Nature as an asset the relevance of biodiversity

Key arguments

• Nature is a critical asset underpinning economic activity; ecosystem services such as clean water, fertile soil, pollination and climate regulation support business continuity and supply chains.
• Companies with high exposure to biodiversity loss or ecosystem disruption along the value chain may face operational, reputational and supply chain risks that could be financially material.
• Nature-related risks are location-specific because ecosystem degradation tends to be localized, so the same sector can face very different water and biodiversity risk depending on geography.
• Much of a company's nature dependency sits in its supply chain rather than direct operations, making value-chain mapping central to assessment.

Corresponding source evidence

1. See box of definitions on page 6 for definitions of nature-related terms used throughout the document.
2. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) estimates that more than half of global gross domestic product— over $50 trillion of annual economic activity around the world 3 —is moderately to highly dependent on nature.
3. 4 When ecosystems fail to deliver the services on which a company relies, its dependency on nature could give rise to financial risks, such as increased costs, reduced production and disrupted supply chains.