new investment and create 400 million jobs.
Australian businesses won't survive without a thriving environment
SWISS RE, the world’s largest reinsurer, says Australia is the second most at-risk economy in the G20 when it comes to the loss of ecosystem services (nature’s contribution to people): because of our extreme risk of biodiversity loss.
Photo: Doug Gimesy
Even though Australia’s nature is like nowhere else on earth:
- Australia is one of only 17 countries in the world considered to be megadiverse.
- We have more unique plants and animals than any other country.
- 85% of life here cannot be found anywhere else on earth — if a species becomes extinct in Australia, they are lost to the world.
We are hell bent on destroying it:
Australia is a global deforestation hotspot alongside places like the Amazon and Congo. Queensland has one of the highest rates of land clearing and deforestation in the world, mostly to increase beef production.
19 of our most important ecosystems from the Great Barrier Reef, to the Murray Darling River Basin, and the Australian Alps are collapsing.
- We have one of the worst extinction records in the world.
So how can a business make positive changes and reduce nature risk?
Because Australia’s nature is uniquely valuable and also extremely vulnerable, there’s a lot at stake. Businesses have a heightened responsibility to know and manage their impacts and dependencies, and make changes to their nature risk.
Businesses should reduce their harmful impacts on nature and aim to have a positive impact.
Photo: David Sickerdick
Five things businesses should be doing right now
Measure and prioritise your business’ nature related impacts and dependencies. Determine the impacts and dependencies that your operations, supply chains and investments have on nature. The ENCORE tool, and Science Based Targets Network are good places to start, but to do this properly you'll need location specific information about your value chain and its interactions with nature.
Engage with suppliers, customers and investments. As with climate risk, nature related risks and opportunities cannot be addressed by one business. Your business should work with suppliers, customers, and partners that have related risks or are themselves sources of risk, and set expectations for how they manage their impacts and dependencies on nature. The financial sector in particular bears responsibility for the transition to nature-positive practices as it determines which activities are financed or insured and under what conditions, including price.
Set targets and science-based policies to protect nature. With nature related risks and opportunities identified, you can set targets for nature - for example, eliminating deforestation and land conversion from your value chain is a target you should set right now. The Science Based Targets Network’s interim guidance provides a good starting point for target-setting. And a comprehensive biodiversity policy should cover everything from how you will manage impacts on threatened species and ecosystems, to how you will engage with stakeholders and respect and protect First Nations peoples' rights and knowledge.
Advocate for nature friendly public policy. Achieving targets for nature are only possible with collaborative action that depends on public policy. Through direct engagement with policy makers, industry associations and your business’ communications, you should send clear signals to regulators of the need to protect nature through strong laws, science-based global and national targets, sufficient funding for nature recovery, and comprehensive environmental accounts and data.
Implement: embed targets for nature in your decision-making and disclose progress toward them. Once your targets for nature have been set, you need to act on them with a comprehensive and transparent implementation plan. Disclosing impacts, dependencies, and targets, with regular evidence-based updates on progress, and value chain transparency is an essential step to demonstrate good risk management. Nature should also be embedded in your business' decision-making as a component of strategy and governance with the highest level of accountability and responsibility.
Read more on how leading businesses, and many nations, are backing an ambitious commitment to reverse nature destruction so that by 2030 nature is in better health than it is now.
Header image: Annette Ruzicka/MAPgroup