McKinsey Quarterly reports on the results of a new survey that asked what issues were of greatest concern to leading firms. The survey found that climate change, pollution, and water scarcity remain top concerns, but that biodiversity loss, including reductions in the ”diversity of species, variety of ecosystems, and variability of genes” is a major emerging issue. While diminishing biodiversity is seen as a growing threat to business, interestingly, some 59 percent also see enormous opportunities in that threat, such as using renewable energy to limit negative impacts on ecosystems and preserving or even strengthening biodiversity through corporate do-gooder programs. In comparison, a few years ago, few saw climate change as an opportunity, only as a major threat.
According to McKinsey Quarterly, climate change, pollution, and human rights still top biodiversity in the list of key issues:
However, more than 50 percent of firms are now taking “some action” on biodiversity. “Notably, among those, the two most frequent steps are communicating about their companies’ use of renewable natural resources and changing operations to reduce such use—even in industries that are not highly regulated and whose operations don’t have much direct impact on biodiversity.” It seems many firms see value in putting out the message that they aren’t contributing to biodiversity loss.
Also, a relatively small group say biodiversity impacts will negatively affect their firm in the next few years. “Only 12 percent of respondents say their companies face a significant risk of a shortage of crucial inputs to their products resulting from biodiversity issues; those in energy and manufacturing are the most concerned. Much larger shares say they will face pressure to change operations or products and services to reduce their impact on biodiversity.”
As noted, more than half of firms see creating new products and services from renewable natural resources as key opportunities. However, for the majority of these firms, more ecosystem-friendly products and services remain in the early idea phase — “Among all respondents, only a quarter have a formal biodiversity policy or strategy, and only 22 percent have formal targets. Among those with any formal target, 62 percent have operational ones, and only 27 percent have financial ones.”
Many firms see consumers and regulators as key drivers of change in businesses’ approach to biodiversity. If they increase the pressure on companies like they have on climate change, there may be more movement towards ecosystem-supportive products and services. A number of companies also called for tax incentives or direct subsidies to encourage conservation and voluntary standards for renewable natural resource use. However, only “less than a quarter say their companies would support mandatory standards or reporting.”
2010 is the UN Year of Biodiversity. To learn more about the value of biodiversity, check out two important initiatives: the Economics of Ecosystems and Biodiversity (TEEB), “a major international initiative to draw attention to the global economic benefits of biodiversity,” and the Natural Capital Project, which seeks to align economic interests with conservation.
Image credit: (1) Amazon Rainforest Deforestation, Daniel Beltra/Greenpeace (2) McKinsey Quarterly
