Truth At The Bottom Of The Glass: Why Business Must Act To Protect Biodiversity – OpEd

Drinking a pint in a pub may not feel like a nature-dependent activity, but it is. Like countless other consumer purchases, from clothing to mobile phones, many of the inputs that brewers need to make beer derive from the natural world. In fact, the market economy can be thought of as a system of creating wealth from applying human ingenuity to the gifts that nature provides us, harvest the bounties of nature, and bring them to market to trade for a profit. 

As technology and other processes have made the wealth creating process more efficient they have also increased the apparent distance between the economy and the environment. But dig deep enough into any value chain and eventually you end up where we started: transforming environmental resources into states that facilitate human consumption. 

In fact, biodiversity — the variety of life on earth from genes to ecosystems — underpins the economy to a scale of £44 Trillion, according to the World Economic Forum. Numbers this large tend to be hard to relate to, but this is not meant as a hypothetical but is, in fact, a measure of economic activity equivalent to around half of the global economy that is explicitly linked to the environment. Broaden the definition of “value”, and the real number may be even larger. 

Biodiversity loss is not just an environmental issue — although it is a vitally important one — but is also an economic one. A vast amount of the wealth created by the economy is not only dependent on the environment, it is also at risk where nature is vulnerable — and nature faces a number of threats including from climate change, land use, pollution, invasive species, and over-extraction. 

This understanding of biodiversity as a fundamental component of wealth creation is driving a rapid awakening in business’ attitudes and activities in response to biodiversity loss, and it’s not just sectors that are more obviously reliant on the environment, such as agriculture or tourism, but businesses in almost every sector via their extended value chains.

In fact, there are ongoing initiatives to include business-critical nature-related information in company financial disclosures, making them an explicit concern on which management would be expected to act. This acknowledges that a company’s impact on nature and its dependence on nature are intricately linked to the financial and commercial viability of its business activities.

So, back to that pint. Beer is made of hops, barley, yeast, and water. Hops are a flower and barley is a grain. Along with being a part of biodiversity themselves, they require good soil, sufficient water cycles, and pollinators to grow, while yeast is also a biological component. Water is required for the beer itself as well as for several parts of the brewing process — and a regular supply of clean water depends on nature. Much of this might seem obvious.

But what about the transportation to bring the beer to the pub? The tyres may be made from natural rubber, and the metals for the electronics in the dashboard extracted from sensitive environments. The roads required to distribute the kegs might be subject to flooding, exacerbated by the removal of forests upstream. Perhaps the sand to make the pint glass is sourced from fossil beaches or lake beds. The pub itself? Perhaps it’s made of timber. How about those birds singing in the trees in the pubs garden? The list could go on. Some aspects might seem a stretch, or of relatively small concern, but taken in aggregate across the economy, they are not.

The different ways that ecosystems support human wellbeing, including via the economy, are often called ecosystem services. These ecosystem services are provided by the environment for free. However, without an associated financial cost, they are often treated as ‘value-less’, and therefore not properly incorporated into decision making. Greater consideration of the value that biodiversity provides will go a long way towards ensuring it is protected.

As a start, business managers should consider how their value chain is linked to the environment, what impact they have on it and what exposure they have to different types of risks. Not just because they care for the environment (hopefully they do), but because it’s a material business concern. It won’t always be obvious: vulnerabilities might come from unexpected places several steps away from the business, be that in specific sectors in specific locations exposed to specific risks. A forward-looking business will want to consider not just what that impact and exposure looks like today, but what it is likely to look like in five, 10, 20, or more years.

The upcoming UN Biodiversity Conference (COP15) is part of a much-needed process to bring governments, business and other stakeholders together to raise awareness and facilitate coordination on addressing biodiversity. The challenge will require numerous stakeholders acting together, and business leaders should share the same level of urgency towards biodiversity loss as is increasingly becoming the norm for issues around climate change. It’s an economic imperative as well as an environmental one.   

Next time you are drinking a pint, or enjoying any number of other products of the economy for that matter, spare a moment to consider all the ways that nature might have contributed to that moment, and perhaps offer a “cheers” to biodiversity!

Jake Kuyer is Associate Director of Economics & Sustainability at Oxford Economics