The world is reportedly in danger of losing 10% or more of its total GDP by the end of the century. This is the top takeaway from a recent stress-test study by Swiss Re that looks at the consequences of failing to address climate and environmental risks.
To put that into perspective using the most recent economic and human tragedy, the Covid-19 pandemic trimmed a full 6% of global GDP in 2020, World Economic Forum said citing two analysts. This is widely seen as an economic catastrophe.
So what are countries and companies doing to safeguard against an even more precipitous decline in wealth?
This question comes at a moment when environmental impacts are growing too severe and costly to ignore. With the Arctic Circle sweltering at 48C, species in decline globally and shareholders demanding new approaches, this is an opportune moment to launch the green recovery and pave the way towards sustainable development and lasting prosperity.
“Yet, even with profit in the green recovery, we are not on track to seize this transformative moment. For private-sector leaders, questions remain. Many know that action is needed, but beyond obvious action like energy efficiency and clean energy, potential solutions and their value are less obvious,” noted André Hoffmann, vice-chairman, Roche, Switzerland and Katell Le Goulven, executive director, Hoffmann Institute, INSEAD.
Potential solutions will be in focus at upcoming meetings of governments and development stakeholders. Protecting nature contributes to the stable environment that is a foundation for growth. For companies and countries looking to gain a competitive edge, investing in biodiversity preserves stability and provides a significant competitive advantage.
Biodiversity is emerging as an area of interest for firms looking for that first-mover advantage, WEF noted. Simply put, healthy ecosystems are needed for healthy growth. As much as we need a stable climate, we must protect oceans and forests and the life that fills these habitats.
This may sound more like a science project or protest march than a business strategy, but forward-thinking business leaders understand that nature and economics are inextricably linked. A recent report found that half of global GDP depends on healthy ecosystems rich with biodiversity.
Pollinators like bees and hummingbirds enable agricultural production. Drugmakers look to nature to innovate new medicines. Tourists flock to natural parks and beautiful beaches. Fishermen feed billions per day from the world’s oceans.
“Clearly, our business models rely on the natural world,” they noted.
The next business frontier lies at the intersection of climate change and biodiversity, and those accounting for nature as a whole will know how to manage risk, meet demand and scale up as the world transforms.
Visionary leaders have sound business reasons to protect, sustainably manage and restore ecosystems to deliver sustained and sustainable growth. In 2021, momentum is building in support of innovative business models and solutions in harmony with the natural world.
Clearly, industry leaders need to change the measures
of growth, bring the true value of nature into market
pricing and ensure demands on nature do not exceed the ability to supply.
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