5 Main Threats to Biodiversity - Network for Business Sustainability (NBS) (2024)

Threats to biodiversity are mounting. Businesses need to understand the dangers—and the opportunities for action.

“The Basics” provides essential knowledge about core business sustainability topics.

Hands up if you can name thislittle-knownmember of the world economy:

• Every year, itprovides services valued at between USD$120-$140 trillion—more than 1.5 times the entireannualglobal GDP.

• More than55% of the world’s GDPdepends on its services.

• It isby far thecheapest and most effectivesource of the services it offers—and it isin dangerof going out of business.

Thisvitalcomponent of the economyisbiodiversity. Biodiversity is the variety of living things. It means the many forms of life that exist in a given area and on the planet overall, and the ways in which that life is supported. An area with good biodiversity will have many different forms of life in it: animals, plants, fungi, and others. These diverse species are all linked to each other in a network called an ecosystem.

Different types of ecosystemssupportbusiness sectors ranging from food and clothing to insuranceandtourism.Economists calltheeconomically valuable goods and servicesthat ecosystems supply“ecosystem services.” These services include crop pollination, flood protection, and water purification. When there is enough biodiversity to keep these ecosystems working well, they can provide trillions of dollars’ worth of services every year.

Biodiversity and ecosystem services are threatened

Butecosystemservices are shutting down as species go extinct andthe ecosystemsgrowweakenedorunbalanced.The costs to businesses are massive. For example, in every year from 1997 to 2011, declines in biodiversity from just two causes—changes in land use and damage to the land from those changes—led to ecosystem services losses valued at USD $10-$31 trillion.

Business and biodiversitydependon each other. Businesses need functioning, diverse ecosystems for their operations and supply chains. At the same time, the way that businesses operate and obtain those supplies affects whether the ecosystems will stay healthy or not.

This article describes the main threats to biodiversity and what they mean foryourbusiness.

What are the main threats to biodiversity?

Scientists have namedfivemain threats to biodiversity.Knowing what they are and how they work can helpyouidentify waysyourcompany’spractices might be contributing to declines in biodiversity, as well as areas where you can change.

The threats are:

1. Changes to how we use the land and waters. Both our lands and our seas contain many different ecosystems, and these are affected by business actions. For example: when developers drain and fill in marshes or wetlands in order to build housing, they take away the land that captures excess water during storms. The consequences can be drastic. When Superstorm Sandy hit New York and New Jersey in 2012, coastal marshland reduced damages by 27% (USD $430 million) in New Jersey, which had kept quite a bit of its marshes. In New York, where almost all the marshes had been drained and developed, marshland protection reduced damages by only 0.4% ($140 million).

2. Overexploitation and unsustainable use.Activities such as logging, farming, and fishing can be done sustainably, but they are often done in ways that overexploit a resource. When too many species, or even just a few important species, are taken out of the ecosystem, the whole network of life in that area can collapse. (Think of a rock wall with too many rocks taken out, or a spider web with too many strands cut.) Overall, people have been taking far more from nature than it can afford. For example, 70% of fish stocks in the ocean are currently being overfished. A 2016 studysuggestedthat the oceans could be empty of fish by 2050.

3. Climate change.We’re already seeing hotter temperatures, warmer oceans, and more severe weather events. Many species can’t adjust to these conditions, and their numbers crash. The species endangered include many pollinating insects, which contribute $235-$577 billion inecosystem-servicesvalueto the global economy every year.

4. Increased pollution.Pollutionofair, soil,andwaterposes a serious problem to many ecosystems.Tiny bits of plastic suspended in ocean waterbuild up inside fish, birds, and othermarine species.Industrial toxinskill many speciesin rivers and lakes.Air pollution makes its way into soil, leaves, and water. It all adds up to fewer species, less diversity, and weakened ecosystems.

5. Invasive species. Global trade brings species from their home ecosystems to other parts of the world, where there are often no predators to eat them and keep their numbers in check. The warming climate allows dangerous species such as disease-carrying mosquitos to thrive in new latitudes. Alien species often throw their new habitats severely out of balance. For instance, the brown rat, which originated in central Asia and has invaded almost every part of the world, has drivenhundreds of species extinct and causes an estimated $19 billion in damageeach year in the United States alone.

How does biodiversity loss threaten business?

All businesses depend on the ecosystem services that biodiversity provides, whether directly or indirectly. So, as a report for the World Economic Forum notes, the steep decline in biodiversity “will inevitably impact bottom lines—for example, through reduced fish stocks disrupting commodity supply chains, economic losses from disasters such as flooding, and the loss of potential new sources of medicine.”

Some of the risks posed to business by biodiversity loss are:

• Operational risks:Many raw materials are becoming scarce or unavailable because ofoverexploited or disturbedecosystems.In 1992 theAtlantic cod stockcollapsedto just 5% of the former cod population; thisended 500 years of cod fisheries in Atlantic Canada and put nearly 30,000 people out of work in Newfoundland alone.

• Regulatoryrisks:Countries are limiting and regulating theuse of certain raw materialsandbusiness activities.For example, several countries in Southeast Asia have imposed partial or totallogging bansin recent years.

• Marketand reputational costs:Customers increasingly demand that businesses operate in environmentally sustainable and ethical ways. One study shows that 87% of consumersworldwide want companies to protect biodiversity with their sourcing practices.

• Reduced access to capital and loss of investment opportunities: Lenders and investors, like consumers, increasingly demand assurances that companies are acting sustainably. More majorcompanies, including BNP Paribas SA andAXA, are signing ontobiodiversity-protection initiatives such asBusiness for Natureand committing to taking companies’ sustainability records into account when making investment decisions.

• Increasing insurance costs:Loss of the “ecosystem service” of storm and ocean-rise protectioncosts insurers billions of dollarsevery year. Much of this cost is passed on to companies.

How can businesses reduce threats to biodiversity—and find opportunities?

Businesses benefit from biodiversity and ecosystem services. And they can also benefit from protecting and restoring them. Integrating biodiversity considerations into strategy, operations, supply chains, and investment decisions can lead to new business services, products, and models.

Here aresomeways thatbusinessesare capitalizing on theseopportunities:

1.Sourcingmaterials sustainablyfor business longevity

Following best practices in sustainably collecting materials canincrease a company’s resilience.Cosmetics manufacturerL’Oréal, which gets the raw materials for its products from nearly 340 species of plants originating in 100 countries, has a new sustainable-sourcing policy that aims for zero deforestation. This is helping the company build long-term partnerships and strengthen its social systems.

2.Innovating tocreate and expand profitable new markets

Increasingly, consumersand investors are demanding ethical and sustainable productsand services.That meannew business models, products, services, revenue streams, and technologies.Trading in carbon creditsis anexample of a new biodiversity-friendly market. These creditscanhelp protect forests, the climate,and communities.Thecarbon-offsets marketis predictedto be worth $200 billion globally by 2050.

3.Improvingrelationships with society

Some businesses are showing great leadership in creating and joining partnerships for ecosystem protection and regeneration. Broad-based partnerships include the Global Partnership for Business and Biodiversity, Business for Nature, and the One Planet Business for Biodiversity (OP2B) coalition. These efforts can strengthen relationships with essential stakeholders, from employees to regulators.

The way forward: global partnerships for business and biodiversity

The threats to biodiversity are real. But increasingly, businesses, individuals, and organizations are finding innovative, collaborative ways to protect the planet. Excellent models exist. Ultimately, we need accelerated action andcollaborationat scalein orderto sustainably use,conserve, andrestore biodiversity.

Creating better business in this way will help to achieve many common societal goals,includingthoseunderpinned by the Sustainable Development Goals.Get involved to turn threat to opportunity and create a better planet for all.

Reports on business and biodiversity

• Brondizio, E. S.,Settele, J.,Díaz, S. and Ngo,H. T. (editors) (2019).Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. IPBES.

• Almond, R.E.A.,Grooten, M. and Petersen, T. (editors) (2020).Living Planet Report 2020 – Bending the curve of biodiversity loss.WWF.

• World Economic Forum. (2020).Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.

• World Economic Forum. (2020).New Nature Economy Report II: The Future of Nature and Business.Report No. 2.

• Bateman, I. J. (coordinating lead author),et al. (2011).Chapter 22: Economic values from ecosystems. The UK National Ecosystem Assessment.

• OECD. (2019).Biodiversity: Finance and the Economic and Business Case for Action. Report prepared for the G7 Environment Ministers’ Meeting, 5-6 May.

About the Series

“The Basics” provides essential knowledge about core business sustainability topics. All articles are written or reviewed by an expert in the field. The Network for Business Sustainability builds these articles for business leaders thinking ahead.