As well as supply chain and regulatory risks, companies also should consider reputational risks linked to natural capital as well as the everyday impact their business has on the environment and how it is perceived by consumers and the wider public.
This is an increasingly important issue given demographic shifts. Millennials are now the largest consumer group by size and spending, and have stronger views about sustainability than previous generations: they expect apparel, entertainment and other brands to share their values.
As a result, many businesses are shifting to a purpose-driven approach and seeking to become better corporate citizens – an idea that aligns with biodiversity and natural capital.
Jonas Persson, Head of Sustainability and ESG Finance says “Understanding biodiversity and natural capital is essentially about risk management. Some of these risks are relatively easy to understand, especially in sectors such as ecotourism (which is impossible if the environment it operates in is degraded), and the food and drink or fashion industries which depend directly on natural resources. But productivity and resilience for companies in all sectors can be impacted by supply chain risks: we all ultimately depend on natural capital.”