A new assessment report by an intergovernmental panel has flagged an urgent alarm about the current global economic growth which it says is leading to biodiversity loss. Conversely, the continuous decline in biodiversity poses critical and pervasive risks to the economy, financial stability and human well-being.
The existing incentive system promotes industrial and economic activities that are harming biodiversity. The report reveals that there is significantly more spending on activities that damage biodiversity than on conservation and restoration efforts.
Globally, it says, governments are spending up to $7.3 trillion on subsidies that support activities driving biodiversity loss such as agriculture, fossil fuels, infrastructure and fisheries. Only 3 per cent of that amount (around $220 billion) is allocated to nature restoration, conservation and sustainable use. This indicates that damaging biodiversity is often seen as more profitable than conserving it.
“Business as usual may once have seemed profitable in the short term but the impacts across multiple businesses can aggregate to create global consequences that could cross ecological tipping points,” said Prof Stephen Polasky (USA), co-chair of the assessment.
The findings of the report emphasise that businesses and biodiversity are symbiotically dependent on each other. The report, ‘Methodological Assessment Report on the Impact and Dependence of Business on Biodiversity and Nature’s Contributions to People’ (also known as the Business and Biodiversity Report), was released by the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) following approval from its 150-plus member governments.
IPBES is an independent, intergovernmental body established in 2012 to provide evidence-based and policy-relevant information to decision-makers about the planet’s biodiversity, ecosystems and the benefits they offer to people.
The report finds that businesses are central to halting and reversing biodiversity loss. However, many companies often lack the information needed to address their impacts and dependencies, as well as the associated risks and opportunities concerning biodiversity and nature’s contributions to people. The 12th plenary session of IPBES prepared the report after three years of work by experts behind the assessment, providing over 100 options for improving business practices.
“The report shows that business as usual is not inevitable. With the right policies, coupled with financial and cultural shifts, what is beneficial for nature is also best for profitability,” said Polasky.
Business as usual scenario
The current circumstances perpetuate a routine approach that fails to inspire the bold and meaningful changes necessary to stop and reverse the alarming decline in biodiversity. For instance, large subsidies that drive biodiversity loss are directed towards business activities with backing from lobbying by businesses and trade associations. In 2023, global public and private finance flows that have direct negative impacts on nature were estimated at $7.3 trillion, with private finance accounting for $4.9 trillion and public spending on environmentally harmful subsidies totalling about $2.4 trillion. In contrast, only $220 billion was directed in 2023 towards activities that contribute to the conservation and restoration of biodiversity, representing just 3 per cent of public funds supporting harmful business practices.
Moreover, industrial development threatens 60 per cent of indigenous lands worldwide and a quarter of all indigenous territories are under high pressure from resource exploitation. However, indigenous people and local communities often find themselves inadequately represented in business research and decision-making.
Perverse incentives, barriers and opportunities
The report indicates that the current conditions under which businesses operate are often incompatible with achieving a just and sustainable future. These conditions can perpetuate systematic risks.
Many businesses encounter challenges that make it difficult to care for the environment. These challenges include poor incentives, obstacles hindering meaningful action, a lack of support and enforcement from institutions, and gaps in information and understanding.
Moreover, many business models focus on resource exploitation while prioritising short-term profits, which harms nature globally. However, the report highlights that significant changes are both possible and necessary. There is a need to foster an environment where what benefits businesses can also positively impact nature and people.
“This is a pivotal moment for businesses and financial institutions, as well as governments and civil society, to cut through the confusion of countless methods and metrics and use the clarity and coherence offered by the report to take meaningful steps towards transformative change,” said Matt Jones (UK), one of the three co-chairs of the assessment.