The World Economic Forum (WEF) is calling for a shift towards “nature-positive economy”, but will it own the role of big business in the climate and nature crisis and ensure the radical economic transformation needed?
This week 3000 leaders from business, politics and science are gathered at the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland, to discuss and debate solutions to key issues for business and the economy. This year the theme is ‘stakeholders for a cohesive and sustainable world’, with an emphasis on action to avert the climate and biological crisis. As one of the most influential events for guiding global economic and social development, there is hope that the meeting could nudge attendees towards the decisive action urgently needed to stabilise the climate and stem the tide of biodiversity loss.
In a report published on Sunday (Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy) the WEF describes the impacts of the nature crisis on business and the economy, and calls for a shift towards a "nature positive economy". The report recognises that major advances over the past half-century, such as the lifting of 1 billion people out of extreme poverty, have come at a heavy cost to nature: wild populations of birds, mammals, amphibians, fish and reptiles across the globe have declined by an average of 70% since the 1970s and 0.5 to 1 million species risk extinction over the coming decades. Yet the extent to which the advance of human society has depended on natural ecosystems has thus far been underestimated.
According to WEF estimates based on 163 economic sectors, all businesses depend on nature either directly or through their supply chains, and $44 trillion of economic value generation (over half of global GDP) is dependent on nature and its services (scored 2 out of 5 or above for a dependency rating). As nature continues to be destroyed and degraded, this puts businesses in an ever more vulnerable situation.
Many businesses are directly reliant on the goods or services provided by ecosystems. For example, the coffee sector had retail sales worth $83 billion in 2017 but risk being severely destabilised by the extinction coffee varieties through climate change, disease and deforestation. The coffee sector must take this prediction seriously and increase the sustainability of production, such as by growing coffee together with other trees and plant species in an agroforestry system, which in turn increases the diversity of insects for pollination amongst other benefits.
Even businesses that are less immediately reliant on nature for revenue are already experiencing reputational and legal risks. Both consumers and governments are increasingly aware of the scale of nature’s plight, and so legislation and demand are shifting towards more sustainable products. The fashion industry has recently been forced to take stock of public perception, with 250 brands signing the G7 Fashion Pact in 2019, committing them to increase efforts to curtail climate change and restore biodiversity. As the trend towards greater transparency continues, the costs will rise for businesses that do not ‘include nature at the core of their enterprise operations’.
But can we put a value on nature? Back in 2014, the financial value of nature (ecosystem services) was estimated to be $125 trillion per year (in 2011 $US), several times higher than the WEF’s most recent estimate. The WEF report concedes that their methods underestimate nature’s value, but they should be much clearer that this is the case. In the words of Michael Toman, any estimate of the financial worth of nature must be a “serious underestimate of infinity”. One cannot predict, for example, what scientific breakthroughs will be inspired by natural phenomena. It is therefore vital that biodiversity is intrinsically valued and its conservation is prioritised, even in the absence of demonstrable financial gain.
What must big business do?
This week the WEF is calling for transformational change, with a shift of policy and practice away from the traditional methods that have driven past economic growth, and towards a nature positive economy including ecosystem restoration, plant-based diets, regenerative agriculture and food waste reduction. The WEF report calculates that this transition in the food and land-use sector alone would provide $4.5 trillion in business opportunity annually.
More than 870 organisations, with a combined market capital of $9.2 trillion and financial institutions responsible for $118 trillion in assets have already adopted the Climate-related Financial Disclosures framework for identifying, measuring and managing climate risks. The WEF proposes that businesses adopt a similar framework for addressing nature-related risk, though it remains to be seen to what extent this will translate into sustainable and equitable practice. Some recent developments might signal the beginning of transformative change needed: the UK government’s post-Brexit agricultural policy will reward farmers for enhancing ecosystem services such as soil restoration. Also, the tech giant Microsoft has pledged to be carbon-negative by 2030. Whilst this is good news, we must ensure that these commitments are met using methods that are based on sound biodiversity science and recognise the real risks that already-marginalised people, including those living in poverty, will shoulder the burden of transformation.
A major concern is companies using carbon offsetting through tree planting to give themselves a greener public image. Such schemes distract attention from the need to reduce greenhouse gas emissions, primarily through drastic cuts in fossil fuel use. Planting trees can sequester carbon, benefit biodiversity, and provide manifold ecosystem services such as improved water security and reduced soil erosion. However, these benefits are only realised if we protect and restore diverse native ecosystems rather than planting monocultures that lack resilience to drought and disease, and are inferior long-term carbon stores. We must cherish and restore a diverse set of ecosystems to reap the most benefit for people and nature.
Although the message from the WEF is broadly in line with the scientific consensus, recognising that there must be a shift towards long-term sustainability in the business world, it is far from a guarantee that major financial powers will follow their guidance. Norway provides a stark example of the severe shortfall in action to combat climate change and nature loss; despite subsidising electric cars, banning deforestation, and pledging to be carbon neutral by 2030, the nation is the second-biggest oil producer in Europe, generating two million barrels of climate change-accelerating oil each day. 100 companies are responsible for 71% of greenhouse gas emissions emitted since 1988. Whilst informed consumers have a responsibility to reduce their personal emissions by not purchasing from polluting and destructive companies, the majority of the power to reduce global emissions rests in the hands of business and political leaders.
The central placement of nature in the 2020 WEF hints at the hope of turning the tide on climate change and biodiversity loss. However, big business must own up to the huge role they have played in these crises and act accordingly. They must decarbonise their operations, defund deforestation, invest in biodiverse Nature-based Solutions and ensure that, across all their supply chains, they have an overall positive impact on nature and society.
This opinion piece reflects the views of the author, and does not necessarily reflect the position of the Oxford Martin School or the University of Oxford. Any errors or omissions are those of the author.