Nature is the most important stakeholder for companies | Nala.Earth

INSIGHT by Nala.Earth

For too long, sustainability discussions in boardrooms, conferences, and ESG teams have been dominated by climate-related issues, a phenomenon known as “Carbon Tunnel Vision.” Meanwhile, the loss of biodiversity, habitats, and ecosystems, along with their consequential impacts on society and the economy, has been largely ignored.  But, spurred by new regulations & disclosure frameworks, businesses are beginning to understand and grapple with their interactions with the natural world. Nature risks are present & significant. But so are opportunities. Effective nature management can therefore be a significant competitive advantage.

| Preserving biodiversity is vital for business resilience

Today, the Earth hosts 69% fewer vertebrates than in 1970.₁ In Germany alone, flying insect populations have declined by 75% in just 30 years. Forests are being cleared, marshes drained, heathlands built on.₂ 

In the past century, humans have cut down an area of forest equivalent to the entire US, which translates into the destruction of 35 soccer fields every minute!₃ This not only leads to habitat loss, but also reduces the resilience of these systems to extreme weather events. Diverse ecosystems are more stable and better equipped to handle disruptions. A rich variety of flora and fauna facilitates agricultural activities and is crucial for climate stability, as diverse soils and forests can store significantly more carbon than monocultures. This exemplifies how nature and climate protection go hand in hand.

Biodiversity has long been overlooked in corporate sustainability strategies. However, driven by a growing interest in the financial sector, this is changing. Investors recognize that biodiversity loss carries significant economic costs and risks. Some ecosystem services can be quantified, such as the pollination services provided by insects, valued at 1 trillion US dollars annually.4 Overall, over 50% of global economic output moderately or highly depends on functioning ecosystems and their associated services (approximately 42 trillion US dollars).₅ Consequently, the loss of nature and biodiversity is considered one of the greatest global risks. 4 of the 5 top global risks on a 10-year horizon are nature risks: biodiversity loss & ecosystem collapse, critical change to Earth systems, natural resource shortages, and extreme weather events.₆  Across sectors, companies have already incurred losses of billions of dollars due to physical risks such as declining access to groundwater, and legal & reputational risks due to illegal pollution and deforestation.₇

| New regulations and frameworks like CSRD & TNFD are driving corporate action to protect nature

An increasingly holistic view of sustainability is beginning to be  reflected by businesses:  >40% of the Fortune 500 have set a nature target beyond carbon on biodiversity, water, forests, chemicals & plastics, or nutrients.₈ TNFD, the Taskforce on Nature-related Financial Disclosures, has developed a comprehensive set of disclosure guidelines to facilitate businesses and financial institutions in assessing, reporting, and addressing their dependencies, impacts, risks, and opportunities related to nature. Serving as the premier framework for nature-related assessments and disclosures, this taskforce has drawn an inaugural cohort of TNFD Early Adopters, including 320 organizations from 46 countries.

Among them are leading publicly traded companies, collectively boasting a market capitalization surpassing 4 trillion US dollars. This is a significant step considering that biodiversity was hardly on any company’s radar just a few years ago. In Europe, this shift is supported  by the Corporate Sustainability Reporting Directive (CSRD), introduced in 2022. This directive, for the first time, mandates the disclosure of corporate activities across biodiversity, water use, pollution, and circular economy and affects approximately 11,000 companies in its first reporting year in 2024 (60k companies in total). Target-setting initiatives like Science-based Target Network (SBTN) and  a new biodiversity reporting standard from  the Global Reporting Initiative (GRI) further support this development.

| The data challenge & opportunity: What We Can’t Measure, We Can’t Manage

In addition to appropriate policy alignment and economic incentives, there is a clear need for corporate action in measuring nature and its ecosystem services. Measurability plays a crucial role in addressing nature and biodiversity loss (as demonstrated by CO2 measurement), because what we can’t measure, we can’t manage. A rigorous assessment of the state of nature must be local & multidimensional, covering the various dimensions of nature across biodiversity, land, and water. This requires global, accurate, timely, and granular data. While there are many data sources available, navigating which data is fit for purpose for business & finance requires deep ecological & data expertise that companies often lack in-house. In addition, academic & scientific data often needs to be adapted to be useful for business decision making. 

Businesses that are able to leverage high-quality data on their nature dependencies & impacts will be better positioned to mitigate nature risks and to capitalize on the opportunities that a shift to nature-positive business models offers, including resource efficiency, greener products & services, sustainable financing, & enhanced reputation. 

| Nala Earth’s nature management platform

Nala Earth is a nature management platform that empowers businesses to report (CSRD, TNFD) and mitigate nature risk. It is one of a growing number of nature & biodiversity tools for business. 

Nala provides companies with a software platform  to assess, improve, and report  on  their interactions with nature and biodiversity. We embrace the complexity of nature while providing clarity & actionability for businesses. The platform contains 30+ nature data sets of satellite earth observations, in-situ measurements, & AI-empowered ecological & hydrological models. This data spans land & soil condition, biodiversity, water quality & quantity and pollution. This data is optimized for use by business: scoring & benchmarking across varied nature indicators facilitate comparison & prioritization. 

The companies we are working with utilize our software for the following use cases:

1. Report with leading nature regulations (CSRD) and frameworks (TNFD, GRI)
2. Create nature-positive strategies and targets: 
3. Mitigate nature risks, act on  opportunities
4. Educate their organization on nature and biodiversity

Ambitious corporate accounting for climate has been galvanized by extensive data and tools on carbon account and climate risk. Until recently, analogous tools for nature & biodiversity did not exist. This new generation of tools will help spur action. 

Please get in touch via www.nala.earth to learn more.

1. WWF Living Planet Report 2022
2. Heinrich Böll Foundation
3. World Economic Forum
4.  EY
5. World Economic Forum
6. World Economic Forum, Global Risks Report 2024
7. Bloomberg NEF, When the Bee Stings, Counting the Cost of Nature-Related Risks
8. McKinsey, Companies are broadening their commitments to nature beyond carbon