Why Collapsing Wildlife Populations Are a Huge Business Risk

Rising temperatures and shifting rainfall have turned “wildfire season” into a season without end and “100-year floods” into annual events. Meanwhile, the global wildlife trade and human encroachment into natural habitats are exposing humans to a growing number of animal pathogens like Ebola, SARS and COVID-19. Our ailing planet’s list of symptoms is long, and it just got longer: According to the 2020 Living Planet Report recently released by World Wildlife Fund (WWF), wildlife populations monitored by the organization have declined on average by 68 percent since 1970, a grim trend driven largely by human activities. 

This staggering loss of wildlife is the ultimate canary in the coal mine. As the report shows, the same human activities driving so many species to the brink are also raising the risk of climate-related disasters, resource scarcity and infectious diseases like COVID-19. The report also makes it clear that one of our greatest assets in addressing all of these challenges is nature itself — and that businesses are uniquely positioned to help reverse these disturbing trends. 

Every year, nature, including wildlife, provides roughly $125 trillion worth of benefits such as food, energy, water and air purification, carbon sequestration, flood protection, disease prevention, and more. The natural capital that underwrites all these goods and services — the air, water, soil and rich variety of organisms that ensure nature’s delicate balancing act — is the lifeblood of business, and a lifeline for the communities that businesses serve. When crops fail because of an extreme heatwave, or because the insect that pollinates them has gone extinct, food production suffers. When droughts lead to increased forest fires, wood and paper production is impacted. And when a virulent disease jumps from animals to humans, because people are buying and selling exotic wildlife in unregulated markets, or because people are pushing further into remote wilderness to create space for farms and grazing land, we risk sparking another deadly pandemic. 

At the heart of all these challenges is humanity’s broken relationship with nature. But what if we chose to work with nature, rather than against it? That’s the idea behind what’s known as “nature-based solutions.” Smart investments in nature — from the protection and restoration of forests, wetlands, and other key ecosystems to green infrastructure like green urban areas and roofs — can help stabilize the climate, support communities adapting to climatic changes that have already occurred, ensure resources for future generations and prevent the next pandemic. 

Recent progress on corporate climate action offers a useful guide. Markets are increasingly factoring in the material risks that climate change poses to corporate profits, as well as the material benefits to be reaped by decoupling production from carbon emissions. Hundreds of companies have responded by adopting science-based targets that align their emissions reduction goals with what the best available science indicates is needed to meet the global climate goals established by the Paris Agreement. Many companies also recognize that, to fully address emissions and meet their Sustainable Development Goals, they need to solve for nature. Indeed, by protecting, restoring and improving the management of our forests and other lands, and slashing waste in both production and consumption, we can deliver up to 30 percent of the emission cuts required to achieve our global climate goals.  

But companies can and should go further, because the material risks of losing nature — and the material benefits of conserving it — go beyond the issue of climate change. A wide range of other challenges, including disaster risk, food security, water security, socio-economic development and human health, are tied to the health of the natural world. And yet, as of today, nature-based solutions only account for a small portion of climate finance. What’s standing in the way? A company can easily calculate the financial benefit of cutting down a rainforest to make way for a palm oil plantation or mining concession. Calculating the financial benefit of keeping that rainforest intact is more complicated, but it's not impossible. 

Climate change was once similarly misunderstood. But today investors like BlackRock understand the material risks posed to business and are demanding greater transparency through the Task Force on Climate-related Financial Disclosures (TCFD), which provides a recommended framework for companies to disclose climate-related risks to investors, lenders and insurers. Likewise, we need investors to see the material risks posed by the degradation of nature and demand greater transparency, and we need companies to address these risks.  

The greatest loss of wealth — not just in human history, but in the history of our planet — is happening right before our eyes. Perhaps the most venerable adage in business is “never touch the principal,” and yet, when it comes to the vast natural bounty that Mother Earth has so generously provided, that is exactly what we’re doing. It doesn’t have to be this way. To put a twist on another well-known adage, “Green is good.” Savvy CEOs who recognized this simple but essential truth, and are prepared to act on it, will be the market leaders of tomorrow. 

Image credit: WWF