Biodiversity Risk Moves to the Center of Business Strategy

The IPBES Assessment on Business and Biodiversity warns that prevailing business and financial models are accelerating biodiversity loss, with trillions of dollars still flowing into nature-negative activities while corporate disclosure remains limited. For Mexico, this raises growing regulatory, financial and reputational risks as sustainability reporting expands and nearly half of major companies already recognize biodiversity loss as a business risk. 

Traditional business models pose a significant risk to the global economy, financial stability and human well-being, warns the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES).

IPBES presented its Assessment on Business and Biodiversity during the organization’s 12th plenary session, held from Feb. 3 to 8 in Manchester, United Kingdom, and attended by representatives of more than 150 member governments. The report was nearly three years in the making and was developed by 79 experts from academia and the private sector, as well as representatives of Indigenous Peoples and local communities from 35 countries.

The document notes that current market conditions perpetuate outdated business models that fail to support the transformative change needed to halt and reverse biodiversity loss. In 2023, global public and private financial flows with direct negative impacts on nature were estimated at US$7.3 trillion. Of that total, US$4.9 trillion came from private finance and US$2.4 trillion from public spending.

By contrast, during the same period, only US$220 billion in public and private financial flows were directed toward activities that contribute to biodiversity conservation and restoration. This amount represents just 3% of the public funds and incentives that either encourage environmentally harmful business behavior or fail to promote biodiversity-positive practices.

The assessment found that fewer than 1% of companies publicly disclose their impacts on biodiversity. In addition, a recent survey of financial institutions identified three primary barriers to greater adoption of nature-related risk assessment and management: access to reliable data, access to robust models and access to forward-looking scenarios.

To overcome these obstacles, the authors identified three characteristics to help determine which methods are most suitable for businesses across sectors: coverage, referring to geographic scope and the range of impacts and dependencies considered; accuracy, meaning how reliably results reflect what they are intended to measure; and responsiveness, or a method’s ability to detect changes attributable to a company’s actions and activities.

Another key finding is that businesses could improve how they measure and manage impacts and dependencies by engaging with traditional knowledge. At a global scale, industrial development threatens 60% of Indigenous lands worldwide, and 25% of all Indigenous territories face high pressure from resource exploitation.

Ximena Rueda, Co-Chair of the Assessment, underscored that insufficient translation of scientific findings into business-relevant language has slowed their adoption. She also noted that many companies fail to recognize local communities as key stewards of biodiversity and essential sources of knowledge for its conservation, restoration and sustainable use. “Greater collaboration and improved sharing of data, scientific insights and local knowledge, can lead to better risk management and the identification of new business opportunities,” she said.

Stephen Polasky, Co-Chair of the Assessment, noted that degrading biodiversity often appears more profitable than protecting it. However, the report shows that with the right policies and appropriate financial and cultural shifts, what benefits nature can also strengthen profitability. Experts identified five key components necessary to achieve sustainability goals: policy, legal and regulatory frameworks; economic and financial systems; social values, norms and culture; technology and data; and capacity and knowledge. The assessment outlines more than 100 specific measures across these five pillars that can be implemented by businesses, governments, financial actors and civil society.

These recommendations apply across different levels of business decision-making. At the corporate level, companies are encouraged to integrate biodiversity into governance, risk management and financial planning, set measurable targets and strengthen engagement with Indigenous Peoples and local communities. At the operational level, actions include conducting impact assessments, applying the mitigation hierarchy and monitoring biodiversity performance. Across the value chain, businesses can enhance traceability, collaborate more closely with suppliers and incentivize more sustainable practices among customers and partners. At the portfolio level, financial actors are urged to assess biodiversity risks and dependencies, engage investee companies and use tools such as stewardship or divestment to drive improved outcomes.

“We need to move beyond the false binary between being pro-environment and pro-business. All businesses depend on nature. Actions that conserve and sustainably use nature can also help companies thrive in the long term. One of the innovations of this report is that it provides a template to accelerate collaboration and collective action at all levels among governments, financial actors, civil society, Indigenous Peoples and local communities, consumers, NGOs, international organizations and academia, in addition to the actions required by businesses and financial institutions themselves,” said Professor Polasky. 

Biodiversity Risk Disclosure Gains Ground Among Global Corporations

According to KPMG’s Global Survey of Sustainability Reporting 2024, the proportion of companies that identify biodiversity and nature loss as a business risk has doubled among the G250 (the world’s 250 largest companies by revenue) rising from 28% in 2020 to 56%. Similarly, among the N100 (the 100 largest companies by revenue in each of the countries included in the study) the figure has more than doubled over the same period, increasing from 23% to 49%.

The report notes that while growth is evident, progress has slowed over the past two years compared to the previous two-year period, including almost no increase among companies headquartered in Latin America. By contrast, companies in the Middle East and Africa recorded significantly stronger growth, with biodiversity reporting rising from 35% two years ago to 56% today.

The highest country-level reporting rates are led by the Netherlands at 83%, followed by Japan at 80% and Brazil at 76%. The survey also shows that sectors most likely to report on biodiversity are those with significant direct impacts on local environments. Within the N100 sample, 68% of mining companies report on biodiversity, compared to 62% in oil and gas and 55% in forestry and paper. By contrast, healthcare at 36% and transport and leisure at 37% are the least likely sectors to disclose biodiversity-related information.

In Mexico, the report indicates that 85% of the country’s 100 largest companies publish sustainability reports. Of these, 71% recognize climate change as a business risk, 78% report carbon emission reduction targets and 48% identify biodiversity loss as a risk to their operations.