What drives some companies to voluntarily adopt biodiversity actions? To what extent can the actions be scaled up, and how?
Biodiversity investing is yet to be a prominent feature across the corporate universe, according to a report authored, through Imperial Consultants, by Dr Pernille Holtedahl, Dr Alexandre C. Köberle, Dr Iva Koci and supported by Impax Asset Management. However, it is climbing higher on the agenda. As well as investing, corporate action on biodiversity may occur via other routes such as interventions in the value chain or biodiversity policies which can be a precursor for actual investments. Many biodiversity actions are connected to other Environmental, Social and Governance (ESG) objectives like climate action, social justice, transparency, and compliance. It is often difficult to disentangle these objectives and the motivations behind them.
The case studies in this report illustrate how biodiversity is embedded into broader strategic or commercial objectives. The concept of resilience (environmental and financial) and how biodiversity may directly or indirectly contribute to it is often embedded, even if implicitly, in corporate thinking. It appears that biodiversity is pursued only when it delivers co-benefits or win-win outcomes alongside other objectives. These case studies show that corporations do take action where biodiversity appears alongside multiple co-benefits.
This report indicates most corporations will not act on their own on biodiversity, and certainly not at the scale required. Policymakers will have to address the market failure and public goods nature of biodiversity through stronger regulation or incentives driving corporate action. Government incentives should seek to encourage further action, but also identify the types of biodiversity and related outcomes that sit outside this “sweet spot” and therefore might require further incentives.
The possibility of introducing a biodiversity incentive or penalty could be explored but a global ‘biodiversity price’ along the logic of a global carbon price is unlikely to be the right path. The report also reflects the authors believe governments can drive corporate behaviour through strengthening existing environmental licensing regulation and by making nature-related disclosures mandatory. None of these actions on their own will get us to where we need to be, but together they will push us in the right direction.