Protecting biodiversity is a pillar of sustainability. By expressing its concern for biodiversity, a company can help build a business model with long-term resilience to the challenges it faces.
What is biodiversity conservation, and why is it so important?
Biodiversity includes the diversity of life forms within species, the number of species, and the ecosystems they create. It is strongly tied to the state of natural capital, i.e. the natural resources used by humans (including in economic activity). Species and ecosystems also perform a range of ecosystem services that we benefit from cost-free.
According to research by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), unsustainable production and consumption patterns reduce biodiversity in five main ways:
Contributing to change in the use of lands, seas and oceans
Exploiting species and ecosystems beyond their ability to regenerate
Driving climate change, creating additional pressure on ecosystems
Polluting soil, water and air
Contributing to the spread of invasive species
According to IPBES data, up to a million species of living things are threatened with extinction in the coming decades. The Dasgupta Review, commissioned by the British government, points to another worrying trend: while in 1992–2014 the value of capital produced per capita doubled, and human capital increased by about 13%, natural capital shrank by almost 40%.
These scientific reports translate into growing social and political interest on this issue. The United Nations has identified the protection of life underwater and on land as 2 out of the 17 UN Sustainable Development Goals. The UN Environment Programme recognizes the biodiversity crisis as one of the three most important current environmental crises, along with climate and pollution. These data mobilize social movements and NGOs to act.
These trends are also followed by international agreements and related legal changes. The Kunming–Montreal Global Biodiversity Framework, adopted at the end of 2022, includes the goal of covering 30% of the planet’s surface with various forms of nature protection and restoring 30% of degraded ecosystems. Provisions on protection of biodiversity can be found in the legal changes proposed and implemented as part of the European Green Deal. Methods of measuring and reporting the impact of business on biodiversity are also being systematized.
Climate crisis fuels biodiversity loss
for example through changes in ecosystems unfavourable to the species that make them up.
Common features:
- Far-reaching effects of both crises.
- Risks associated with crossing certain tipping points.
- Foreseeable risks.
- Uncertainty about the time horizon and future scenarios.
Specifics of biodiversity challenges:
- Impacts of changes are not as well understood.
- Lower awareness among decision-makers than in the case of climate
- Risk of insufficient attention to pro-climate activities/investments with potentially negative effects on biodiversity (e.g. extraction of raw materials in areas of natural value).
- Impossibility of using a single indicator to diagnose the situation.
Biodiversity loss hampers climate action
for example tropical rainforests or wetlands changing from CO2 stores to emission sources.
“Climate and biodiversity are two sides of the same coin—it is vital that we look at them together."
Biodiversity challenges for companies
Studies in recent years (e.g. by the World Economic Forum, and the Costanza team from 2014) indicate that the value of nature for the global economy may be as high as USD 125 trillion, and more than half of the world’s GDP is moderately or greatly dependent on nature and the services it provides. In the annual WEF Global Risks Report, biodiversity loss regularly appears at the forefront of the challenges to the global economy reported by respondents.
Behind these figures lie challenges for specific industries, arising from their impact on biodiversity and from their vulnerability to the effects of biodiversity loss:
Sector |
Links to biodiversity issues |
Food production |
Occupation of spaces valuable for nature, environmental pollution as a result of overuse of fertilizers, increased costs as a result of a decrease in the population of pollinator insects |
Infrastructure projects (construction, energy, transport) |
Projects (and related extraction of resources) that degrade and cut through ecosystems, hindering the migration of species |
Fashion |
Challenges related to the use of land surface and chemicals, and waste generation |
Cosmetics & medicines |
Potential loss of the ability to use active ingredients as a result of extinction of unexplored species |
As with climate issues, companies also face reputational and regulatory challenges—often interrelated. In recent years, companies have been forced to reconsider their business models, prompted by reports of threats to marine ecosystems as a result of plastic pollution, the pressure of palm oil production on valuable natural tropical ecosystems, and reports of the unsustainability of forest management in some countries and regions of the world.
The changing legal environment will affect businesses in different ways. The European Farm to Fork Strategy includes provisions on reduction of pesticide use by 50% and allocation of 25% of agricultural land to organic farming by 2030. The EU law on restoration of natural resources is intended to increase the area under nature protection. This is to be followed by funds for protection and promotion of biodiversity.
Regulatory changes will not be limited to the food production sector. The EU’s Corporate Sustainability Reporting Directive (CSRD) expands the range of entities subject to the obligation to report sustainability issues. Among the accompanying standards (ESRS), there is a separate set of indicators of a company’s impact on biodiversity, such as having measures or corporate policies in place, and analysis of risks and opportunities related to biodiversity.
Implementation of corporate measures on biodiversity protection issues has long been frustrated by the lack of a coherent set of standards and indicators for reporting and implementation of specific activities. Recommendations from the Task Force on Nature-related Financial Disclosures (TNFD), finalized in September 2023, are intended to systematize the process of analysing a company’s impact on the environment.
What will you gain by working with KPMG?
In KPMG companies around the world, over 200 people in over 30 countries deal with biodiversity issues, with knowledge and experience in practical implementation. The knowhow we draw on includes participation in the work of the TNFD, and compiling reports on the importance of biodiversity and natural capital conservation in building sustainable supply chains and business models.
The support of our team helps clients understand the links between biodiversity and other sustainability challenges, in particular climate issues and building a circular economy. With increasing awareness of environmental impacts, together we can identify the main areas requiring intervention and obtain the key data.
Through cooperation on biodiversity issues, the client can more smoothly pursue the process of green transition, enabling construction of a climate-neutral, nature-positive economy of the future. By incorporating biodiversity into other ESG activities, the company will approach challenges more consciously, not only minimizing reputational and regulatory risks, but also stimulating a proactive approach to changes in business models in the spirit of sustainable development.
KPMG’s support on biodiversity issues
The scope of cooperation in biodiversity protection is tailored in each instance to the needs and expectations of the client, including the specifics of the company and the industry in which it operates. Thus the proposed activities will respond to the needs of the organization while striving to maximize the environmental benefits.
The measures carried out by our team include:
- Analysis of regulations and market trends in the area of biodiversity
- Analysis of the enterprise’s impact on biodiversity
- Analysis of threats and opportunities for the company related to biodiversity
- Use of nature-based solutions (NbS) in the company’s circular economy and climate policies
- Developing recommendations for targets, actions and strategies
- Implementation of reporting obligations in line with the CSRD, ESRS, and TNFD guidance
- Training on biodiversity and its links to other ESG issues.
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