Where the world’s biggest companies stand on nature

Nature’s health, like climate change, it is now recognized as an urgent global risk. In purely economic terms, half of all economic activity is moderately or heavily dependent on natural capital – the world’s stock of natural assets. Governments and intergovernmental organizations are increasingly drawing attention to the nature crisis, while a growing number of businesses are making biodiversity pledges or becoming ‘nature positive’. Industry-led organizations such as the Task Force on Nature-Related Financial Disclosures (TNFD) set the framework for how businesses account for and act on nature-related risks and opportunities.

Commitments related to nature remain low

Companies are in the early stages of engaging with a wide range of nature-related goals (Exhibit 1). A high-level review of Fortune Global 500 companies shows that most companies have climate-related goals (83 percent) or at least acknowledge climate change (an additional 15 percent). In other dimensions of nature, however, targets and acknowledgments are much lower (see sidebar, “Our Methodology”).

For example, although 51 percent of companies recognize biodiversity loss in some way, only 5 percent have set quantitative targets in addition to this recognition. Meanwhile, some dimensions of nature, such as soil nutrient pollution, appear much less frequently in public acknowledgments. This may not be surprising – while decades of experience have helped companies understand how to deal with climate change, corporate understanding of nature is still in its infancy.

There is no standardized approach to measuring natural capital and ecosystem services, and many companies may not know what steps to take beyond simply acknowledging the challenge. This potential explanation is echoed by our own experience working with clients worldwide on sustainability topics: while corporate leaders increasingly recognize the importance of nature, a limited understanding of how to engage structurally and responsibly on the topic of nature degradation hinders many to make quantitative commitments.

Considering all dimensions of nature

Among companies that have nature-related goals, most consider only one dimension of nature – most often climate.

Another slice of the same data highlights the fact that among companies that have nature-related goals, most consider only one dimension of nature—most often climate (in the context of natural climate solutions). Sixteen percent of the Fortune Global 500 have set goals against three or more environmental dimensions, and no company has goals against the six dimensions we examined in this analysis (Exhibit 2). While one explanation for this may be that companies are focusing on what is most important in relation to their activities, expectations are rising: for example, the initial guidelines of the Science-Based Targets for Nature (SBTN) initiative suggested that companies have “a comprehensive understanding of [their] impacts and dependencies of nature’.

Few Fortune Global 500 companies have quantitative goals in multiple dimensions of nature.

Some sectors are ahead of others in setting targets

Cutting the data to the sector level reveals that as a proportion of the total sector, transport leads in terms of the overall target (Exhibit 3). This is likely due to a combination of the sector facing climate transition risks, a regulatory focus on carbon emissions from the transport sector and a shift to renewable energy, among other factors. And although the sample is small, agriculture leads the way in setting three or more targets, likely due to increased attention to water and nutrient pollution concerns, in addition to climate, compared to other sectors.

Fortune Global 500 companies' nature-related goals vary by sector.

Ahead of this year’s UN Conference on Biological Diversity (COP 15), governments will agree a new set of targets for nature to ensure that the “shared vision of living in harmony with nature is met”. Now is the time to consider what it will take to drive widespread and effective environmental action among companies. Corporate leaders will need to understand the shape of the challenge ahead, the risks to their operations and the opportunities to build business, what the key objectives are and what actions their companies can take.

Leave a Comment

Your email address will not be published. Required fields are marked *