Securing a healthy future for our planet calls for an integrated approach of climate (GHG emissions) and environment. The industry has made progress in developing methodologies and setting targets for climate (and now the challenge will be to meet targets). The EC’s proposed legislation to restore nature offers an opportunity to progress on environment more broadly. My view is that to succeed, we urgently need a simple, common language and metrics to set specific targets and hold stakeholders to account.
Biodiversity and ecosystems
Delivering the climate transition in time to avoid the most extreme consequences of global warming is a huge challenge. Furthermore, the shocks to energy prices and subsequent inflationary pressures are making it harder and more expensive to deliver a just transition. Understandably, this issue is front of mind for many policymakers, businesses, and households.
Even so, we cannot afford to neglect efforts to protect and restore ecosystems because only an integrated approach will result in a viable natural environment. Reducing GHG emissions alone is not enough, we should also take measures to deal with water scarcity, restore water quality and warrant biodiversity. A prominent Nature study concluded that biodiverse ecosystems have more resistance for climate events: The productivity of low-diversity communities with one or two species changed by approximately 50% during climate events, whereas that of high-diversity communities with 16–32 species was more resistant, changing by only approximately 25%.
What gets measured, gets managed
Moreover, contributing to healthy ecosystems is in fact seamlessly aligned with the long-term interest of companies and households. Often there are strong local feedback loops which should reduce the collective action problem. This is different from carbon emissions which contribute to global warming. Withdrawing too much surface water or allowing water quality to deteriorate locally doesn’t hurt 1.000 km away, it is at your front door and will impact your own commercial success and quality of life.
For climate, stakeholders have converged on GHG emissions to set targets and physical and transition risks to understand risks. Ecosystems are local, diverse and may be impacted by a multitude of factors. While the concept of physical and transition risks still provides a useful skeleton for understanding the materiality of environmental risks, target setting is more challenging. If we accept the reasoning of Peter Drucker of “What gets measured, gets managed” as still valid, then we need simple, universal metrics to achieve our goals.
Integrating nature aspects into decision-making
In the EU, the European Commission even plans to introduce legally binding targets for nature restoration. The legislative proposal includes both overarching and specific targets for ecosystems in articles 4-10 which together run over five pages. I applaud the EC’s proposed targets and their specificity and yet, it’s easy to see how business leaders may get lost in “understanding nature” and refrain from integrating nature aspects into decision-making.
There are many initiatives that aim to drive convergence. The Task Force for Nature-Related Financial Disclosures (TNFD) found that more than 3,000 nature-related metrics are being used today. The initiative aims to evolve its list of illustrative metrics into more definite guidance by mid-2023.
Defining a common language
It is vital we develop a useable language on nature and equip stakeholders with the insights needed to make nature-positive decisions. The national restoration plans required by the EC’s legislative proposal should consider how this information, such as a health index for each ecosystem, can be made available to all stakeholders.