By Matt Jones, Head of Programme, Business and Biodiversity, UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC)
In 2020 the World Economic Forum (WEF) put biodiversity loss in the top group of global risks.
Since then, I’ve increasingly seen references to this being evidence that the risk to business from biodiversity loss is growing.
It is true that the risk is growing – but the WEF’s analysis is based on a survey of perceptions of risk. What we’re seeing is a lagging indicator. So, I’d argue that if you see this as evidence to be worried about biodiversity, you’re still not as worried as you ought to be. The risk to business from biodiversity loss gets larger for every day that biodiversity is in decline.
In the 2021 WEF Global Risk Report, released last week, biodiversity loss has 'dropped' a place. This partly because the perceptions of the risks of infectious disease have been completely altered by the terrible consequences of COVID-19.
As we respond to and recover from the pandemic and its indirect effects, the attention on biodiversity loss may diminish. Yet we can’t mitigate biodiversity loss with quick wins and short-term solutions. Mitigating biodiversity risk will require long-term transformative change. Each moment of inaction worsens future scenarios, lengthens the road to recovery and increases the cost.
The term ‘risk’ is often used loosely, which is unhelpful for risk management.
Some definitions equate risk to the cause of a negative event, others to the probability that something negative will happen. The view of risk is often one or the other - rarely both.
Either view skews decisions.
If decision-makers don’t consider negative events because they’re unlikely, they won’t put in place even the most basic mitigation measures. The risk goes completely unmanaged.
If they are primarily concerned about the most dramatic outcome, even if it’s highly improbable, institutions may fail to manage everyday risks from which the overall impact may be greater.
To get actionable information, it’s necessary to think about both the likelihood that something bad happens, and the severity of the consequences. The WEF Global Risk Reports prioritise based on the perception of both components.
Some people might argue you don’t need to consider two angles, provided you identify the risk as material. Yet, there isn’t a single manifestation of biodiversity risk and these risks emerge from dynamic systems. For the mitigation of biodiversity risk, one-sided approaches have real and far-reaching implications:
Mitigation can and should address the risk in both dimensions as the fastest and most effective route to risk management. This approach acknowledges that the systems underpinning our economy have resulted in an unsustainable draw-down on biodiversity.
We can reduce the likelihood of negative impacts by tackling the drivers of biodiversity loss within those systems and rebalancing the relationship between people and nature. We can also act to reduce the severity of inevitable impacts, for example by restoring degraded ecosystems.
The risk to biodiversity from business activity has been understood and, in some cases, managed for many years. But the risk to business from biodiversity loss is still very much in an emergent stage.
With over half of global Gross Domestic Product (GDP) estimated to be moderately or highly dependent on nature, business must work to understand the likelihood and severity of the risk they face from the biodiversity crisis, and take action to address it. There is a growing range of approaches designed to help businesses and financial institutions understand the nature-related risks and opportunities they face, including the online ENCORE tool. This work is informing responses from a number of leading institutions.
Awareness and action must go hand in hand.
The WEF’s 2021 Global Risk Report notes that the 2006 edition sounded the alarm on the risk from a global pandemic. Despite the warning, that risk became a reality. And yet the mitigation measures have been found lacking.
The 2020 edition of the report was a turning point for business awareness of the risks from biodiversity loss. But awareness is just the start.
Early adopters can drive solutions and set the pace of change.
The next decade provides the opportunity to translate this awareness into corporate biodiversity policies and targets, and manifest these through beyond business-as-usual governance and operational approaches.
When the 2030 edition of the WEF report is published, I hope it will be able to look back at the leadership role businesses have taken in response to the warnings around biodiversity loss.