A Biodiversity Crisis is Evolving, Now is the Time for Businesses to Act

By KPMG's Biodiversity Lead – EMA, Orlaith Delargy

A month ago, the United Nations Climate Change Conference (COP27) was held in Sharm el-Sheikh, Egypt followed by another crucial conference in Montreal.

In contrast to COP27, which tried to find answers to the global climate catastrophe, the Canadian gathering is centred on nature and biodiversity. The CBD COP-15 meeting, also known as the UN Biodiversity Conference, may not garner as much media attention, but its significance for the future of our planet cannot be overstated.

Biodiversity, or the variety of all life on Earth, is threatened. Climate and nature are interdependent. The climate emergency cannot be resolved without also addressing the natural emergency. The human population is exceeding the planet's inherent capacity to adapt, hence raising the risk of irreversible environmental and societal disruption. Global biodiversity is declining despite ongoing efforts, and this reduction is anticipated to accelerate under present business-as-usual scenarios. And we know that climate and nature are intricately linked: we cannot achieve net zero without stopping and reversing the loss of biodiversity.

The Montreal summit, which has already been postponed twice, is viewed as the last opportunity to agree on a "post-2020 global biodiversity framework" — a set of targets to restore nature over the following decade. By 2050, the ultimate goal is to realize a shared vision of living in balance with the environment.

All of this may appear unrelated to the boardroom agenda. However, businesses in all sectors of the economy are likely to be impacted by biodiversity loss. By depleting nature, we not only lose species and ecosystems, as well as the awe and inspiration they give, but we can also create physical, transitional, and systemic hazards for the economy and the stability of the financial system itself.

Central bankers and finance ministers acknowledged the responsibility of financial policymakers, supervisors, and regulators in 'bending the curve' of nature loss and preventing the manifestation of financial-stability issues related to nature loss in 2022.

To account for these risks, market prices for goods and services must better represent the advantages offered by nature and ecosystem services, which are now undervalued. In fact, KPMG research indicates that fewer than half of businesses view biodiversity loss as a threat to their operations. Data on biodiversity is a significant obstacle here. Unlike carbon, which is reasonably simple to quantify, biodiversity lacks a single metric, and data is complex and not standardized.

The regulatory landscape pertaining to these concerns is continuously evolving, and organizations that engage now may be better placed to deal with these alterations. For instance, one of the proposed targets up for negotiation in Montréal would require businesses and financial institutions to examine and publish their impacts on the environment, as well as to take steps to decrease such impacts. Taskforce for Nature-related Financial Disclosures and Finance4Nature provide suggestions on how to accomplish this.

It is anticipated that a record number of corporate sector representatives would attend COP-15, and their participation will provide urgency to the Montreal debates. The time has come for CEOs and other corporate leaders to take up and alter our economy and society. KPMG is pleased to be sending a delegation to Montreal alongside more than ten thousand other delegates, including political and non-profit leaders.

Orlaith Delargy is the EMA Bioadversity Lead at KPMG.