The cost of immense biodiversity loss now poses a critical and pervasive systemic risk to the economy, financial stability, and human wellbeing, according to a new report published by the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES).

The organisations said even companies that might seem far-removed from nature or that do not see themselves as nature-based rely, directly or indirectly, on material inputs, regulation of environmental conditions – such as flood mitigation and water supply – and non-material contributions such as spaces for tourism, recreation, education, and spiritual, aesthetic and cultural values. But businesses often bear little or no financial cost for their negative impacts and many cannot currently generate revenue from positive impacts on biodiversity.

Approved by representatives of the more than 150 member Governments of IPBES, during the 12th session of the IPBES Plenary, hosted in Manchester, United Kingdom, the IPBES Methodological Assessment Report on the Impact and Dependence of Business on Biodiversity and Nature’s Contributions to People (known as the Business and Biodiversity Report), found that businesses are central to halting and reversing biodiversity loss, but that many often lack information to address their impacts and dependencies, as well as the risks and opportunities relating to biodiversity and nature’s contributions to people.

Prepared over three years by 79 leading experts from 35 countries and all regions of the world, drawn from science and the private sector, in consultation with Indigenous Peoples and local communities, the Report finds that the current conditions in which businesses operate are not always compatible with achieving a just and sustainable future, and that these conditions also perpetuate systemic risks.

The report added: “Businesses often face inadequate or perverse incentives, barriers that hinder efforts to reverse nature’s decline, an institutional environment with insufficient support, enforcement and compliance, as well as significant gaps in data and knowledge. These combine with business models that result in ever-increasing material consumption and an emphasis on reporting quarterly earnings, to contribute to the degradation of nature around the world. The Report makes the point that fundamental change is possible and necessary to create an enabling environment to align what is profitable for business with what is beneficial for biodiversity and people.”

“This Report draws on thousands of sources, bringing together years of research and practice into a single integrated framework that shows both the risks of nature loss to business, and the opportunities for business to help reverse this,” said Matt Jones (UK), one of three co-chairs of the Assessment. “This is a pivotal moment for businesses and financial institutions, as well as Governments and civil society, to cut through the confusion of countless methods and metrics, and to use the clarity and coherence offered by the Report to take meaningful steps towards transformative change. Businesses and other key actors can either lead the way towards a more sustainable global economy or ultimately risk extinction…both of species in nature, but potentially also their own.”

It added: “Current conditions perpetuate business-as-usual and do not support the transformative change necessary to halt and reverse biodiversity loss. For example, large subsidies that drive losses of biodiversity are directed to business activities with the support of lobbying by businesses and trade associations. In 2023, global public and private finance flows with directly negative impacts on nature, were estimated at $7.3 trillion, of which private finance accounted for $4.9 trillion, with public spending on environmentally harmful subsidies of about $2.4 trillion.

“In contrast, $220 billion in public and private finance flows were directed in 2023 to activities contributing to the conservation and restoration of biodiversity, representing just 3% of the public funds and incentives that encourage harmful business behaviour or prevent behaviour beneficial to biodiversity.”

“The loss of biodiversity is among the most serious threats to business,” said Prof. Stephen Polasky (USA), co-chair of the Assessment. “Yet the twisted reality is that it often seems more profitable to businesses to degrade biodiversity than to protect it. Business as usual may once have seemed profitable in the short term, but impacts across multiple businesses can have cumulative effects, aggregating to global impacts, which can cross ecological tipping points. The Report shows that business as usual is not inevitable – with the right policies, as well as financial and cultural shifts, what is good for nature is also what is best for profitability. To get there, the Report offers tools for choosing more effective measurements and analysis.”