Our economies, livelihoods and well-being all depend on our most precious asset: nature1.
Nature’s contribution to the global economy is estimated to be USD$125 trillion per year2, while over 50 percent of the world’s GDP (USD$44 trillion) is moderately or highly dependent on nature and its services3.
Unsurprisingly, the Word Economic Forum’s 2021 Global Risks Report ranks biodiversity loss as the fourth top risk by impact, following infectious diseases, climate action failure and weapons of mass destruction.
Despite this, nature is often perceived to be ‘free of charge’ – meaning it is systemically undervalued, or unvalued, in all levels of society and decision-making. We often take it for granted, consider it an externality, and are increasingly at risk of over-exploiting it.
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Read our thought paper on Demystifying natural capital and biodiversity and explore:
- what it means to be nature-positive
- what is natural capital and biodiversity?
- the four categories and importance of ecosystem services
- why biodiversity and natural capital matter
- 5 vital insights for businesses to consider
- targets for nature
- how businesses can become nature-positive
Current state
The global economy is rapidly approaching a ‘planetary tipping’ – the first of its kind induced by humans. It is a state of change so severe that we will be irreversibly pushed into a different way of living. This change will ripple through our globalised system and impact our economies and the ability of people, communities, and businesses to thrive.
At the corporate level, nature-related risks and opportunities are best understood through the lens of impacts and dependencies. These concepts are defined by the Organisation for Economic Co-operation and Development (OECD) as follows6:
Impacts:
How an organisation’s activities positively or negatively impact nature from the ‘inside-out’. For example, chemical pollution (as a negative), reforestation and afforestation (as a positive).he talent pool is now more accessible and diverse, allowing for new levels of innovation.
Dependencies:
How nature positively or negatively impacts on an organisation’s immediate financial performance from the ‘outside-in’. For example, extreme heat (as a negative), soil fertility (as a positive).
What is natural capital and biodiversity?
Biodiversity
|
The variety of life on earth, including animals, plants and other living organisms and ecosystems in which they live. It underpins and supports everything in the natural world that we need to survive and maintain life. |
Natural Capital
| The stock of the earth’s renewable and non-renewable resources, including trees, soils, air, water, and all living things7. It is from these natural assets that a wide range of benefits (often called ecosystem services) are produced. |
How can KPMG help
KPMG has deep experience in supporting organisations to establish their biodiversity and natural capital strategy. We can help organisations:
- undertake biodiversity vulnerability risk assessments
- set ambitious and realistic biodiversity targets and prepare a biodiversity roadmap
- with reporting and assurance on establishing and building a pathway to reduced nature-related risks and moving towards being nature-positive
- become familiar with new technologies, emerging tools and data sets that can support the baselining, measurement and management of biodiversity
- manage natural capital and biodiversity accounting processes as well as the creation of nature-based financial instruments and solutions to support the preservation of biodiversity
- articulate to investors and regulators on the issue of biodiversity by showing confidence and their capacity to tackle nature-related challenges
- undertake client engagement and facilitation to broker nature-positive investments and operations
- evaluate future opportunities arising from investment in nature-based solutions, also as part of their climate change and decarbonisation strategy
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Related insights
Footnotes:
- The Economics of Biodiversity: The Dasgupta Review – Headline Messages, (February 2021), pg. 1
- Costanza, R, De Groot, R, Sutton, P, Van der Ploeg, S, Anderson, S J, Kubiszewski, I & Turner, R K (2014). Changes in the global value of ecosystem services. Global environmental change, 26, 152-158
- World Economic Forum: Nature Risk Rising (PDF 6.43MB) | weforum.org
- The Economist: How should economists think about biodiversity? | The Economist
- For example, reports from IPCC, IPBES, IUCN, OECD, World Resources Institute
- OECD website home page | OECD
- What is natural capital? | naturalcapitalforum.com