Biodiversity 1o1: Back to Basics.
Biodiversity is complex and often misunderstood. We've compiled a guide to unravel its intrincasies. Dive in below to explore our primer on biodiversity.
What is biodiversity?
Biodiversity refers the variety of life on earth. One can talk about it in spheres:
Sphere 1: Genetic diversity. The variety of genes within species. It's crucial for a species' ability to adapt. Low genetic diversity would translate into less resilience to environmental changes. According to Darwin, genetic diversity is a prerequisite for evolution by natural selection.
Sphere 2: Species diversity. It includes everything from animals, plants and micro-organisms. It’s important because it helps ecosystems withstand environmental stress. One can think of primary forests for instance, very diverse by nature, which are more able to absorb external shocks such as floods or wildfires than planted forests.
Sphere 3: Ecosystems diversity. It ranges from a coral reef, a tropical forest to a wetland, a marshland etc. Once again, diversity here brings about stronger stability and ecological balance.
As such, the concept of biodiversity encompasses all the natural processes that allow humans and many other living species to survive. It includes the variety of species, ecosystems, and genes, as well as their interaction. This intricate network of varied genes, species and ecosystems is essential as it provides critical (and free) “ecosystem services” (i.e. climate regulation, carbon storage, water purification, pollination, etc.).
How fast is biodiversity declining?
According to a - now fundamental - report published by the IPBES in 2019 (the IPBES is the equivalent of the IPCC for Biodiversity), biodiversity is declining faster than at any time in human history. A few interesting data points:
75% of the Earth's surface is significantly altered (IPBES). 400m ha of land are being degraded every year, approximately the surface of Europe.
1 million species already face extinction; basically c.25% of the known plants and animal groups are threatened (IPBES). And nearly 70% of all wildlife populations have disappeared in 50 years (WWF). People are speaking about the 6th “mass extinction”.
Current species extinction rate is 1000 times greater than historical geological rates (Pimm et al. 2014)
By 2030, global water supply is expected to fall short of demand by 40%.
As a result, current estimates suggest we have crossed the “planetary boundary” for biodiversity, where biodiversity is considered in two different variables, ecosystem condition evaluated through a measure called the Biodiversity Intactness Index (BII) and the global species extinction rate, measured as the rate of species loss per million species years. Both variables have crossed thresholds and are evaluated as overpassed; yet only the extinction rate has been actually quantified.
The concept of planetary boundaries, introduced by environmental scientist Johan Rockström, defines the safe operating space for humanity based on the Earth's biophysical subsystems and processes. There are nine planetary boundaries, and biodiversity loss is one of them, alongside climate change and other critical thresholds.
Why should we care about biodiversity erosion? What are “ecosystem services”?
The erosion of biodiversity is fundamentally economic, not just a matter of affection for wildlife. Indeed, over 50% of the global economy relies on the services freely provided by nature and biodiversity (World Economic Forum, 2020). These “ecosystem services”, valued at $125-140 billion globally, encompass:
Provisioning services: Nature supplies us with fruits, livestock, fish, raw materials, and medicinal products.
Regulating services: Plants purify air and water, bees pollinate crops, forests store carbon, and wetlands mitigate flooding.
Supporting services: These include soil formation, nutrient and water cycling, and photosynthesis, which are essential for the functioning of habitats.
Cultural services: Nature offers recreation, tourism, opportunities for intellectual growth, and spiritual fulfillment to humanity.
Source: Range of Ecosystem Services provided by nature to humans. WWF, 2016 (adapted from Millennium Ecosystem Assessment, 2005)
⚠️ The impact on biodiversity can be locally irreversible: ecosystems may reach "tipping points" beyond which recovery is impossible, such as when a deteriorating forest transforms into a desert. The complex and non-linear dynamics of these interactions within biodiversity and nature render these specific tipping points challenging to forecast. However, on a broader scale, scientists believe that it is still feasible to return within the planet's safe operating boundary, which is encouraging news: we can act upon biodiversity and see results fairly quickly.
What is causing the current erosion of biodiversity?
The IPBES 2019 report reveals that the causes of current biodiversity loss are predominantly linked to human activities. They identify 5 main "pressures" or causes:
At the top of the list, changes in land, sea and freshwater use. This includes deforestation, coastal development, conversion of wild areas, habitat fragmentation etc., accounting for about 30% of the impact on biodiversity.
The overexploitation of natural resources, such as overfishing, excessive materials extraction or the depletion of freshwater stocks, responsible for 23% of the impact.
Climate change, caused by anthropogenic greenhouse gas (GHG) emissions, unsurprisingly, but constituting only 14% of the impact.
Pollution of air (non-GHG pollutants), water, and soil. Think of heavy metals, plastics, chemicals, or pesticides. 14% of the impact.
The spread of Invasive Alien Species (IAS), threatening endemic species. For example, the raccoon in Europe, originating from North America, disrupts local ecosystems. 11% of the impact.
These impacts of human activities explain why the species extinction rate is now way faster than in the past.
An impact on biodiversity can be defined as a change in the state of biodiversity. Those changes in state can affect both Ecosystems and Species. An impact on an ecosystem refers to changes in its extent, condition, or integrity. For an impact on a species, it concerns a change in the size of its population or its habitat. These changes can be positive (a gain in biodiversity) or negative (a loss of biodiversity).
What are the links between biodiversity loss and climate change?
We need to understand that those two crisis are two sides of the same coin:
Climate change is one of the five biggest drivers of biodiversity erosion (IPBES): global warming and the increased frequency of extreme weather events are impacting biodiversity.
The biodiversity crisis reinforces climate change: natural systems such as forests and oceans are the most effective carbon sinks (through photosynthesis). They could absorb half of emissions to 2050, according to the IPCC. Change in land use and deforestation are thus directly impacting GHG emissions.
Coral reefs are a good example of this interdependence: their disparition largely due to rising sea temperature level is in turn affecting climate change as reefs also sequester CO2 through the algae, plants and other organisms that live within it.
Put differently, if we act on climate change and do nothing on biodiversity loss:
It will become very difficult for us to reach net zero goals.
Our system could collapse as the provision of ecosystem services, key to the economy, is heavily dependent on biodiversity.
As a result, those two topics need to be tackled together. Businesses need to have a comprehensive nature strategy that encompasses both elements.
Why do companies have been focusing more on GHG emissions than biodiversity?
Calculating one's carbon footprint is easy in comparison with one's biodiversity footprint. Indeed, carbon measurement relies on:
A single and interchangeable metric (tons of CO2 equivalent).
An established international framework (the GHG Protocol).
A standard methodology (the use of emission factors to calculate GHG emissions from activity data).
A clear goal (such as achieving Net Zero).
Measuring biodiversity presents more complexities:
Biodiversity involves multiple dimensions (composition, structure, function) and can be measured on various spheres (from genes to landscapes).
Biodiversity is inherently local and context-specific, exhibiting significant regional variations (unlike carbon, nature is not interchangeable).
Comprehensive data on biodiversity is often scarce, making it difficult to establish baselines. Biodiversity is also still largely unknown: it is estimated that 80% of the world's biodiversity remains to be discovered and documented.
There is no universally accepted method for quantifying a company's impact on biodiversity to date.
However, the situation is rapidly evolving. The 2022 COP15 on biodiversity, akin to the 2015 Paris Agreement on climate, marked a turning point for nature. Industry stakeholders agree that the biodiversity market is developing much more rapidly than the carbon market did. The emergence of numerous tools to measure biodiversity as regulation takes shape on the subject is already evident. Therefore, it's time to move beyond the "carbon tunnel” vision and consider other types of environmental impacts such as biodiversity loss, water and pollution.
Source: “Carbon Tunnel” Vision - Illustration by Jan Konietzko from the Maastricht Sustainability Institute.
Why is biodiversity a critical concern for businesses?
Businesses have a deep connection to biodiversity, whether directly or indirectly through their supply chain. All companies rely on natural systems making biodiversity erosion a tangible threat to business models.
These risks can be divided into:
Operational & physical risks: the most visible, often tied to the reduction of ecosystem services (e.g. an agricultural business might see lower yields due to fewer pollinators) or to supply chain disruptions.
Transition risks: include legal & regulatory risks (stemming from changes in regulations, subsidies, taxes, or penalties), reputational risks (arising from negative public perception), market & technology risk (when new technologies displace older ones harmful to biodiversity, such as the shift to meat alternatives affecting traditional beef industries).
As such, nature-related risks (or opportunities) have financial implications for organisations through changes to its revenue streams, cost base and potentially cost of capital.
An example - among others - of these risks is what happened at Vitell, where Nestlé Waters had to reduce their workforce by 75% (25% of which occurred recently) due to concerns over the depletion of groundwater in the region. They are now accused of having treated bottled water in breach of French regulations.
Tony Goldner, Executive Director for the TNFD puts it nicely: “At Davos this year, there was a growing appreciation that nature is a core strategic risk management issue and no longer just a CSR issue. The reality is that nature risk is sitting on balance sheets and cash flows today.”
Mitigating these risks underscores why businesses should prioritise biodiversity. Biodiversity concerns are fundamentally business concerns. Only then comes the willingness to comply with emerging regulation incorporating biodiversity disclosures such as the Corporate Sustainability Reporting Directive (CSRD).
Are there any sectors more impacted than others by biodiversity loss?
A report by the World Economic Forum highlights that the dependency on nature significantly differs across industries.
The vulnerability of primary industries is quite clear: it's no shock that Agriculture, Food & Beverage, and Construction are the top sectors most reliant on nature. They depend on direct resource extraction from forests and oceans or on ecosystem services like fertile soil, clean water, and a stable climate.
However, the impact on secondary and tertiary industries can also be significant and less obvious, as dependencies can be hidden within a business’s supply chain. For instance, the destruction of wetlands in the US has cost insurers billions, as wetlands are crucial for mitigating flood damage during the hurricane season.
All in all, most sectors depend on nature in one way or another. The exception might be some Tech service enterprises in the tech sector, but even they need to consider the energy consumption of their offices and servers, including the environmental footprint of data centers (land use, water use, etc.).
With that in mind, it's evident that different sectors face varying degrees of challenge in addressing biodiversity. The journey for a pharmaceutical company, and a agri-food business diverges significantly. There's a pressing need to balance standardization with sector-specific adaptability.
More precisely, the UNEP-FI (2022 report) identified 10 priority sectors based on their inherent reliance on ecosystem services that are underpinned by biodiversity, and their direct impacts on biodiversity. See below.
Source: Direct impacts & dependencies on nature, by priority industry. Prioritising nature-related disclosures. Considerations for high-risk sectors. UNEP-WCMC 2022
At darwin, we assist consultancies & developers in measuring and managing biodiversity impacts and dependencies. Interested in learning more? Contact us.
Bibliography
The global assessment report on Biodiversity and Ecosystem services: Summary for Policy Makers - IPBES (2019)
Prioritising nature-related disclosures. Considerations for high-risk sectors - UNEP-WCMC, Cambridge, UK (2022)
Living Planet Report 2022 – Building a naturepositive society. Almond, R.E.A., Grooten, M., Juffe Bignoli, D. & Petersen, T. (Eds). WWF, Gland, Switzerland - WWF (2022)
Nature Risk Rising: Why the Crisis engulfing Nature matters for Business and the Economy - World Economic Forum (2020)
