A growing number of businesses are striving to hit net-zero emissions targets to benefit their brands, comply with current and future regulations, and improve their bottom lines. As climate risk management and reporting have evolved and have become mandated and standardized, companies taking proactive approaches to emissions tracking and reduction should look ahead to the next frontier of sustainability regulation. Just as tracking corporate GHG emissions began as a voluntary action that gradually became required by regulators, considering and measuring impacts on biodiversity is quickly entering mainstream corporate practice.
Biodiversity loss is a global crisis that’s inextricably linked to the climate crisis, and forward-looking companies are embracing the opportunity to mitigate their contributions to both crises at once. Incorporating biodiversity and other environmental considerations beyond decarbonization initiatives into business strategies isn’t just about compliance or ethics—it’s fundamental to future-proofing businesses and ensuring long-term sustainability and profitability.
Regulatory landscape on biodiversity
Similar to the regulation of emissions and climate risk, the regulatory environment for biodiversity is evolving. Nature-related climate risk follows the same trajectory as emissions-related risk—it’s just trailing behind in its broad adoption. In 2015, the Financial Stability Board (FSB), an international body responsible for monitoring and making recommendations regarding the global financial system, released the Taskforce on Climate-related Financial Disclosures (TCFD) framework, which set a precedent for public companies to disclose climate-related risk. In 2023, the FSB released its Recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), which asserted that “nature risk, beyond climate change, is financial risk.”
Meanwhile, the EU’s CSRD, also implemented in 2023, embedded emissions reporting in disclosure requirements for public companies and included requirements for biodiversity measurement and reporting. These evolutions have shown how biodiversity protections follow this trajectory—starting with investor- and stakeholder-driven pressures—and will eventually evolve into regulatory mandates, just as we've seen with emissions-related climate risk.
International leaders, academics, and policymakers agree that enhanced biodiversity protections are urgently needed. In parallel with GHG emissions reduction efforts, a landmark example of the increasing focus on biodiversity is the 15th Conference of the Parties (COP15) of the U.N. Convention on Biological Diversity (CBD), which took place in Canada in December 2022. Established in 1992, the CBD represents the first global agreement to cover all aspects of biological diversity. COP15, which convened all of the states that have ratified the treaty, resulted in the Kunming-Montreal Global Biodiversity Framework (GBF) being unanimously adopted and signed by 196 member nations. The GBF marked a historic commitment to nature preservation, including four global goals and 23 targets. The agreement has been referred to as the "Paris Agreement for Nature.”
At the national level, Canada had previously opened its Offsetting Policy for Biodiversity, an initiative aimed at achieving “the goal of no net loss of biodiversity within Environment and Climate Change Canada’s mandate,” for public comment. These offsets, or carbon credits, will function as financial tools that incentivize the protection and restoration of natural habitats by assigning them an economic value analogous to the purpose of carbon credits. This system will allow businesses to purchase credits to fund biodiversity projects while complying with emerging regulatory requirements. Much like corporate emissions reduction strategies reduce regulatory and reputational risks, aligning with the global trend toward environmental conservation and restoration enhances a company’s ability to weather new environmental regulations and market fluctuations.
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The business case for biodiversity
These global regulatory developments mirror a broader market trend that will influence future regulation, and businesses should be prepared with comprehensive strategies for managing their impact on nature. Just as reducing carbon emissions is crucial for companies to comply with regulatory pressures and maximize value, integrating biodiversity into risk management strategies mitigates environmental risks and unlocks strategic business advantages.
Sustainability is no longer just a box to check—it is a tool to enhance value creation and resilience.
Today’s climate and emissions regulatory schemes foreshadow a future in which regulators will take a similar approach to broader ecological impact. Businesses, supply chains, and economies depend on natural resource availability, and corporate strategies at the forefront of sustainability are moving beyond climate-related analyses.
According to the World Economic Forum, over 50% of the world’s GDP—that’s $44 trillion—is moderately or highly dependent on nature. That means biodiversity loss directly affects businesses, underscoring the economic importance of ecological services. A proactive approach to biodiversity conservation improves long-term operational resilience for businesses, protecting sustained access to essential resources.
Strategies for integrating biodiversity into business planning
Integrating biodiversity considerations into sustainability and business strategy begins with understanding a company’s impacts on ecosystems. Often, companies have a direct stake in preserving biodiversity. A clear example is a pharmaceutical company that relies on horseshoe crab blood as a raw material for endotoxin detection. The overharvesting of this resource has not only threatened the survival of the species throughout southeast Asia but has also put an entire sector’s operations at risk. The exploitation raised attention for sustainable resource management practices, and regulations are the sole reason for stabilizing previously threatened horseshoe crab populations. This risk exposure called for increased investment in the maintenance of the species by corporate entities.
Another example of industries’ role in protecting biodiversity is the increasing need for sustainable fishing practices. Fish is a primary form of protein for over a third of the global population, with wild fisheries supporting the livelihood of 60 million people worldwide. About 35.4% of Earth’s fish stocks have been overfished, putting marine life and the food security and economic stability that the fishing industry provides at risk. While regulatory constraints, such as increasing protected marine areas and enforcing sustainable fishing quotas, help address this challenge, fishing companies can mitigate their impacts by integrating sustainable practices. For example, selective fishing techniques can help to avoid bycatch (unwanted catches that end up as waste and impact marine ecosystems). Implementing sustainable fishing techniques helps conserve marine life while ensuring the long-term viability of the fishing industry by maintaining the health and productivity of ocean ecosystems.
While companies work toward accounting for their greenhouse gas emissions-related impacts, new challenges are ahead, and they are rooted in the natural world and biodiversity. Just as the transition to low-carbon operations has become a marker of a future-proof business, embedding biodiversity considerations into business will define the next era of corporate leadership. Together, emissions reduction and biodiversity protection strategies boost a company’s resilience against climate and environmental-related risks while preparing it for an evolving market and regulatory environment.
Sources
1. Financial Stability Board, https://www.fsb.org/
2. Taskforce on Nature-related Financial Disclosures, “Recommendations of the Taskforce on Nature-related Financial Disclosures,” https://tnfd.global/wp-content/uploads/2023/08/Recommendations_of_the_Taskforce_on_Nature-related_Financial_Disclosures_September_2023.pdf
3. Government of Canada, “UN Biodiversity Conference: COP15 in Montréal,” https://www.canada.ca/en/services/environment/wildlife-plants-species/biodiversity/cop15.html
4. Convention on Biological Diversity, "The Biodiversity Plan.” https://www.cbd.int/gbf
5. United Nations Environment Programme, “Global Biodiversity Framework and the finance sector,” https://www.unepfi.org/nature/gbf-finance-sector/#:~:text=The%20Kunming%2DMontreal%20Global%20Biodiversity,at%20COP15%20in%20December%202022.
6. Government of Canada,“Share and view ideas: Offsetting Policy for Biodiversity,” https://www.canada.ca/en/environment-climate-change/services/biodiversity/share-view-ideas-offsetting-policy-biodiversity.html
7. World Economic Forum, “Half of World’s GDP Moderately or Highly Dependent on Nature, Says New Report,” https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly-dependent-on-nature-says-new-report/
8. The Horseshoe Crab, “Achieving Sustainability,” https://horseshoecrab.org/achieving-sustainability/
9. The Food and Agriculture Organization of the United Nations, “The State of World Fisheries and Aquaculture,” https://www.fao.org/publications/home/fao-flagship-publications/the-state-of-world-fisheries-and-aquaculture/2022/en
10. Marine Stewardship Council, “Oceans at risk,” https://www.msc.org/what-we-are-doing/oceans-at-risk
