Governments must introduce tougher regulations on biodiversity because companies won’t act on their own at the scale needed to stave off to nature and biodiversity loss crisis, according to a UK-based asset manager.
Impax AM, which specialises in investing in the transition to a sustainable global economy, has released a report commissioned from researchers at Imperial College London, looking at incentives for corporations to take action on biodiversity.
Looking at a number of global case studies where corporations have taken biodiversity-related action, the report found that companies are not taking action for the sake of biodiversity itself.
“Aside from where they are required by regulation, actions to protect biodiversity are currently only pursued where they deliver broader corporate objectives,” the report concluded.
“Motivations may be commercial – such as supply chain resilience – or related to other [ESG] objectives like ensuring a social licence to operate. Some interventions could be interpreted as little more than window-dressing,” it found.
None of the companies studied had pursued biodiversity-related goals at the scale required to make a global difference.
It should fall on governments then, Impax said, to address “the market failure that drives corporate inaction”.
“Governments should explore the full complement of policy levers, from tighter environmental licensing to introducing biodiversity-related incentives,” the asset manager said.
It pointed out that corporate action taken out of self-interest was only the lowest-hanging fruits, and that various public-private partnerships should be considered in order to achieve the scale of action needed.
Lawmakers should also make sure that regulatory frameworks promote action, and make mandatory reporting systems for corporate impact on and dependencies on nature.
“Given growing recognition of the systemic risks associated with biodiversity loss, this would provide impetus to explore how risks can be mitigated,” Impax AM said.
It also urged companies that are early movers on biodiversity action to be vocal about it, and to engage with customers, suppliers, and employees to identify actions that benefit everyone.
“Almost all solutions identified to date by investment managers focus on reducing loss of biodiversity, rather than restoring or enhancing it. As with addressing climate change, however, preventing harmful practices is a crucial first step,” Impax said.
“Given that progress on addressing biodiversity loss lags climate action, there are currently fewer substitutes to economic processes that damage nature. Corporate practices must swiftly evolve though to better protect biodiversity and embrace the opportunities that can reduce the drivers of biodiversity loss.”
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