Unlocking the critical levers for a nature-positive economy
The urgency of transitioning to a nature-positive economy was the central theme of a recent session at Davos hosted by Business for Nature.
Even among the headlines of Donald Trump’s inauguration, AI and ESG backlash, the urgency of transitioning to a nature-positive economy was the central theme of a recent session in Davos hosted by Business for Nature and InTent. Participants explored the critical levers needed to accelerate this transformation and navigate through choppy waters and headwinds by shifting core economic systems. They recognized the intrinsic link between climate change, social inequality and nature loss. The discussion highlighted the need for a fundamental shift in how businesses operate – and for businesses to lean into solutions where they exist, including widely accepted priority sector-specific actions. We also need governments to set the rules and incentives to scale and speed up action – and here we should build on the policy recommendations for effective implementation of the Global Biodiversity Framework, supported by more than 230 businesses. Overall, the session’s message was that while incremental changes are no longer sufficient, we have very strong levers to influence to accelerate the transformation.
Government leadership to define sector-specific expectations
A key takeaway was the crucial role of government leadership in driving sectoral pathways for a nature-positive transition. These pathways, aligned with national biodiversity and climate goals, provide both public and private sectors with clear direction. "Government-driven sector pathways offer both private and public sectors clear direction on how each economic segment should contribute to environmental targets, and they are widely supported by businesses and governments as a crucial tool for mainstreaming the Global Biodiversity Framework (GBF)," said speaker Sanne Wendes, Chief Strategic Engagement Officer, WWF International.
Similar to net-zero frameworks, these pathways are essential for clarifying transition expectations, fostering confidence in nature investments, and outlining the actions required to meet ambitious targets. A concrete example: in 2022, in a historic referendum, the Canton of Zurich in Switzerland included the circular economy in its constitution. This unblocked innovation and new opportunities; and boosted companies – such as Holcim – processes to re-use waste material in new buildings. The discussion also stressed the importance of consulting companies, including SMEs, to develop these scenarios and build on existing national-led efforts such as Projects for Nature in the UK.
Valuing nature to drive better decision making
The concept of "paying for nature" was also a central point of discussion, although some participants suggested reframing this more broadly as "valuing nature." Today, we are beginning to understand how companies depend on nature, but companies largely do not pay for these critical inputs to their production that come from nature. This is major risk to their business and for investors. The session was kicked off by Andrew Steer, President and CEO of the Bezos Earth Fund who acknowledged the historical context of payments for ecosystem services and emphasized the need to move beyond public funding. The focus shifted towards internalizing the cost of nature's services within business operations. This includes:
Developing mechanisms for businesses to "pay for nature" to ensure the continued flow of these vital services (which are essential inputs the company relies on), and;
Integrating nature's true economic value into core business practices, or natural capital accounting. The potential of new financial instruments, like biodiversity credits and sustainability-linked loans, was also explored.
Putting nature on the balance sheet was also discussed, with mention of potential business value decreases based on nature loss.
The conversation underscored how important it is that businesses consider the impact on supply chain resilience when valuing nature, as we typically only appreciate the full value of something when it is no longer available (think freshwater availability and quality, soil health, erosion control).
Moving the masses through trade associations
The power of trade associations to influence corporate political engagement was another key lever discussed. Participants recognized that these organizations can either support or hinder the transition to a nature-positive economy. Companies need to do more than set targets and must actively advocate for supportive policies. As Caroline Bryant, Global Challenge Lead Purposeful Business, Porticus highlighted: "Many companies realize they must do more than just draft transition plans and set targets; they need to lobby for good policy."
However, misalignment between a company's sustainability goals and the lobbying efforts of its trade association memberships can undermine these efforts. The discussion emphasized the need for greater transparency in trade association operations and encouraged companies to actively engage with and influence their trade associations to advocate for ambitious nature-positive policies. The different types of trade associations, from "accelerators" to "blockers," were identified, and the importance of investor involvement in influencing these associations was emphasized. For those wanting to dig deeper, we recommend the recent Volans report and Business for Nature’s guide to responsible policy engagement.
Mandatory disclosure to raise the floor
Finally, the session addressed the critical role of mandatory nature-related disclosure. While acknowledging the burden of reporting (EU CSRD being top of mind), the discussion emphasized its importance as a foundation for driving action and levelling the playing field for businesses.
"Recognizing the importance of mandatory nature-related disclosure is an important first step to drive action and level the playing field for businesses," shared Kari Stoever, Chief Growth Officer, CDP, that has published a set of principles for High-Quality Mandatory Disclosure.
The potential of AI and geospatial tools to streamline reporting and unlock investment opportunities was also explored. The focus shifted from simply reporting, and seeing disclosure only as a burden, to aligning disclosures with value creation and opportunity, and therefore seeing the benefit. Tools and methodologies already exist, however the importance of interoperability and simplification of reporting frameworks was also raised, including with the disclosure recommendations of the Taskforce on Nature-Related Financial Disclosures (TNFD). One participant offered a crucial insight: "if you're going to try to make business more purposeful, you’ve got to look at what's obstructing business and what business actually needs."
The session concluded with a sense of cautious optimism. While acknowledging the challenges and pushback, participants recognized the significant progress made in recent years. The overarching message was clear: a nature-positive economy is not just an environmental imperative; it's a business imperative. By understanding these critical levers – government leadership, valuing nature, engaging trade associations, and mandatory disclosure - businesses and governments can work together to build a sustainable and resilient future.