Climate change is the environmental issue at the top of mind when investors and companies talk about the “E” in ESG, but climate change is just one of the nature-related issues we face in the “policrisis” before us. One way to look at the challenges we face in the natural world is through the Planetary Boundaries Framework established by the Stockholm Resilience Center.
The planetary boundaries framework focuses on the impacts of human activities on Earth’s systems. Beyond these limits, these systems may not be able to self-regulate. In addition to climate change, these boundaries include ocean acidification, biosphere integrity, land-system change, and freshwater change. You can see from the graphic below that we have already breached 6 of 9 planetary boundaries.
We have crossed these boundaries because we are not managing our natural resources very well.
The bad news is that we have breached too many planetary boundaries.
The good news is that many of these boundaries are connected and have an impact on one another. It is often the case that addressing one planetary boundary helps address another boundary.
For example, ocean acidification has not been breached yet. However, excess CO2 in the atmosphere is increasingly absorbed by our oceans. This makes the oceans more acidic. If the oceans become too acidic some organisms with shells cannot survive, and the food web of the ocean could collapse. However, if we address climate change and reduce CO2 in the atmosphere, we can address ocean acidification at the same time.
An example of one environmental issue that touches on many planetary boundaries is beef and dairy production. One of the biggest land system changes of the past half-century is the increased use of land for cattle grazing and the food needed to feed cattle. The below graphic from Bloomberg shows about 42% of land in the US (excluding Alaska and Hawaii) is used to either graze cattle or grow feed for cattle.
This type of map is typical for developed markets and the markets supplying them with beef. It is estimated that 800 million trees in the Amazon rainforest have been cut down in the past 6 years to meet global demand for beef.
Beef production is one of the most damaging human activities. Cows do release methane, which contributes to climate change, but that is but one negative environmental impact of cattle. Raising cattle uses a great deal of land, which has in some cases come from cutting down forests that help fight climate change. Land cleared for cattle leads to biodiversity loss, as plants and animals lose habitat to cattle grazing. Beef production is also highly water intensive, putting excess strain on water resources such as the Colorado River in the American West. Beef production requires the use of excess nitrogen and phosphorus-based fertilizers (biochemical flows) to raise the food that cattle eat. The nitrogen and phosphorus that get into our waterways from run-off can cause dead zones in our rivers and oceans.
If we as a planet scaled back our consumption of beef and dairy, we could make a positive change in the planetary boundaries of climate change, biodiversity, land use, water use, and biochemical flows. This would not require everyone to stop eating beef or using dairy products. It would however require a decrease in demand so that these systems could move back into a safe range. Beef and cattle production is not the only issue leading to the breaching of planetary boundaries, just one of the most impactful. Other actions would need to be taken to move all the planetary boundaries back into safe territory.
More good news.
The planetary boundaries framework argues for giving nature the chance to regenerate.
When given that chance, nature is very resilient. Forests can recover their full plant species diversity in 25 to 60 years, though it may take a century to recover the full biomass of a mature forest. A recent study published in Science shows that conservation action, on which humanity spends billions of dollars per year, is effective. This study, which focused on biodiversity, found that more than half the time, conservation actions had a net positive effect. This shows that multiple types of conservation actions are beneficial and needed to address biodiversity loss.
More tools are on the way.
Several tools already exist to help investors better understand natural capital and biodiversity, such as the Taskforce on Nature-related Financial Disclosures, the ENCORE tool for assessing nature and biodiversity risks, and many others.
The climate change and investment advisory firm Pollination recently published a user guide for companies to take action in a more nature-positive transition. The report contains many resources for companies to use, including the six key principles that corporates can apply to future-proof their corporate strategy, specifically:
Principle 1 – Integrate objectives for people, nature and climate.
Principle 2 – Apply a holistic definition of nature.
Principle 3 – Apply the mitigation hierarchy to contribute to nature-positive.
Principle 4 – Make a systemic contribution to nature-positive.
Principle 5 – Identify and act in priority locations.
Principle 6 – Work toward an overall net gain in nature.
The report provides companies with practical guidance on how to design and implement a nature-positive aligned corporate strategy. It is a welcome tool to add to the growing list of resources companies can use to assess nature and biodiversity risks.
Expect more natural capital and biodiversity tools as investors and companies attempt to better measure and manage their impact on our natural systems.
To whom is this relevant?
Companies need to better understand the nature and biodiversity issues that impact them and how these issues interact.
Companies are looking for tools to measure and manage their nature and biodiversity impacts.
Investors are assessing how companies are integrating nature and biodiversity issues into their strategy and operations.