In an urgent call for companies to move away from business-as-usual to environmentally and socially sustainable models, a recent World Economic Forum report spotlights three key areas with trillions of dollars of existing market opportunities and millions of jobs as countries and companies plot their paths to recovery from the pandemic.
A second report in its “New Nature Economy” project, Future of Nature and Business 2020, published this month, said that transformations in food, land and ocean use; infrastructure and the built environment; and energy and extractives can generate an estimated $10 trillion in business value and create 395 million jobs in ten years.
“If there is one thing we learn from the COVID-19 crisis is that societies can [change] when we must,” said Svein Tore Holsether, president and chief executive officer of Yara International, a food and agriculture company, at the report’s launch. “Faced now with overwhelming urgency, we have a short time frame to make dramatic changes to how we live, how we work, how we travel, consume, and interact. This is exactly the sense of urgency that we now need to build on.”
He added, “The business community has a very clear responsibility; it’s no longer profitability versus sustainability.”
A separate WEF report earlier this year estimated that half of the world’s GDP ($44 trillion) is heavily or moderately dependant on nature and is potentially at risk from collapse in nature’s ecosystems.
For years, organisations from the World Resource Institute to the World Bank have highlighted the risks from Earth’s depleting natural resources and that companies cannot continue in the same linear business models of “extract, use and dispose”, with little efforts in protecting and restoring the land, air, and water. For finance departments, natural capital accounting has been used as a method to improve stewardship of ecological resources. Institutional investors increasingly demand an accurate picture of companies’ environmental, social, and governance (ESG) and climate-related risks. However, identifying and mitigating risks is insufficient to tackle the climate and nature crisis, according to the report. What’s needed is a complete rewiring of business models, the report says.
“Unless the structural roots of this [nature] crisis are addressed, irreversible climate change, biodiversity loss and other environmental risks that harm the economy and human wellbeing will only worsen,” the report said.
The research estimates that $2.7 trillion of investments will be needed to fund the new opportunities identified. Akanksha Khatri, the report’s lead author, said that while the investment amount seems huge, the US government’s landmark stimulus package announced in March alone is at $2.2 trillion.
“COVID has shown us that we… are capable of making drastic changes,” Khatri said. “What’s required are decisive political will and leadership, as well as business innovation and acumen”.
The report highlights various use cases of businesses and non-profits across industries employing new models that protect and restore the environment. One example is Teemill, an online shopping platform that allows users to make and sell T-shirts. Products are made in real-time after customers place orders, eliminating overproduction and waste. Applying circular principles, the T-shirts are designed to be returned to the factory when worn out or unwanted to be remade from recovered material. The company’s facilities in India and the UK use renewable energy, and processed water is recovered, cleaned, and reused.
The use of land in urban cities is another area with opportunities for business innovation.
“The way we have built our cities and the urban environments means that there’s a huge amount of land as well as office spaces which are simply kept vacant or underutilised,” Khatri said. “Our research shows that this amount of land is equivalent to the size of Switzerland.”
“If … we can create more compact environments, spare nature so that animals and wildlife can take care of themselves in their own environment … protect, restore, and sustainably manage our land, we can move towards a scenario where we can create jobs, economic opportunities, and good outcomes for the environment,” she said.
The report identified 15 priority business transitions in three key areas:
Food, land and ocean use
- Ecosystem restoration and avoided expansion.
- Productive and regenerative agriculture.
- Healthy and productive ocean.
- Sustainable management of forests.
- Planet-compatible consumption.
- Transparent and sustainable supply chains.
Infrastructure and the built environment
- Densification of the urban environment.
- Nature-positive built environment design.
- Planet-compatible urban utilities.
- Nature as infrastructure.
- Nature-positive connecting infrastructure.
Energy and extractives
- Circular and resource-efficient models.
- Nature-positive metals and minerals extraction.
- Sustainable materials supply chains.
- Nature-positive energy transition.
— Alexis See Tho (Alexis.SeeTho@aicpa-cima.com) is an FM magazine associate editor.