The 5 Biggest Drivers of Biodiversity Loss
Biodiversity loss is a pressing environmental issues facing our planet today, with significant impacts on ecosystems, and the global economy, as well as on human well-being. Despite increasing levels of attention on the topic of nature loss over the past few years, there is still limited understanding of how loss of nature affects business. In part, this lack of understanding is due to hidden or incorrectly priced-in supply chains. But, with a growing awareness about the interlinkages between biodiversity and business, this is about to change.
Overall, there are three ways in which the destruction of biodiversity and ecosystems create risks for businesses:
Dependency of business on nature: when businesses depend directly on nature for operations, supply chain performance, real estate asset values, physical security and business continuity
Fallout of business impacts on nature: when the direct and indirect impacts of business activities on nature loss trigger negative consequences, such as losing customers or entire markets, costly legal action and adverse regulatory changes, or
Impacts of nature loss on society: when nature loss aggravates the disruption of the society in which businesses operate
Given that more than half the world’s total GDP is moderately or highly dependent on nature and ecosystem services, by not managing nature, businesses are increasing their risk exposure to these risks.
Whilst the main sector that comes to mind when thinking about biodiversity loss is ‘Agriculture’ there are far more sectors significantly impacted due to non-direct factors. These include the chemicals and materials; aviation, travel and tourism; real estate; mining and metals; supply chain and transport; retail, consumer goods and lifestyle in which less than 15% of their direct Gross Value Added (GVA) are highly dependent on nature. But, they also have “hidden nature dependencies” through their supply chains, wherein more than 50% of the GVA of their supply chains is highly or moderately dependent on nature.
This article, however, will focus on the 5 direct causes of biodiversity loss, as stated by The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), and the types of risks this can pose for businesses.
The 5 direct drivers of biodiversity loss as:
Changes in Land and Sea Use
Climate Change
Direct Exploitation of Organisms
Air Pollution
Invasive Alien Species
1.. Changes in land and sea use
Changes in land and sea use is widely touted as the largest cause of biodiversity and nature loss.
Whilst deforestation rates are generally considered to be reducing; this pattern varies across countries. For example, China has seen high afforestation due to conservation and restoration over the past 30 years. However, Brazil has conversely continued to see significant deforestation - despite its conservation policies.
In addition to deforestation, another significant cause in changed land use is urban expansion. City areas have doubled in size from 1992 - 2015; expanding into green spaces. As urban areas have grown there has been a significant negative impact on the health of tropical and subtropical ecosystems; savannahs, grasslands and scrublands. And, as such we are now seeing the introduction of new biodiversity laws across the UK and Europe, and other regions as well.
The change in land use is compounded by the intensification of land use. This intensification has led to progressive changes in ecosystem functions and, in cases, irreversible changes, which is often, found to later result in land abandonment. This intensification is, in part, due to technological advances in agriculture, fisheries, aquaculture, and forestry over last 50 years.
All of this can lead to systemic risks for businesses. These risks arise when a natural system no longer functions; a tipping point is reached leading to collapse of that natural ecosystem, resulting in wholesale geographic or sectoral losses.
2.. Direct Exploitation of Organisms
To support an increasing human population on this planet, and a growing wealthier global population, the extraction of biomass and materials is also seen to be increasing. As wealth increases, so does consumption, and so not only are we seeing more consumption because there are more people on the planet, we are seeing compounded consumption because the population is also more intensively consuming those resources.
This leads to exploitation of resources in the form of overfishing, hunting, and logging that exceeds natural regeneration rates, pushing species toward endangerment or extinction.
This results in chronic physical risks for businesses that are dependent on ecosystem services. E.g. loss of crop yields due to decline in pollination services, drought, or soil salination. Leading businesses, however, are increasingly recognizing the value and fragility of critical ecosystems, and are beginning to rethink their strategies and value chains, and innovating to reduce their negative impacts on nature.
3.. Climate Change
Climate change is currently a major driver of change in nature, with strong direct global impacts. Climate change sees rising temperatures, shifting weather patterns, and extreme events that disrupt ecosystems, forcing species to adapt, migrate, or face extinction. What makes climate change such a problem is that it also affects the other four drivers captured here.
In 2017, human-induced warming reached roughly 1 degree above pre-industrial levels. In general, we’re seeing that most land regions are warming faster than the average, most ocean regions slower (UNFCCC, 2015). And with further rises expected this will cause thermal stress. We’re already seeing this through coral bleaching, and the melting of sea and land ice.
Evidence of long-term geophysical and biological changes due to warming is now more clear in many parts of the world. This results in both Acute Physical Risks for companies such as needing to respond to increasing and exacerbated natural disasters due to loss of protection from coastal ecosystems (coral reefs, mangroves, wetlands etc.), or due to increased damage from storms and floods. As well as Financial Contagion Risks, where one or more financial institutions, linked to unmanaged exposure to nature-related risks, spills over to the financial system as a whole.
4.. Pollution
Pollution comes in many forms. This includes, chemicals, plastics, and waste, which degrade natural environments, causing harm, or poisoning species, as well as reducing air, soil, and water quality.
Air Quality
Population growth, economic activity, energy consumption and technology drive anthropogenic greenhouse gas (GHG) emissions − such as carbon dioxide (CO2), nitrogen oxide (NOX), and sulphur dioxide (SO2) − that trap heat in the atmosphere and contribute to global climate change.
Unsurprisingly, all countries across the globe have shown an increase in air pollution. Whilst this consistent rise in GHG emissions is causing negative impacts on human health. It can also disrupt the delicate balance of habitats, and can cause alterations to habitats so that species are then forced to migrate to new areas, adapt to new conditions, or face extinction if they cannot adjust quickly enough.
Water Quality
Water quality has also fallen over the last five decades, causing key environmental and societal impacts. Major sources include untreated urban sewage and industrial and agricultural run-off, erosion, airborne pollution, and salinization, as well as oil spills and dumping of substances into the oceans.
It is estimated that over 80% of urban and industrial wastewater is released to freshwater systems without adequate treatment. This can cause habitat degradation as pollutants from untreated sewage, industrial and agricultural runoff, and other contaminants degrade freshwater and marine habitats, making them inhospitable for many species.
Chemicals and Solid Wastes
Chemicals and heavy metals in untreated wastewater and industrial pollution can be toxic to plants and animals. These substances accumulate up the food chain, poisoning species at higher trophic levels, including fish, birds, and mammals, causing long-term health issues or death.
Solid wastes have impacts at different scales. At the regional and global scales, solid waste emits methane, contributing to climate change, and produce leachates, which contaminate the soils and aquifers. Every type of disposal (incinerating, recycling, down-cycling) produces adverse environmental impacts, e.g., all of them contribute to GHG emissions in different ways.
Combined, these impacts on biodiversity may represent both Policy and Legal and Reputation risks for companies. The introduction of new regulations or policies, e.g. new water quality requirements or increased land/ marine area protections will require more compliance effort. And company reputation may also become more heightened as changing societal, customer or community perceptions change as a result of an organization’s role in nature loss.
5.. Invasive Alien Species
The number of established alien species, as well as their rates of invasion, have risen during the last century. Major drivers of invasions are expansions of trade networks, higher human mobility, continuous habitat degradation and climate change. These alien species threaten native species and destabilise ecosystem services. So much so, that nearly one fifth of the Earth’s surface is at risk of plant and animal invasions − including many biodiversity hotspots (IPBES, 2018a). Outbreaks of invasive pests and diseases are a common cause of nature loss threatening the survival of commercially important crop species with low genetic diversity.
The cumulative number of alien species that have been recorded is rough 40 times greater within developed countries rather than developing countries, due in part to trade and population, but also due to detection capacities. Thus it’s not surprising to learn that while the current recorded levels of alien species in Europe, Central Asia, the Americas, Asia and the Pacific are all similar, levels of alien species in Africa are lower. And so, Invasive Alien Species (IAS) hotspots are often found in developed countries within North America, Europe and Australasia.
The de-stabilization of biodiversity due to invasive species presents a market risk for businesses. Businesses may need to shift supply, and are likely to see changing and more volatile demand due to changes in the ecosystem, as well as more demand form financial institutions. For example, ratings agencies have started to include nature-related disclosures in their assessments, while institutional investors are demanding more accountability in terms of the environmental risks of business operations. This means companies will incur higher costs of capital when engaging in nature-degrading practices.
Conclusion
For long term planetary success, the Earth’s rich diversity of plants, animals, and microorganisms, which forms an intricate connected web needs to maintain balance with its ecosystems to sustain life. Therefore, biodiversity loss is not just an environmental issue—it’s a crisis that impacts the stability of ecosystems, economies, and human health across the globe. As habitats shrink, species decline, and ecosystems become unbalanced, businesses lose invaluable ecosystem services, from clean air and water to food security and disease regulation. Climate change, pollution, habitat destruction, and invasive species all contribute to a world less resilient to future environmental and economic challenges.
But, we have the power to change course. It’s not all bad. The World Economic Forum’s research shows that the shift towards nature-positive business models could generate $10 trillion in annual business opportunities and create 395 million jobs by 2030.
The shift toward nature-positive practices not only benefits the planet but also holds significant economic promise. By embracing sustainable strategies, businesses can unlock trillions in opportunities and create millions of jobs, leading to a healthier planet and a stronger economy.
It’s time to act—each of us can make a difference by supporting policies, and practices that factor in biodiversity. Together, we can protect the web of life that sustains us all.
