08 May 2024

Innovation Zero: As nature rises up the agenda, businesses should be ready for tough questions

Nature takes centre stage at Innovation Zero, highlighting the urgent need for businesses to integrate nature-based solutions in their sustainability strategies and risk management.

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Last week’s Innovation Zero conference at London’s Olympia saw thousands of impassioned entrepreneurs, business leaders and politicians make the case for climate action. Renewables, transport and finance all featured heavily throughout the two-day congress. But it was the focus on nature and its role in corporate sustainability efforts that caught our eye.   

Waking up to nature-related risk 

Often overlooked, nature has been given more attention in recent years following developments such as the Taskforce for Nature-related Financial Disclosures (TNFD) and the Montreal-Kunming Global Biodiversity Framework. While this has pushed the issue up the international agenda, nature is still somewhat of a hot potato, with businesses struggling to communicate their role in protecting and conserving our natural environment or how they are harnessing nature’s power to accelerate net zero.  

A recent analysis from the Green Finance Institute and the University of Oxford has starkly quantified the potential impact of nature degradation, both domestically and internationally, on the UK’s economy and financial sector. The deterioration of the UK’s natural environment could lead to an estimated 12% loss to GDP, a figure larger than the shocks of the Global Financial Crisis and the Covid-19 pandemic.  

The researchers argued that while the economic costs of climate change are becoming increasingly accepted, the risks posed by nature degradation amount to a material cost that has not been sufficiently factored into financial and business decision-making.  

Another study from BloombergNEF in collaboration with TNFD at the end of last year, profiled 10 companies that incurred significant financial losses due to their impacts, dependencies, and risks associated with nature. These companies, ranging from Bernard Matthews to Tesla, faced heavy falls in market valuation, credit rating downgrades, litigation settlements, and major reputational damage. This underscores the real-world consequences of nature-related risks. 

Rethinking nature by moving it out of the corporate social responsibility bucket and putting it on equal footing with net zero will enable businesses to take the lead in managing their risk exposure and safeguard their reputation. It will also help channel capital and investments towards nature-based solutions and businesses taking nature-positive steps as part of their environmental strategies. Communicating the steps businesses are taking to focus on nature-based solutions as well as net zero will be paramount to achieving real change. 

The great carbon offsetting debate 

A second thread of the nature conversation at the conference was generally a more positive one. Forests, peatlands, and oceans all hold the key to one of the most powerful levers for climate action: nature-based solutions (NbS). 

The potential of NbS is immense, offering a pathway to sequester carbon and restore the balance of our ecosystems. The voluntary carbon market is the most well-known mechanism that provides essential funding for nature-based projects that might otherwise lack support.  

However, its critics have continued to campaign against corporates purchasing carbon credits to offset emissions, claiming that it distracts from decarbonisation. Indeed, last Thursday, the BBC’s Panorama investigated two carbon projects that have generated carbon credits purchased by the likes of Shell, Delta Airlines and Deliveroo. The programme raised some serious questions about how the proceeds of the credits are spent and the impact on local communities, with one example showing a group of indigenous people having been evicted from their land. 

The programme’s accusations are the latest in a long-running series of investigative journalism that has scrutinised the voluntary carbon market and the businesses that participate in it.  

With the in delivering net zero, businesses must be prepared for heightened questions about their use of carbon credits, the projects they are supporting, and how this does not distract tactic from the broader objective of decarbonisation.  

Nature has entered the boardroom 

Putting all of this together, it is increasingly clear that nature is becoming a boardroom issue and getting on the front foot is essential. So where should communicators begin? 

Firstly, transparency is crucial. Exploring initiatives like the TNFD, where businesses voluntarily disclose their nature-related impacts and dependencies, will help build trust over the long run. Given that these frameworks tend to later become mandatory, businesses that are engaging now will be better prepared when it becomes part of their legal reporting requirements.  

Secondly, this issue requires meaningful stakeholder engagement. Creating dialogues with key audiences around the importance of nature and its role in net zero will offer a chance to understand their needs and highlight where efforts should be focused. No business will have all the answers now, but through collaboration and engagement, solutions can surface. 

In summary, businesses and their complex relationships with nature are firmly in the spotlight. Reputations are on the line when things go wrong.  

However, on the flip side, those who get it right should stand to gain when they are able to confidently articulate how they are contributing towards a nature-positive future. 

Benjamin Carr, Associate Director & Mathilde Milpied, Senior Account Manager 

 

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