What do supply chains, business resilience, and ecosystems have in common?

The Covid-19 pandemic at the start of the 2020s caused a massive disruption to global supply chains and proved to be a major test of business resilience. Some companies were able to reorganise and bounce back from the economic shock, but others could not recover and collapsed.  

Businesses today face a similar challenge to their long-term resilience. The rapid loss of biodiversity—the variety of all living things—is creating risks to the future supply of the benefits—termed ecosystem services—humans derive from biodiversity and its interactions with non-living components of nature such as climate, soil, and water. 

Biodiversity loss undermines the resilience of these ecosystem services, from which we derive many of the commodities that underpin the global economy. Global biodiversity loss is primarily driven by land- and sea-use change, overexploitation of natural resources, pollution, climate change, and invasive species. These drivers of biodiversity loss are often related to business activities. For example: 

• Crop production, animal agriculture, and mining are creating negative impacts through land-use change and the pollution of soils and water;  

• Unsustainable supply chains are contributing to the over-exploitation of resources like water, exacerbating shortages in water-stressed regions.  

These risks may, in turn, create or add to a company’s financial risk, for example, through the increased volatility of commodity prices and disruptions to business operations. Worse, at the systemic level, there is the risk of crossing environmental “tipping points” that could lead to ecosystem collapse, potentially triggering a global financial crisis. 

In response, governments are changing laws and regulations to better protect nature, and investors are pressuring companies to anticipate and adapt to these transition risks. Companies that are perceived to be slow or unwilling to adapt could be subject to reputational risks.

It’s understandable for businesses to feel paralysed by the immense scale of the challenges. Many have only just begun to grasp the climate and net zero agenda and are yet to prepare to take on nature-related risk assessments and nature positive commitments.  

However, integrating nature into your business need not be difficult. To begin with, climate change is as much a pressure on biodiversity as it is on business and society. Companies that have already undertaken risk mitigation initiatives as part of their net zero strategies are therefore in a good position to also address their biodiversity risks and impacts, for example, through nature-based climate solutions like ecosystem protection and restoration. 

A company that wants to go further can start by asking three basic questions: 

1. Where are your “interfaces” with nature? Which parts of your supply chain depend on nature? What are the impacts of your supply-chain activities on nature? 

2. What are your options for improving your interactions with nature? What are the risks (physical, transitional, financial, etc.) of nature loss to your supply chain? What are your opportunities for improvement that could address the risks?   

3. What tangible actions will you take? Based on the opportunities you have identified, what can you do to maximise the advantages from taking action? What are the targets you can set, and how would you track and validate your progress?  

This is where The Biodiversity Consultancy can help. We have worked side by side with companies from a wide range of sectors, applying a data-driven and participatory approach to assess where they are now and explore where they want to be.  

We have helped companies that have already assessed their carbon footprints through life-cycle assessments to adapt and apply the same methods for assessing their biodiversity footprints. 

We can use the data from the assessments to identify the pressures on nature from the supply chain and estimate which of these pressures should take priority. This facilitates target-setting by a company based on its priority pressures. Scenario modelling can also be used to determine which actions are likely to have the most impact in helping the company meet its targets. 

At any stage of this process, we are able to leverage on our extensive expertise across multiple sectors to develop bespoke solutions that would directly address each company’s needs. We look forward to helping you take a science-based approach towards a nature positive future. 

Categories: Insight, Ecosystem Services, Biodiversity Strategy