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i4n The Earthshot Prize 2023

TNFD: Taking into account
business’ dependency on nature

Remember in a previous article we told you that only 5% of Fortune Global 500 companies have set biodiversity-related targets and assessed their impacts on nature? Well, even more worrying, is that less than 1% of these companies understand their dependencies on nature.

Dependencies: aspect of ecosystem services that an organisation or other player relies on for operations and business continuity. These dependencies can be direct or through the organisation’s supply chain.

Companies with no land or natural resources as their primary material tend to think that their organisation is not dependent on nature. They are wrong. Many companies depend on nature without full realisation. A change in the natural resources stock or ecosystem services production on which a company rely directly or indirectly through its supply chain will influence the costs and benefits of the later and hence turn into risks or opportunities for the company. A WEF research shows that $44 trillion of economic value generation is moderately or highly dependent on nature and its services, and therefore exposed to risks from nature loss.

For example, 60% of coffee varieties are in danger of extinction due to climate change. No need to look very far to understand how it will affect the coffee industry. Now let’s take the example of insurance; nothing to do with nature at first sight. But wetlands degradation could cost up to $52 billions a year to the insurance industry, through storm and flood damage. Indeed, those endangered ecosystems protect shorelines from erosion and help mitigate flood episodes.

Further reading

Coralie Delacoste