Biodiversity provides a range of goods and services collectively termed ecosystem services on which business is reliant. Provision of clean water, the maintenance of fertile soils, and the regulation of climate are all examples.
According to the UN more than 60% of these services – including fresh water provision, climate regulation and soil fertility – are being degraded or used up faster than they can be replenished. This downward trend is likely to intensify, as demand for raw materials continues to grow. This clearly has implications for the long term viability of the businesses which depend upon natural systems for value generation.
The implications of this loss in economic terms, is that each year we are losing biodiversity and ecosystem services with at least total economic cost of between US$2 and US$4.5 trillion (3.3 – 7.5% of global GDP in 2008) 1. This is creating new risks to security of supply, brand value, license to operate and investment return, as well as opening up new business opportunities.
Such risks are increasingly being recognised by the finance sector and within the companies in which they invest. However, tools to enable a rigorous evaluation of performance on this issue are scarce. The Natural Value Initiative (NVI) is working with the finance sector to address this gap.