More than half of global GDP depends on nature and is therefore exposed to risk posed by the degrading state of nature and ecosystems, one of the largest financial auditors worldwide, PwC, published in its latest research on Wednesday.

The research revealed that $58 trillion of capital is at risk from nature’s decline, with 50.6% of the market value of listed companies on 19 major stock exchanges exposed to material nature risk.

Of the companies listed on the London Stock Exchange, 47% of the company value traded is highly or moderately dependent on nature, aligning with the global average. Most of the risk is related  to the food, beverage, and tobacco industry, as well as the mining and metals industry that accounts for 10% of the value of listings.

The New York Stock Exchange instead had a below-average of 40% of company value highly or moderately dependent on nature, whereas Euronext had an above-average exposure to nature-related risk of 60%.

The auditor’s findings revealed that the extent to which economic activity and natural ecosystems are linked has gone up by a third compared to 2020.

“A number of factors have led to the increase in nature risk that we are seeing – from global economic growth since 2020 to a better understanding of how industries rely on nature to generate and protect value,” Will Evison, sustainability director at PwC UK, said.

“As economies grow, they tend to consume more natural resources, but we have reached a point where it is clear that business leaders need to create nature-positive business models that actively enhance nature if they are to mitigate risks and strengthen financial returns,” Evison added.

Companies’ reliance on nature lies in crops for food and drink industries as well the forests needed for timber or the plants in rubber used to build tires for cars, but all 163 economic sectors analysed in the study are somehow impacted by nature’s degradation.

“Nature’s rapid decline means that executives can no longer ignore either the risk stemming from ecosystem failures and biodiversity losses, or the emerging regulatory requirements and stakeholder demand which relate to nature,” said Lynne Baber, sustainability leader at PwC UK.

Businesses should focus on nature loss on the same level as climate change in their risk assessments, the PwC analysis recommended.

Baber advised companies to start measuring their nature baseline, use data to improve decision making and transparency, and set ambitions to manage nature-related risks. She also recommended better understanding companies’ dependence on nature.

To tackle this lack of accounting for nature-related risk, PwC plans to double its number of nature specialists to 1,000 globally, launch a Global Centre for Natural Positive Business, and offer its staff specific training on measuring nature-related risk.

By Rebecca Gualandi – rebecca@carbon-pulse.com