The Economics and Business Risks of Biodiversity Loss

Less than one in five companies see biodiversity as an important business issue, and only two out of the world's largest 100 companies manage it as a strategic risk.

Yet, a new analysis by PricewaterhouseCoopers concludes that no sector or business in the economy will escape unaffected by changes to the availability of environmental resources for business and consumers.

The research, which was conducted as part of a landmark study by the UN Environment Programme (UNEP), puts the economic impact of biodiversity loss at between $2-4.5 trillion annually and says this impact will be felt in product pricing, availability of products and financing, and supply chain disruptions for consumers, business and government. For example, the study lists water used in food and drink production, timber for packaging, furniture and paper, productive land for fruit and vegetables, and fibers for clothes, as just some of the biodiversity and ecosystem services' whose economic value and protection are currently at risk.

Interestingly, the data revealed that geography now plays a significant role in how businesses perceive threats presented by biodiversity loss. According to the study, titled The Economics of Ecosystems and Biodiversity(TEEB), more than half of CEOs in Latin America and 45 percent in Africa see declines in biodiversity as a challenge to business growth. In contrast, less than 20 percent of their counterparts in western Europe share such concerns.

We know that climate change and global consumerism are already having an impact on resource availability in certain parts of the world, so it's critical that you begin to prepare for emerging supply risks related to water scarcity and the other biodiversity losses defined in this report. As the study concludes, corporate chiefs who fail to make sustainable management of biodiversity part of their business plans may find themselves increasingly out of step with the marketplace.

The TEEB for Business report is available at www.teebweb.org.

TAGS: Finance
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