How Biodiversity Risk Will Reshape Business – And Why You Need to Act Now
- Gasilov Group
- Mar 5
- 3 min read
Updated: 1 day ago
For years, businesses have focused on climate change, carbon emissions, and net-zero strategies, but a hidden ESG risk is rapidly gaining investor and regulatory attention: biodiversity loss. As ecosystems decline, supply chains face disruption, compliance risks increase, and investors start scrutinizing companies’ nature-related financial risks.
With the Kunming-Montreal Global Biodiversity Framework setting new global targets, companies can no longer afford to ignore biodiversity risks. Understanding and integrating nature-related risks into ESG strategies will soon become as critical as carbon accounting. The question is: Is your business ready?
Why Biodiversity Loss Is Now a Business Risk
Biodiversity loss isn’t just an environmental concern—it’s a direct financial and operational risk for businesses. The World Economic Forum ranks biodiversity loss as one of the top five global risks due to its impact on economies, supply chains, and regulatory landscapes.
Key risks businesses face due to biodiversity decline:
Supply Chain Disruptions – Industries reliant on agriculture, forestry, fisheries, and pharmaceuticals face raw material shortages.
Regulatory Compliance Risks – Stricter biodiversity reporting requirements are emerging under frameworks like the Kunming-Montreal Agreement.
Financial & Reputational Risks – Investors are shifting capital toward biodiversity-conscious companies, while greenwashing penalties for misleading claims are increasing.
The Kunming-Montreal Agreement: A New Era for Corporate Biodiversity Accountability
The Kunming-Montreal Global Biodiversity Framework (GBF), adopted in December 2022, is a landmark agreement that sets global targets for biodiversity conservation. Similar to the Paris Agreement for climate, it aims to halt and reverse biodiversity loss by 2030.
Key Targets Impacting Businesses:
✔ 30% of the planet under protection by 2030 – Companies operating in or sourcing from protected areas must rethink supply chain strategies.
✔ Mandatory biodiversity risk disclosure – Businesses will face increased scrutiny on how their operations impact nature.
✔ Reduction of environmentally harmful subsidies – Industries benefiting from biodiversity-harming subsidies (e.g., industrial farming, deforestation-linked commodities) will face financial impacts.
Which Industries Are Most at Risk?
1. Agriculture & Food Industry
Biodiversity is critical for crop resilience, soil health, and pollination. Yet, unsustainable farming practices, deforestation, and monoculture plantations are driving biodiversity loss, threatening food security and supply chain stability.
2. Fashion & Textiles
From cotton and leather to synthetic fibers, the fashion industry is a major driver of biodiversity loss through land conversion, chemical pollution, and water-intensive production processes.
3. Pharmaceuticals & Cosmetics
Many medicines and skincare ingredients are derived from plants, fungi, and marine ecosystems. The degradation of biodiversity hotspots threatens future innovation and the availability of raw materials.
4. Mining & Infrastructure
Large-scale land use changes, deforestation, and habitat destruction caused by mining, construction, and urban expansion put businesses in conflict with evolving environmental regulations.
To stay ahead of biodiversity-related risks and regulatory shifts, businesses should take proactive steps to embed nature into their ESG and risk management frameworks. Here are some:
Conduct a Biodiversity Risk Assessment
Align with Global Reporting Standards
Implement Supply Chain Biodiversity Strategies
Engage in Nature-Based Solutions
Companies that proactively integrate biodiversity risk management into ESG strategies will gain a competitive advantage by securing sustainable supply chains, reducing regulatory risks, and attracting responsible investors.
You can take our free climate risk assessment here to determine the magnitude of climate risks posed to your organization.
However, navigating biodiversity risk requires expert insights, strategic planning, and tailored ESG integration. If your business is looking to future-proof its operations and stay ahead of biodiversity regulations, our team can help.
Curious about who we are or the impact we’re making? Visit our homepage or learn more about us.
Frequently Asked Questions
Why is biodiversity loss now considered a material business risk?
Biodiversity loss threatens the stability of supply chains, especially in sectors reliant on natural resources. As ecosystems degrade, raw materials become scarcer, operational costs rise, and businesses face new compliance demands—making biodiversity a direct financial and strategic risk.
How is the Kunming-Montreal Agreement affecting corporate responsibility?
The Kunming-Montreal Global Biodiversity Framework sets binding global targets that include protected area expansion and biodiversity risk disclosures. Companies must now assess and report their impact on nature, similar to how they report carbon emissions.
Which industries face the greatest exposure to biodiversity-related risks?
Agriculture, fashion, pharmaceuticals, and mining are among the most vulnerable. These sectors depend heavily on natural systems and are increasingly scrutinized for their environmental impact and supply chain practices.
What steps can companies take to mitigate biodiversity risk?
Start with a biodiversity risk assessment, align with frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD), adapt supply chains to avoid sensitive ecosystems, and invest in nature-based solutions to offset impact.
How does addressing biodiversity risk benefit business performance?
Integrating nature considerations strengthens resilience, reduces regulatory and reputational risks, attracts ESG-conscious investors, and differentiates your brand as a sustainability leader in a rapidly evolving market.
