WEF New Nature Economy Report 2020

New Nature Economy series
Nature Risk Rising:

Why the Crisis Engulfing
Nature Matters for Business
and the Economy
In collaboration with PwC
January 2020
World Economic Forum
91-93 route de la Capite
CH-1223 Cologny/Geneva
Switzerland
Tel.: +41 (0)22 869 1212
Fax: +41 (0)22 786 2744
Email: [email protected]
www.weforum.org
© 2020 World Economic Forum. All rights

reserved. No part of this publication may be
reproduced or transmitted in any form or by any
means, including photocopying and recording, or
by any information storage and retrieval system.
Nature Risk Rising is published by the World Economic Forum in
collaboration with PwC. It is the first in a series of reports from the
New Nature Economy project.
About the New Nature Economy series
The series of New Nature Economy (NNE) reports is being developed under the
umbrella of the Nature Action Agenda, a platform for committed actors to join
up ideas and efforts in the run-up to the UN Convention on Biological Diversity
COP15 – in Kunming, China, in October 2020 – and in support of the related
Business for Nature agenda. The NNE reports aim to contribute to the Agenda’s
fact base, focusing on the business and economic case for action.
The series will span three reports that focus on the following priorities:
1. Make the case for why the nature crisis is crucial to business and the
economy, including:
– The scale and urgency of the nature crisis

– The potential consequences for society if the crisis goes unchecked
– The interests of business to make the crisis a critical consideration
2. Identify a set of priority socioeconomic systems for transformation:
– Target areas in which individual and collective action from business and
other actors (such as state-owned enterprises, investors and financial
corporations) is urgent and indispensable
– Ecosystems that are closer to irreversible tipping points, and hence have
more global relevance if tipped, and in which the drivers of degradation
are more deeply connected to economic and business activities. Actors
in this space therefore have more value at stake and a greater ability to
influence the transformation.
3. Scope the market and investment opportunities for nature-based

solutions to environmental challenges:
– Research solutions across the biodiversity, climate mitigation, climate

resilience and ocean agendas
– Assess their economic and nature-building potential
– Identify areas and approaches that are most interesting for private-sector
finance to engage in
About the World Economic Forum
The World Economic Forum, committed to improving the state of the world, is
the International Organization for Public-Private Cooperation. The Forum engages
the foremost business, political and other leaders of society to shape global,
regional and industry agendas.
Nature Risk Rising 3

Contents
Foreword 7
Executive summary 8
1. The nature emergency 9
Environmental costs of economic growth 9
Drivers of nature loss 11
Non-linear risks of nature loss 12
2. The hidden risks of nature loss for business 13
Risks emerging from dependency of business on nature 13
Risks emerging from fallout of business impacts on nature 16
Risks emerging from impacts of nature loss on society 17
3. Managing nature-related risk 19
Aligning nature-related risk with existing risk categories 20
Developing a risk-management approach for nature-related risk 22
4. Moving to action on nature-related risks 24
Appendix A: Approach to modelling nature dependency for

countries and sectors 25
Direct nature dependency 25
Supply chain nature dependency 26
Contributors 27
Endnotes 28

Foreword
How come the most intellectual creature to ever walk Earth is

destroying its only home?
Jane Goodall, writing in The Guardian, 3 November 2018
Since the start of the 20th century, human ingenuity and entrepreneurialism have delivered exponential
Dominic economic growth.1 In the last century, real global output grew 20-fold2 and the further acceleration that
Waughray, took place after 19503 has delivered impressive improvements in human welfare. For example, child
Managing mortality rates have halved globally since 1990,4 and average life expectancy has increased from 29
Director, years in the pre-modern era to 73 years in 2019.5,6 However, the pivotal role of natural capital assets
Managing Board, and ecosystem services in ensuring this social and economic prosperity has gone largely unnoticed.
World Economic
Forum Our analysis detailed in this paper shows that in high-growth economies such as India and
Indonesia, around a third of the GDP is generated in sectors that are highly dependent on nature.
We also find that every industry sector has some degree of direct and indirect dependency on
nature. Unsurprisingly, primary industries such as food and beverages; agriculture and fisheries;
and construction exhibit the highest nature dependency. In addition, nature loss can also fuel
socioeconomic instability, which in turn disrupts the markets in which business operates.
According to the World Economic Forum’s 2020 Global Risks Report, biodiversity loss is one of the
top five risks in terms of likelihood and impact in the next 10 years. Nature loss is a fat-tail risk like the
2008 asset-price bubble: It cannot be seen with a linear world view, but once triggered can have far
greater than average implications. This has significant ramifications for businesses both in the short
and long term and requires a reset of how businesses perceive, assess and mitigate nature risks.
By investing in a more nature-positive way of doing business, we can mitigate significant economic
Celine Herweijer, and societal shocks in the coming future. To this end, there is a need for new mechanisms of public-
Global Leader, private collaboration and non-traditional flows of finance to reverse nature loss and secure a net-zero
Innovation and emissions world by 2050. Fourth Industrial Revolution technologies also offer great opportunities to
Sustainability, support this shift towards a net-zero, nature-positive world.
PwC, United
Kingdom The World Economic Forum’s New Nature Economy (NNE) report series aims to catalyse a public-
private momentum in 2020 with a focus on the UN Convention on Biological Diversity (CBD) COP15
in Kunming, China, and the related Business for Nature mobilization. This report, the first of the NNE
report series, begins by calling out the dependency and impact of business on nature and aims to
ensure that biodiversity and nature-related risks are appropriately considered within the broader
economic growth agenda.
As the world prepares for the 2020 “Super Year for Nature”, with important international political
milestone events on oceans, climate, Sustainable Development Goals and biodiversity, we hope that
this report helps bring new perspectives and stakeholder engagement to bear in tackling the urgent
nature crisis.

Executive summary
Although the world’s 7.6 billion people represent only secondary and tertiary industries can also be significant. For
0.01% of all living things by weight, humanity has already example, six industries – chemicals and materials; aviation,
caused the loss of 83% of all wild mammals and half travel and tourism; real estate; mining and metals; supply
of all plants. The current rate of extinction is tens to chain and transport; retail, consumer goods and lifestyle
hundreds of times higher than the average over the past – with less than 15% of their direct GVA highly dependent
10 million years – and it is accelerating. Current production on nature, still have “hidden dependencies” through their
and consumption patterns, land use and urbanization, supply chains. More than 50% of the GVA of their supply
population dynamics, trade, industry and governance chains is highly or moderately dependent on nature.
models underpin this loss, calling for a radical reset of
humanity’s relationship with nature. Nature risks become material for businesses in the following
three ways:
Consequently, it is not surprising that the World Economic
Forum’s 2020 Global Risks Report (GRR), through its 1. When businesses depend directly on nature for
comprehensive risks perception survey, ranks biodiversity operations, supply chain performance, real estate
loss and ecosystem collapse as one of the top five risks in asset values, physical security and business continuity
terms of likelihood and impact in the coming 10 years. Yet
general confusion persists on what amount of nature loss 2. When the direct and indirect impacts of business
has occurred, why it relates to human prosperity and how activities on nature loss can trigger negative
to confront its loss in a practical manner, especially in the consequences, such as losing customers or entire
business world. markets, legal action and regulatory changes that
affect financial performance
Following on the heels of the 2020 GRR, this report provides
a deep dive into how nature loss is material to businesses 3. When nature loss causes disruption to society and the
in all industry sectors and makes a clear argument for markets within which businesses operate, which can
nature-related risks to be regularly identified, assessed and manifest as both physical and market risks
disclosed by business – as is now increasingly the case for
climate change risks. This will help prevent risk mispricing Given that efforts to mitigate the risks of climate change
and inaccurate capital buffers, as well as guiding action to are significantly more mature than those of nature-related
mitigate and adapt business activities that degrade and risks, this report draws lessons from the climate action
destroy nature. agenda. The Task Force on Climate-related Financial
Disclosures (TCFD) recommendations, for instance, are
Human societies and economic activities rely on biodiversity proving to be an important lever for enhancing corporate
in fundamental ways. Our research shows that $44 trillion of and investor climate action by embodying climate risk and
economic value generation – more than half of the world’s opportunity into effective risk management, strategy and
total GDP – is moderately or highly dependent on nature oversight. Learning from and drawing on this approach may
and its services and is therefore exposed to nature loss. be a crucial mechanism for managing nature-related risks
Together, the three largest sectors that are highly dependent and will ensure alignment with broader risk-management
on nature generate close to $8 trillion of gross value added processes. To this end, this report suggests adapting a fit-
(GVA): construction ($4 trillion); agriculture ($2.5 trillion); for-purpose approach to incorporating nature-based risks
and food and beverages ($1.4 trillion). This is roughly twice into existing core enterprise risk-management processes, as
the size of the German economy. While the risk to primary is increasingly undertaken for climate change and broader
industries is straightforward to grasp, the consequences for environmental, social and governance (ESG) processes.
Never before have we had such an awareness of what we are

doing to the planet, and never before have we had the power to
do something about that.
Sir David Attenborough, at the World Economic Forum Annual Meeting

in Davos-Klosters, 2019
8 Nature Risk Rising

1. The nature emergency
The ecological foundations underpinning our society and economy are at risk
Environmental costs of economic growth Earth system science is showing us how climate change
and nature loss are inextricably interlinked. The destruction
The pace of change over the past 50 years has been of mangroves, peatlands and tropical forests for agriculture
unprecedented in human history, with extraordinary and other uses contributes to 13% of total human CO2
increases in world economic output and life expectancy. emissions and will continue to exacerbate the effects of
The human population has doubled, the global economy climate change.14 Their conversion to farmland and other
has expanded four-fold and more than 1 billion people uses releases carbon from vegetation and soils while
have been lifted out of extreme poverty.7,8 Globally, undermining Earth’s capacity to absorb and sequester
we produce more food, energy and materials than greenhouse gases from the atmosphere. In a business-
ever before.9 The improvements in human welfare and as-usual scenario, as global temperatures increase by 2°C
aggregate benefits from the accelerated economic growth compared to the pre-industrial growth era, one in 20 species
over the past century have been impressive. The global will be threatened with extinction from this warming alone.15
middle class, currently 3.5 billion people, continues to Additionally, more than 99% of coral reefs, which host more
grow by about 160 million people a year, 70% of whom are than a quarter of all marine fish species, will be lost.16
in China and India.10
So it is unsurprising that the World Economic Forum’s
However, this remarkable growth and prosperity has come annual Global Risks Report (GRR) has, for the past five
at a heavy cost to the natural systems that underpin life years, identified biodiversity loss and ecosystem collapse
on Earth – and which therefore underpin these economic as a mid- to high-level global risk in terms of impact and
achievements too (see Figure 1). Human activities have likelihood (see Figure 2). In 2020, the GRR’s comprehensive
already severely altered 75% of land and 66% of marine Global Risks Perception Survey, conducted across a global
environments.11 Around 25% of assessed plant and community of businesses, governments and civil society,
animal species are threatened by human actions, with a displays a striking result. For the first time, the top five
million species facing extinction, many within decades.12 global risks come from a single category: the environment.
Ecosystems have declined in size and condition by 47% This includes biodiversity loss as one of the top risks in the
globally compared to estimated baselines.13 coming 10 years.
FIGURE 1:
Human activity is eroding the world’s ecological foundations
83%
More than population
85% of decline
wetlands across
have been lost freshwater 60%
At least 55% species since population
of ocean area 1970 decline
is covered 50% of the across
1/3 of the by industrial world’s coral vertebrate
world’s fishing reef system 41% of species since
topsoil has been known insect 1970
has been 32% of the destroyed species have
33% of fish
degraded world’s forest declined in the
stocks are
The Amazon area has been past decades
overfished
has lost 17% destroyed
of its size in
the past
50 years
Terrestrial ecosystems Oceanic ecosystems Species
Source: IPBES, 2019, “Global assessment report on biodiversity and ecosystem services”; Maria-Helena Semedo of the Food and Agriculture Organization (FAO) at World Soil
Day 2014; The Economist, 2019, “On the brink – The Amazon is approaching an irreversible tipping point”; WWF, 2018, “Living planet report – 2018: Aiming higher”;
F. Sánchez-Bayo and K.A.G. Wyckhuys, 2019, “Worldwide decline of the entomofauna: A review of its drivers”, Biological Conservation.

FIGURE 2:
The Global Risks Landscape 2020 and the evolution of the biodiversity loss risk in the past three years
4.0 Climate action

failure
Weapons of
mass destruction
Water crises Biodiversity loss 2020

Extreme weather
Biodiversity
Natural disasters
Information loss 2019
Cyberattacks
infrastructure
breakdown
Human-made
Infectious diseases environmental disasters
Interstate
Food crises conflict
Biodiversity loss 2018
3.5
3.47 Financial failure Global governance failure
average
Fiscal crises Involuntary migration
Data fraud or theft
Unemployment Asset bubbles
Social instability
Critical infrastructure failure
National governance failure
State collapse Adverse technological

Terrorist attacks
advances
Energy price shock
Unmanageable inflation
3.0
Failure of
urban planning
Deflation
Impact
Illicit trade
2.5 3.0 3.5 4.0

3.32
average plotted area
Likelihood 5.0
Source: World Economic Forum Global Risks Perception Survey 2019–2020
Note: Survey respondents were asked to assess the likelihood of the individual global risk on a scale of 1 to 5, with 1 representing a risk that is very unlikely to happen and
5 being a risk that is very likely to occur. They were also asked to assess the impact of each global risk on a scale of 1 to 5 (1: minimal impact, 2: minor impact, 3: moderate
impact, 4: severe impact and 5: catastrophic impact).

Drivers of nature loss increasing the risk of large-scale, irreversible environmental
and societal changes.21
Although the world’s 7.6 billion people represent only 0.01%
of all living things by weight, humans have already caused According to the latest report by the Intergovernmental
the loss of 83% of all wild mammals and half of all plants.17 Science-Policy Platform on Biodiversity and Ecosystem
The current rate of extinction is tens to hundreds of times Services (IPBES) – the most comprehensive global
higher than the average over the past 10 million years – and biodiversity assessment to date – five direct drivers of
it is accelerating.18 The impacts on the planet by a single change in nature have accounted for more than 90%
species, humans, are so profound that scientists have of nature loss in the past 50 years (see Figure 3).
coined a new geological epoch: the Anthropocene, or the Ultimately, these five drivers stem from a combination
period when humans are the key driver of geological change of current production and consumption patterns,
on the planet.19,20 We are breaching the planet’s boundaries population dynamics, trade, technological innovations
beyond the ability of natural systems to cope, which is and governance models.
FIGURE 3:
Five direct drivers of nature loss have accelerated since 1970
Driver of nature loss Illustrative impact on nature
Half of all habitable land today is used for agriculture and livestock22
In recent years, we have lost more than 3 million hectares annually of tropical primary
forest, one of the most biodiverse ecosystems in the world23
Land- and In the past 50 years, there has been a four-fold increase in the number of dead zones, i.e.
sea-use change areas in which levels of oxygen are too low to support most marine life; there are more than
400 dead zones worldwide, a combined area greater than that of the United Kingdom24,25
Fires in boreal forests are now more extensive and destructive than in the past 10,000
years;26 climate models predict that conditions making fires more frequent and severe will
significantly increase27
Coral reefs are projected to decline by a further 70% to 90% at 1.5°C of warming, with
Climate change larger losses (>99%) at 2ºC28
93% of fish stocks today are fished at or beyond maximum sustainable levels29
Since 1970, annual extraction of natural resources, including fossil fuels and biomass,
Natural resource use has increased 3.4-fold30
and exploitation
Globally, around 115 million tonnes of mineral nitrogen fertilizers are applied to croplands
each year; a fifth of these nitrogen inputs accumulate in soils and biomass, while 35%
enter the oceans31
Pollution
There has been a 70% increase in non-native species, with adverse impacts on local
ecosystems and biodiversity32
Invasive alien species

Non-linear risks of nature loss waste and enable real-time tracking and monitoring of
global agricultural and industrial supply chains. This century
requires a reset of the relationship between humans and
nature – in doing so, innovations of the 21st century need to
responsibly deliver for both people and the planet.
Many have tended to assume that tipping
points in the Earth system – such as the The global economy is embedded in Earth’s broader
loss of the Amazon rainforest or the West ecosystems and is dependent upon them.39 As nature
Antarctic ice sheet – are of low probability and continues to deteriorate, businesses progressively run
more risk. This risk is not only reputational and legal – as
little understood. Yet evidence is mounting more consumers and governments become aware of and
that these events could be more likely than act on nature loss. It is also operational and financial – as
was thought, have high impacts and are direct inputs disappear and ecosystem services, on which
interconnected across different biophysical businesses depend, stop functioning.
systems, potentially committing the world to
As nature declines, the prospects for business success
long-term irreversible changes. and future prosperity dwindle. Conversely, the business
opportunities that await those committed to restoring
natural ecosystems could be considerable. Solutions to
Johan Rockström, Director – Potsdam Institute the issue of nature loss are complex, but unless we take
for Climate Impact Research transformative action urgently, the risks and impacts of
such loss will only accelerate.
Scientists and researchers predict that if the current rates

of nature destruction continue unabated, some biomes
(e.g. tundra, grasslands, forests, deserts) may cross
irreversible tipping points, with far-reaching economic and
societal impacts. When exceeded, these tipping points can
trigger catastrophic events – sometimes locally, sometimes
(as with climate change) globally.33 For example, large-scale
forest loss in the Amazon not only affects the destroyed
area, but can also alter regional weather patterns,34 affecting
regional water availability and agricultural productivity. Some
17% of forest cover in the Amazon has been lost since
1970.35 If the rate of forest loss continues, and 20–25%
of the forest is lost, scientists warn that the region will
reach a tipping point and parts will change to non-forest
ecosystems.36 Models suggest that this would lead to
increased duration of droughts in the region37 and annual
agricultural production losses of $422 million in Brazil
alone.38 Brazil is a significant global exporter of food, and
a sharp decline in its agricultural output could increase the
volatility of food prices around the world.
Accurately managing and mitigating such risks requires

a fundamental shift in thinking about the value of nature,
including accounting for natural capital and the costs of
ecosystem degradation within economic development. New
business models enabled by Fourth Industrial Revolution
technologies have the potential to accelerate this shift
towards a nature-positive development path and unlock
nature’s value while minimizing resource use. Examples
include harnessing artificial intelligence (AI), satellite imagery
and drones to automatically detect land-use changes
or monitor and control invasive species and diseases in
ecosystems. Likewise, circular economy models and new
technologies can both optimize use of inputs and minimize

2. The hidden risks of nature loss for business
Nature loss creates significant risks for businesses and the wider economy
The 2019 Edelman Trust Barometer found that more than Risks emerging from dependency of business
three-quarters (76%) of the population want chief executive on nature
officers to lead the way in delivering change rather than
waiting for governments to impose it.40 All businesses depend on natural capital assets and
ecosystem services either directly or through their supply
Despite increasing levels of attention to the topic of chains. Our research shows that $44 trillion of economic
nature loss over the past few years, there is still limited value generation – more than half of the world’s total
understanding of how nature loss affects business and what GDP – is moderately or highly dependent on nature and
practical steps businesses can take towards addressing its services, and therefore exposed to risks from nature
nature loss. One of the main reasons for this is that nature is loss.41 To estimate the extent to which the global economy
often hidden or incorrectly priced in supply chains. depends on nature, we have assessed the reliance on
natural capital assets of 163 economic sectors and
There are three ways in which the destruction of biodiversity examined them at an industry and regional level, based
and ecosystems creates risks for businesses: on the economic value creation of each industry. Our
methodology is detailed in Appendix A.
1. Dependency of business on nature: when
businesses depend directly on nature for operations, Industry dependency on nature
supply chain performance, real estate asset values, Industries that are highly dependent on nature generate
physical security and business continuity 15% of global GDP ($13 trillion), while moderately
dependent industries generate 37% ($31 trillion). Together,
2. Fallout of business impacts on nature: when the the three largest sectors that are highly dependent on
direct and indirect impacts of business activities on nature generate close to $8 trillion of gross value added
nature loss trigger negative consequences, such as (GVA42). These are construction ($4 trillion), agriculture
losing customers or entire markets, costly legal action ($2.5 trillion) and food and beverages43 ($1.4 trillion). This
and adverse regulatory changes is roughly twice the size of the German economy. Such
sectors rely on either the direct extraction of resources from
3. Impacts of nature loss on society: when nature forests and oceans or the provision of ecosystem services
loss aggravates the disruption of the society in which such as healthy soils, clean water, pollination and a stable
businesses operate, which in turn can create physical climate. As nature loses its capacity to provide such
and market risks services, these sectors could suffer significant losses.

For example, 60% of coffee varieties are in danger change.47 However, monocultures, induced mostly
of extinction due to climate change, disease and by economic incentives, are still the dominant form
deforestation.44 If this were to happen, global coffee of industrial agriculture.48,49
markets – a sector with retail sales of $83 billion in
201745 – would be significantly destabilized, affecting the Dependency on nature can vary considerably between
livelihoods of many smallholder farmers. different industries and sectors. While the risk to primary
industries is straightforward to grasp, the consequences
Similarly, outbreaks of invasive pests and diseases for secondary and tertiary industries can also be significant.
are a common cause of nature loss that threatens For example, six industries – chemicals and materials;
the survival of commercially important crop species aviation, travel and tourism; real estate; mining and metals;
with low genetic diversity. More than half of the world’s supply chain and transport; retail, consumer goods and
food comes from just three staples – rice, wheat and lifestyle – with less than 15% of their direct GVA highly
maize – which already suffer annual losses of up to 16% dependent on nature still have “hidden dependencies”
of total production (valued at $96 billion) due to invasive through their supply chains. More than 50% of the GVA of
species.46 Agricultural crop diversification can improve their supply chains is highly or moderately dependent on
resilience to pest and disease outbreaks, as well as buffer nature. Figure 4 illustrates in more detail the proportion of
crop production against the effects of greater climate GVA exposed to nature loss in 22 global industries.
FIGURE 4:
Percentage of direct and supply chain GVA with high, medium and low nature dependency, by industry
Direct Supply chain

Forestry
Agriculture
Fishery and aquaculture
Food, beverages and tobacco
Heat utilities
Construction
Electricity
Water utilities
Supply chain and transport
Chemical and materials industry
Aviation, travel and tourism
Real estate
Mining and metals
Retail, consumer goods and lifestyle
Oil and gas
Automotive
Healthcare delivery
Electronics
Information technology
Insurance and asset management
Banking and capital markets
Digital communications
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
% of industry GVA % of supply chain GVA
■ High ■ Medium ■ Low
Source: PwC

Spotlight
Coral reef and wetland destruction could cost insurance companies and tourism billions
Maintaining healthy coastlines is critical to providing protection from flooding and other extreme weather events.
Destruction of coral reefs reduces such protection and puts at risk up to 300 million people living within coastal 100-
year flood zones.50 If global warming increases to 2°C, the world will lose 99% of all coral reefs.51 This loss also creates
economic risks for the tourism industry. Globally, coral reefs provide $36 billion a year in economic value through
tourism, of which $19 billion is generated through “on-reef” tourism such as diving and wildlife watching, while the
remainder is generated from tourism in reef-related areas, for instance, ocean views, beaches and local seafood.52
Wetland destruction is another critical risk, as these habitats provide significant ecosystem services, including water
filtration and flood control.53 During Hurricane Sandy, the strongest hurricane of the 2012 Atlantic season, wetlands
were estimated to have saved more than $625 million in avoided flood damage.54 Protecting coastal wetlands could
save the insurance industry $52 billion a year through reduced losses from storm and flood damage.55
National and regional dependency on nature In terms of global exposure, larger economies have the
Analysing industry-wide GVA through a national or regional highest absolute amounts of GDP in nature-dependent
lens provides additional perspectives on the dependency sectors: $2.7 trillion in China, $2.4 trillion in the EU, and
and impacts of businesses on nature (see Figure 5). We $2.1 trillion in the United States. This means that even
find that some of the fastest-growing economies in the regions with relatively lower shares of their economies at
world are particularly exposed to nature loss. For example, high exposure to nature loss hold a substantial share of the
around one-third of the GDP of India (33%) and Indonesia global exposure and therefore cannot be complacent.
(32%) is generated in sectors that are highly dependent on
nature, while the African continent creates 23%56 of its GDP
in such sectors.
FIGURE 5:
Distribution of nature dependency classification by region
23%
37%
Low nature
41% 37% dependency
54% 51% 45% 53% 44%
55%
45%
30%
38% Medium nature
33% 39% 39% dependency
36% 36% 38% 35%
33%
32% High nature
20% 17% 12% 17% dependency
10% 13% 12% 23%
0% 20% 40% 60% 80% 100% % of World GDP
States
United
EU
China
America
Central
South and
Japan
Middle East
India
Africa
Indonesia
world
of the
Rest
Source: PwC

Given their significant nature dependencies, it is critical financial system is likely to be overexposed to such assets.63
that these economies with significant exposure to nature In addition to regulatory changes, stranded assets can also
loss assess, prioritize and invest in nature. However, this arise directly from longer-term environmental changes, such
is only part of the picture, as there are also potential as climate change or nature loss.64
missed opportunities from nature loss that may not be
captured in current economic data or trends. There are Public perception, reputation and investor pressure
many cases in which nature has inspired and enabled Public opinion is shifting, especially among millennials
people to solve complex human challenges. For example, and generation Z. We are seeing major consumer shifts
researchers from Harvard University studied the Namib on single-use plastics,65 meat66 and other ethical
desert beetle to develop a better way to condense and consumer considerations.
transport water droplets to fight droughts.57 They did so
by mimicking the way the beetle collects water droplets A typical company in the fashion and textile industry, for
on the bumps of its shell while V-shaped spines guide instance, can often be resource- and water-intensive,
droplets to the plant’s body. chemical-heavy and a significant generator of waste.67
Consumers are becoming increasingly aware of the
Risks emerging from fallout of business environmental damage caused by the industry and are
impacts on nature demanding action. Companies that stay at the forefront
of this shift in consumer consciousness and preferences
In addition to dependency on nature, the negative impacts stand to benefit. Prompted by the G7 summit in 2019, more
that businesses have on nature can create direct and than 50 companies and 250 brands have signed up to the
indirect risks in the form of regulatory, legal, reputational and G7 Fashion Pact, a commitment by the fashion industry to
market risks, among others. do more to stop global warming, restore biodiversity and
protect the oceans.68
Regulatory and legal pressures
In October 2020, the 15th Conference of the Parties (COP) Another example of shifting consumer preference is seen
will gather 196 parties to the UN Convention on Biological in the meat industry, which is coming under increased
Diversity, in Kunming, China, to negotiate the adoption scrutiny given the environmental damage it causes.69 Beef
of the post-2020 Global Biodiversity Framework, setting consumption in the United States fell by 19% between 2005
the course of action for a “Paris moment” for nature. and 201470 and Europe predicts that both its beef and pork
The meeting will set new targets, encouraging increased meat consumption will decline by 2030.71
government action on nature loss. A variety of new
regulatory levers are anticipated, including strict rules Consumers are not the only ones demanding more from
on the commercial use of specific land areas, subsidy businesses. Ratings agencies have started to include
reforms, taxes and fines, science-based targets and nature-related disclosures in their assessments, while
trade directives. A few countries have already started institutional investors are demanding more accountability
this journey. Indonesia has introduced a moratorium on in terms of the environmental risks of business operations.72
peatland conversion by restricting the issuing of new This means companies will incur higher costs of capital
agricultural licences;58 Costa Rica has redirected cattle when engaging in nature-degrading practices.
subsidies towards paying farmers and landowners to
provide ecosystem services such as carbon sequestration In the soy supply chain, for example, 57 institutional
and watershed protection;59 and France recently established investors with assets totalling $6.3 trillion have asked
a duty-of-care law that requires companies to include all soy trading companies to “demonstrate commitment
environmental assessments in their supply chains.60 More to eliminating deforestation” by publicly disclosing their
countries are likely to follow, and this will increase the policies on this issue, including the origin of their soy
regulatory risk exposure for many businesses. and their stance on suppliers that fail to comply with no-
deforestation standards.73
As regulation intensifies, the chance of businesses holding
“stranded assets” increases. Companies holding nature-
related stranded assets, such as land banks that can no
longer be developed, might face premature write-offs,
downward revaluations or conversions to liabilities.61 The
Tropical Forest Alliance (TFA), for example, has estimated
that if over the next five to 10 years investors continue to
invest in the production of deforestation-linked commodities,
tens of billions of dollars in assets could be at risk of
stranding.62 Often, risks resulting in stranded assets are little
understood, mispriced and overlooked. This means that the

Spotlight
Tropical deforestation drives market and reputational risks in agriculture and biofuels
Tropical deforestation is a key source of nature risk for sectors that either have an impact or dependency on
tropical forests.
An estimated 4.3 million hectares of humid tropical primary forest,74 an area the size of Denmark, are lost each year
– mainly due to agriculture, livestock and infrastructure expansion. The impact of deforestation activities can reach
beyond agriculture sectors: The World Bank estimates that 2015’s deforestation-fuelled fire crisis in Indonesia cost their
economy $16 billion through disruption of economic activities and reduced GDP growth.75
Exposure to commodities linked to deforestation is another critical risk for businesses, with up to $941 billion of
turnover in publicly listed companies dependent on the commodities most connected with forest loss (beef, soy, palm
oil, pulp and paper). Deforestation risk can emerge as reputation risk, where shifts in public perception have led to
business commitments to zero-deforestation sourcing (commitments that companies are struggling to meet); but it can
also quickly manifest as market risk.
A good example is the palm oil sector. In 2016, the European Food Safety Authority raised concerns about three
contaminants present in palm oil and fats.76 The issue was quickly picked up by anti-palm oil campaigners in Italy. This
resulted in Coop Italia – the largest Italian grocery chain with more than €12 billion of turnover – and Barilla – the world’s
leading pasta manufacturer with €3.4 billion in sales – phasing out some or all of the palm oil from their food product
lines. While there are serious questions about the environmental benefits of these exclusions,77 there is no doubt that
they triggered market turbulence in the palm oil sector, with “palm oil-free” branding becoming the subject of a legal
and trade dispute.78
Meanwhile, biofuel accounted for nearly half of Europe’s palm oil consumption in 2015.79 This, too, is coming under
pressure as the European Union has revised its regulations around assessing the deforestation risks of biofuel in a way
that would require palm oil to be phased out by 2030.80 These regulatory and market movements pose significant risks
to a sector that imports 3.5 million tonnes (€2.2 billion) of palm oil into the EU every year.81
Risks emerging from impacts of nature megacities is $482 million per year85 – while the destruction
loss on society of vegetation in forest and brush fires is an increasingly
frequent source of hazardous air pollution levels. The World
Besides their contribution to economic activities, nature’s Bank estimated that the haze from the 2015 forest fires in
assets and services – clean air, plentiful fresh water, fertile Indonesia caused $151 million of immediate health costs
soils, a stable climate, to name a few – provide vital public alone, with long-term costs still unquantified.86
goods on which human societies rely for their functioning.
Consequently, the loss of nature can contribute to systemic Risks to global peace
geopolitical risk and, in some cases, destabilize the The degradation of nature can – with climate change –
environments in which businesses operate. contribute to water shortages, which in turn have long
been a precursor to disputes and conflicts.87 Droughts have
Risks to global health been linked to climate change88 and are exacerbated by
The degradation and loss of natural systems can affect nature-loss trends such as deforestation.89 Geopolitically,
health outcomes.82 For example, the onset of infectious drought events have increasingly been referenced as
diseases has been connected to ecosystem disturbance major components of increased violence,90 including in
such as the strong links between deforestation and sub-Saharan Africa,91 internal security challenges in Kenya
outbreaks of animal-transmitted diseases like Ebola and the and Sudan and numerous coups in Mali.92 A well-known
Zika virus.83 example of this relationship is the drought that has been
linked to the onset of the Syrian civil war.93
Nature loss can also exacerbate the effects of air pollution,
a major threat to health that causes between 3.4 and 8.9
million deaths every year.84 Urban trees provide substantial
pollution reduction services – an estimate for the world’s 10

Risks to global trade forest ecosystems contribute only 7% to India’s GDP, they
Large-scale loss of nature has the potential to affect trade contribute 57% of rural Indian communities’ livelihoods.98
relations between countries. The dramatic increase in Given that three-quarters of moderately and extremely poor
forest fires in the Brazilian Amazon in 2019 is threatening people live in rural areas,99 the loss of natural assets and
to derail the EU-Mercosur trade agreement after 20 years ecosystem services has a profound effect on global poverty
of negotiations. The trade between the two blocs is and development.
worth €122 billion94 and the deal is expected to generate
significant new market opportunities through the reduction Risks to gender equality
or elimination of tariffs and trade barriers. However, EU Nature loss and climate change have a disproportionate
member states have voiced concern about the scale of impact on women and children, as women play a vital
forest fires, putting the deal in jeopardy. The Austrian role in managing biological resources such as fuel, food
parliament, citing environmental concerns among other and water.100,101 As increased gender equality is a driver
things, has expressed its opposition to the deal, which of economic growth,102 the adverse impacts of nature
would effectively torpedo any EU ratification.95 Ireland loss on women have wider implications for economic
and France have also stated that they will reject the development and can reduce market development
deal unless Brazil meets its environmental commitments opportunities for businesses.
regarding the Amazon.96
Risks to economic development

Nature loss is particularly dire for the rural poor and their
prospects of economic development. Rural communities
are often directly and heavily dependent on nature for their
food, shelter, income, fuel, health and way of life. They
are more vulnerable to its loss since substitutes are often
unavailable or too costly.97 In India, for example, while
Spotlight
Genetic material loss puts future growth in the pharmaceutical industry at risk
The sustainable growth of the pharmaceutical industry depends on the development of new drugs and treatments
to drive future revenues.103 No other sector spends as much on R&D as pharmaceuticals.104 As much as 50% of
prescription drugs are based on a molecule that occurs naturally in a plant,105 while 70% of cancer drugs are natural or
synthetic products inspired by nature.106
In the past 70 years, approximately 75% of approved anti-tumour pharmaceuticals have been non-synthetic, with 49%
being wholly natural products or directly derived therefrom.107 Species currently endangered by biodiversity loss include
the South American cinchona tree, the source of the malaria drug quinine.108
The industry is particularly dependent on biodiverse tropical rainforests for new discoveries, with 25% of drugs
used in modern medicine derived from rainforest plants.109 As tropical forests face threats from felling and wildfires,
pharmaceutical companies face losing a vast repository of undiscovered genetic materials that could lead to the next
medical – and commercial – breakthrough. Only 15% of an estimated 300,000 plant species in the world have been
evaluated to determine their pharmacological potential.110 According to some estimates, we are already losing one
potential major drug every two years.111
The field of venomics (scientific analysis of venom) also makes significant contributions to pharmaceuticals in a variety
of areas including cancer, heart disease, diabetes and other health issues.112 For example, Byetta is part of a new wave
of drugs designed to lower blood glucose in patients with type 2 diabetes. Its key ingredient, exendin-4, is found in
the saliva of the Gila monster, a large lizard species native to the south-western US and north-western Mexico.113 This
is just one example of how the loss of species yet to be studied can carry with it the loss of unmeasured potential for
further discovery.

3. Managing nature-related risk
The previous two chapters established the materiality of 1. Financial materiality: The TCFD moves beyond non-
nature-related risks to businesses and the economy. As the financial sustainability metrics and requires assessment
global community works towards transitioning to a nature- and disclosure of potential financial impacts. In the
positive economy, an urgent reframing of the financial case of nature, this could include, for example, the
materiality of nature risks to businesses, financial institutions, impact of land-use restrictions on asset value, or the
asset owners, regulators and governments is required. It is costs and insurance premium increases arising due to
important that these risks are regularly identified, assessed settlements from pollution.
and disclosed by business – as is now routinely the case
for climate risks. This will help prevent risk mispricing and 2. Governance: The TCFD recommends that disclosures
inaccurate capital buffers to both short-term risk events and are made in audited (e.g. public) annual financial
more chronic impacts. filings under the laws of the jurisdictions in which
they operate. This puts climate risk assessment and
Nature-related risks can be incorporated within existing disclosure in the hands of the chief financial officer
ERM (enterprise risk management) and ESG (environmental, and chief risk officer and makes them subject to the
social and governance) processes, investment decision- rigorous governance processes that inform mainstream
making, and financial and non-financial reporting. Using financial filings. The resulting increase in governance
a similar framework across environmental risk categories and board understanding is a significant step and
should enable more efficient and effective integration into would raise action on nature-related risks (alongside
business decision-making. climate) to executive board level rather than leaving it
to sustainability departments alone.
Many large businesses have already adopted the framework
proposed by the G20-initiated Task Force on Climate-related 3. Business-centric: The TCFD framework was developed
Financial Disclosures (TCFD) for identifying, measuring and with input from a wide range of businesses and investors
managing climate risks (see Figure 6). Although voluntary and is flexible enough to allow risks to be incorporated
at this stage, more than 870 organizations – including into companies’ own ERM systems and other core
companies with a combined market cap of more than $9.2 business risk processes. The TCFD’s recommendations
trillion and financial institutions responsible for assets of are based on the broad themes of governance, strategy,
nearly $118 trillion – have signed up to support the TCFD’s risk management and metrics and targets (see Figure
recommendations.114 The TCFD framework could be used 6). These are well known to risk practitioners and
to manage nature risks by relying on the main aspects of the corporate reporters, and commonly accepted as a way of
framework that make it particularly powerful: managing and reporting on many types of risk.
FIGURE 6:
Core elements of recommended climate-related financial disclosures
Governance Governance
The organization’s governance around climate-related risks and
opportunities
Strategy
Strategy
The actual and potential impacts of climate-related risks and opportunities
on the organization’s businesses, strategy and financial planning
Risk management
Risk management
The processes used by the organization to identify, assess and manage
climate-related risks
Metrics and targets

Metrics and targets
The metrics and targets used to assess and manage relevant climate-
related risks and opportunities
Source: TCFD, 2017, “Recommendations of the Task Force on Climate-related Financial Disclosures”, https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-2017-
TCFD-Report-11052018.pdf (link as of 16th Dec 2019).

Aligning nature-related risk with existing risk categories
Nature-related risks can be assessed using categories that are broadly consistent with the climate risk categories as
defined in the TCFD.115 Figure 7 outlines the key categories of risk that businesses should consider, as well as high-level
examples of how these different risk types can manifest.
FIGURE 7:
Categories of nature-related risks
Category of nature-
related risk How this risk materializes Examples
Commodity risks More than three-quarters of the world’s food crops
Nature is a key contributor to a business’s rely at least partially on pollination by insects and
production processes. other animals. Global crop production with an annual
market value of between $235 billion and $577
billion is directly attributable to animal pollination and
thus at risk from pollinator decline.1
Physical risks
Supply chain performance risks Degradation of forest landscapes can threaten
Similar to climate change-related
Nature is critical to the performance of a business’s the availability and longer-term security of valuable
damage from storms, floods and
supply chain. commodities on which the €200 billion global
other extreme events, nature-
cosmetics market2 depends. For example, the
related damage such as habitat
supply of shea butter used in various cosmetics
destruction, invasive species and
products is reliant on the shea tree, which currently
habitat decline can also pose
is threatened by deforestation, parasites and
risks for business operations,
pollinator loss3,4 and is classified as vulnerable by the
assets and value chains.
International Union for the Conservation of Nature
(IUCN).5 Argan oil, another key commodity for the
cosmetics industry, is at risk from land degradation
in Morocco, where the argan tree grows.6
Damage and business continuity risk Mangroves provide crucial protection to businesses
Nature provides the stable conditions (e.g. physical and communities against coastal flooding and
security against acute and chronic events) necessary storm surges7 in addition to biodiversity benefits
for a business’s operations and continuity. and carbon sequestration.8 Coastal communities
with more extensive mangroves benefit from
increased protection against tropical cyclones,
reducing permanent losses to economic activity.9
With an estimated 35% or more of their original
cover lost,10 mangroves’ ability to continue providing
these essential services is in jeopardy. If today’s
mangroves were lost, 18 million more people
would be flooded every year (a 39% increase)
and annual damages to property would increase
by 16% ($82 billion).11
Business value risk Japanese knotweed is a highly persistent, fast-

Nature enables the conditions necessary for spreading and treatment-resistant invasive species
maintaining the value of a business (e.g. nature loss that affects many properties in Great Britain. The
can give rise to real estate asset repricing). cost and difficulty of eradicating it – as well as its
potential to spread to neighbouring properties and
give rise to legal damages – has resulted in lower
asset prices for affected properties;12 it is estimated
to cost Great Britain £165 million every year.13
Similarly, an invasive forest pathogen called sudden
oak death is projected to cost $7.5 million in tree
treatment, removal and replacement costs and $135
million in losses to single-family residential property
values in California between 2010 and 2020.14

Increased policy and regulatory intervention in Nature losses caused by business operations may
response to nature risks could cause some sectors trigger regulatory interventions. For example, in 2018
of the economy to face big shifts in asset values Indonesia’s president issued a three-year moratorium
(e.g. if they hold stranded assets due to legislation on clearing primary forests and peatlands for
change) or higher costs of doing business for land-use activities such as palm oil plantations and
companies that generate negative impacts on nature logging,15 and this was made permanent in 2019.
(e.g. in response to subsidy removals or new taxes The moratorium is forecast to reduce Indonesia’s
Regulatory and and fees). Laws, policies, regulations and court economic growth and negatively affect other
legal risks actions that may affect business operations include: macroeconomic indicators such as gross national
– Standards/certifications expenditure (GNE) and welfare. Sumatra, Indonesia’s
– Moratoria/bans/fines on access largest palm oil-producing region, is expected to be
– Taxes and fees worst affected, with a predicted -2% deviation from
– Subsidies its baseline GDP by 2030.16
– Tradable permits and resource quotas
– Trade directives
– Payment schemes
– Emissions pricing
– Changes in disclosure requirements
– Changes in liability schemes
Many companies are threatened by emerging Meat and fish alternatives, including synthetic
products/services, technologies and business proteins, will increasingly replace traditional meat
models aimed at counteracting nature risks, as well products. The demand for cow products will
as from shifting supply and demand patterns, as decrease by 70% by 2030, and by 80–90% by
consumers and the market react to nature risks. 2035, with a total cost in excess of $100 billion to
meat producers and their supply chains.17
Market risks
Shifts in public sentiment mean that companies Businesses are held to account by customers
face reputational risks by being held accountable by as social awareness of nature-related issues
customers, clients and the wider public for natural has increased. In 2010, Greenpeace launched a
capital decline/biodiversity loss or through facing campaign against Nestlé’s KitKat brand to raise
litigation for such losses. This can result in lower awareness about the brand’s sourcing of palm oil
brand value, loss of customer base and profits and/ from deforested Indonesian rainforests. Nestlé’s
or further increases in insurance premiums (in the stock subsequently decreased by 4%.18
Reputational risks case of legal action).
1 IPBES, 2017, “The assessment report on pollinators, pollination and food production”, https://ipbes.net/assessment-reports/pollinators (link as of 16th Dec 2019).
2 L’Oréal, 2018, “Cosmetics market”, https://www.loreal-finance.com/en/annual-report-2018/cosmetics-market-2-1 (link as of 16th Dec 2019).
3 Department for International Development, 2016, “Cultivating climate resilience: The shea value chain”, https://www.gov.uk/dfid-research-outputs/cultivating-climate-
resilience-the-shea-value-chain (link as of 17th Dec 2019).
4 H. Sanou et al., 2004, “Vegetative propagation of Vitellaria paradoxa by grafting”, https://link.springer.com/article/10.1023%2FB%3AAGFO.0000009408.03728.46 (link as of
17th Dec 2019).
5 IUCN, 2019, “Vitellaria paradoxa”, https://www.iucnredlist.org/species/37083/10029534 (link as of 17th Dec 2019).
6 T. Lybbert et al., 2011, “Booming markets for Moroccan argan oil appear to benefit some rural households while threatening the endemic argan forest”, https://doi.
org/10.1073/pnas.1106382108 (link as of 17th Dec 2019).
7 M. Spalding et al., 2014, “Mangroves for coastal defence: Guidelines for coastal managers & policy makers”, https://www.nature.org/media/oceansandcoasts/mangroves-
for-coastal-defence.pdf (link as of 17th Dec 2019).
8 G. Ajonina et al., 2014, “Carbon pools and multiple benefits of mangroves in Central Africa: Assessment for REDD+”, https://www.uncclearn.org/sites/default/files/inventory/
reddcarbon_lowres_954607.pdf (link as of 17th Dec 2019).
9 J. Hochard et al., 2019, “Mangroves shelter coastal economic activity from cyclones”, Proceedings of the National Academy of Sciences, https://doi.org/10.1073/
pnas.1820067116 (link as of 17th Dec 2019).
10 I. Valiela et al., 2001, “Mangrove forests: One of the world’s threatened major tropical environments: At least 35% of the area of mangrove forests has been lost in the
past two decades, losses that exceed those for tropical rain forests and coral reefs, two other well-known threatened environments”, https://doi.org/10.1641/0006-
3568(2001)051[0807:MFOOTW]2.0.CO;2 (link as of 17th Dec 2019).
11 M. Beck et al., 2018, “The global value of mangroves for risk reduction. Summary report”, https://www.conservationgateway.org/ConservationPractices/Marine/crr/library/
Documents/GlobalMangrovesRiskReductionSummaryReport10.7291/V9930RBC.pdf (link as of 17th Dec 2019).
12 House of Commons Science and Technology Committee, 2019, “Japanese knotweed and the built environment”, https://publications.parliament.uk/pa/cm201719/
cmselect/cmsctech/1702/1702.pdf (link as of 17th Dec 2019).
13 F. Williams et al., 2010, “The economic cost of invasive non-native species on Great Britain”, https://www.researchgate.net/publication/298559361_The_Economic_Cost_
of_Invasive_Non-Native_Species_on_Great_Britain (link as of 17th Dec 2019).
14 K. Kovacs et al., 2011, “Predicting the economic costs and property value losses attributed to sudden oak death damage in California (2010-2020)”, https://www.ncbi.nlm.
nih.gov/pubmed/21224033 (link as of 17th Dec 2019).
15 L. Tacconi et al., 2019, “Policy forum: Institutional architecture and activities to reduce emissions from forests in Indonesia”, https://doi.org/10.1016/j.forpol.2019.101980
(link as of 17th Dec 2019).
16 A. Arief et al., 2018, “Indonesia’s moratorium on palm oil expansion from natural forests: Economy-wide impacts and the role of international transfers”, https://www.
mitpressjournals.org/doi/pdf/10.1162/adev_a_00115 (link as of 17th Dec 2019).
17 RethinkX, 2019, “Rethinking food and agriculture 2020-2030”, https://www.rethinkx.com/food-and-agriculture#food-and-agriculture-download (link as of 17th Dec 2019).
18 G. Rijk et al., 2019, “Deforestation-driven reputation risk could become material for FMCGs”, https://chainreactionresearch.com/wp-content/uploads/2019/05/Reputation-
Risk-and-FMCGs.pdf (link as of 17th Dec 2019).

Developing a risk-management approach for Risk management: Underlying a clear governance
nature-related risk structure and links to business strategy is a robust risk-
management process to assess nature-based risks.
The TCFD framework was designed to go beyond risk The categories described in Figure 7 can serve as a
disclosure to provide a structure within which to embed framework for businesses to identify the nature-based
climate risk and opportunity into effective risk management, risks to their operations and supply chains across the main
corporate strategy and oversight. Nature-related risks and categories – physical, regulatory and legal, market and
opportunities can be managed by building on the same core reputational risks.
TCFD elements:
Metrics and targets: Businesses should consider
Governance and strategy: Businesses with significant developing metrics and targets for monitoring material
exposure to nature’s assets and services will want to nature-based risks and assessing progress against strategy.
ensure there is a clear governance structure in place to While key metrics will differ by sector, there is likely to be
identify and manage the risks stemming from nature loss some overlap with climate-related metrics already being
throughout the business. This includes defining a process reported by a range of organizations.
for communicating upwards from business units to
management (and the board) and specifying the frequency Figure 8 provides guidance on the organizational basics for
with which this needs to happen. Businesses also need nature risk management, alongside a summary of what a
to understand the implications and expected evolution of mature approach could look like. Over time, organizations
nature-based risks over the short, medium and long term, with material nature risks should expect to move towards
and actively use this understanding to inform their business a more mature approach to adequately respond to nature-
planning and strategy. related risks.

FIGURE 8:
A fit-for-purpose nature-based risk management approach
The basics Mature approach
– Identify management member responsible – Identify board and/or senior management level
for nature-based risks; if possible, the same ownership of nature risk
person should have responsibility for climate
– Establish governance structure and process to
and nature
identify, manage and report nature-based risks
– Integrate nature considerations into existing and opportunities both to the board and across
Governance environmental risk management, for example, the organization
within ERM and/or ESG functions, and the
– Identify key board-level committee(s) for nature-
corporate sustainability team
based risks and process for informing these
– Educate key governance functions on interplay (including audit, risk and ESG committees)
between nature and broader ESG risks
– Integrate performance on nature and climate
into incentives for key leadership
– Consider company ambition on nature and – Conduct forward-looking scenario planning for
how the business wants to be positioned in nature-related risks and impact on company
the market growth strategy
– Describe any nature-related risks and – Have clearly defined position and
opportunities the organization has identified communications about nature, including link
Strategy over the short, medium and long term to climate
– Develop action plan to consider and mitigate – Identify and lead partnerships and initiatives in
key risks and opportunities key markets or internationally
– Conduct a high-level assessment of risks to – Embed nature risks fully into enterprise risk
identify hotspots and overall risk level, and any management processes, alongside climate
material risks, if present
– Conduct detailed analysis of material risks and
– Consider how to integrate material risks into opportunities including, where possible, effects
Risk ERM and risk processes, including linkages to on impact statements and balance sheets
climate risk management
management – Have a good understanding of organizational
– Decide timeline for risk review resilience and action plan for nature risk and
opportunity management
– Develop simple metrics to identify and – Develop and describe the targets used by the
track nature-related risks and opportunities organization to manage naturerelated risks and
to products and services, supply chain, and opportunities and your performance against
business continuity these targets
– Integrate nature considerations into targets set – Disclose key metrics and targets
Metrics and for broader environmental impact ambition
targets
Lower risk sectors High risk sectors

Source: PwC

4. Moving to action on nature-related risks
The accelerating negative impact of human activities As the global momentum on safeguarding nature continues
on biodiversity and nature cannot be tackled without a to strengthen, the next step is to identify the areas in which
proactive shift in the policies and practices that have driven strategic transformation of current business models and
much of the current growth model. production processes can contribute the most to halting
and reversing nature loss, and the ways to finance this
With this in mind, companies, investors and policy-makers transformation. As the trend for greater transparency
have a vital role to play, working alongside civil society to and accountability continues, costs are likely to rise for
bend the curve on nature loss by 2030. This report is the businesses that have not begun to include nature at the
first of a series of New Nature Economy reports, prepared core of their enterprise operations. Businesses that ignore
through the Nature Action Agenda, a platform that aims this trend will be left behind while those that have embraced
to encourage a movement of businesses, governments, this transformation will exploit new opportunities. In the
civil society, academics, innovators and youth to disrupt food and land-use sector alone, a recent study suggests
business-as-usual approaches. there is an annual business opportunity of $4.5 trillion
by 2030 associated with transitions towards a nature-
To uphold the principles of stakeholder capitalism as positive economy, including forest restoration, sustainable
well as to remain profitable in a time of growing risks, aquaculture, plant-based meat, precision and regenerative
this report attempts to highlight the materiality of nature- agriculture, and reducing food waste.116
related risks for businesses. In the absence of the TCFD
recommendations formally being extended to incorporate To this end, the World Economic Forum’s Nature Action
nature-risk considerations, we recommend that businesses Agenda platform will be releasing two subsequent reports,
and investors (particularly in high-risk sectors) extend and focusing on opportunities and finance. Provisionally
apply the principles of the framework to nature, alongside entitled Future of Nature and Business and Financing for
considering nature risks as part of ERM and ESG practices. Nature, these reports will be released at milestone events
In parallel, we also recommend that governments and in 2020, providing new thinking on business’s impact and
regulators look at how to recognize the systemic risks posed dependency on nature.
by nature loss to the financial system through strategic and
policy action, including consideration of extending climate
risk disclosure to nature risk.

Appendix A: Approach to modelling nature dependency
for countries and sectors
Direct nature dependency Each sector was assigned an overall dependency
rating – aggregated from multiple ecosystem service/
We analysed the nature dependency of 163 sectors and production process dependencies – based with equal
their supply chains across a range of ecosystem services, weight on three factors:
building on work done by the UN Environment Programme
World Conservation Monitoring Centre (UNEP WCMC)117 – The number of different individual
and PwC for the Natural Capital Finance Alliance (NCFA).118 dependencies identified
Further information on the underlying methodology for
identifying and rating sector dependencies on individual – The mean strength of those dependencies
ecosystem services is available from the NCFA.119,120 The (rated from 1–5 in the underlying analysis)
full list of ecosystem services considered in the underlying
analysis is as follows: – The maximum strength of any individual dependency
This approach was developed to provide some

representation of the heterogeneity of types and strengths of
Ecosystem services ecosystem service dependency and should be understood
as providing a relative and indicative assessment of sector-
Animal-based energy Groundwater level nature dependency.
Bio-remediation Maintain nursery habitats
Consolidated dependency scores above 3.0 are considered
Buffering and attenuation Mass stabilization and “high”, scores between 2.0 and 3.0 are considered
of mass flows erosion control “medium” and scores below 2.0 are considered “low”.
Climate regulation Mediation of sensory By aligning these sector-level dependency ratings to GVA
impacts data split by sector and country, the amount of direct GVA
Dilution by atmosphere generated at each level of dependency can be estimated.
and ecosystems Pest control
Disease control Pollination To determine nature dependency by industry, sectors
were aggregated into overarching industry groups. These
Fibres and other materials Soil quality
industries are based on the World Economic Forum
Filtration Surface water Strategic Intelligence industries, with some additional
sector groupings added where necessary. The industry
Flood and storm Ventilation
GVA is calculated as the sum of GVA in all relevant sectors.
protection
Water flow maintenance The share of industry GVA in “high”, “medium” or “low”
Genetic materials dependency categories is then calculated based on the
Water quality
dependency scores of the sectors within that industry.
Similarly, regional GVA is calculated as the sum of GVA in
Source: NCFA121 all relevant countries in the region. The share of regional
GVA in “high”, “medium” or “low” dependency categories is
calculated based on the dependency scores of the sectors
Dependency ratings consider a sector’s reliance on within that region, weighted by GVA.
ecosystem services at the production process level, for
a range of factors, including: inputs to production, inputs
to research and development, business operations,
assimilation of waste and protection of assets. These
ratings were based on desk research and consultation
with industry experts, conducted as part of the work done
by UNEP WCMC and PwC for NCFA. The rating process
considered the degree of dependency on each ecosystem
service of each relevant production process, the sensitivity
of the production process to changes in the provision
of the ecosystem service, and the sensitivity of financial
performance to changes at the production process level.

Supply chain nature dependency up the purchasing sector’s supply chain – in proportion to
demand from the purchasing sector as a share of demand
A global multiregional input-output model was used to from all other sectors at each tier of the supply chain.
analyse the commercial relationships between sectors in The share of supply chain GVA in “high”, “medium” and
order to assess the level of nature dependency present “low” dependency categories is calculated based on the
in supply chains. For example, while the food-processing dependency scores of the sectors within the supply chain,
sector has limited direct dependencies on nature, it relies weighted by the GVA created in each. Sector-level supply
heavily on agricultural inputs, which are produced in sectors chain GVA estimates were aggregated at industry level in the
with typically high direct nature dependencies. same way as for direct nature dependencies.
The GVA generated in the supply chain of each individual All GVA figures were adjusted to 2018 prices using standard
sector (the purchasing sector) was calculated using a World Bank GDP deflators. Where figures are expressed at
multiregional input-output model with inputs based on the regional or global scales, the industry-level GVA figures were
entire country-level intermediate demand from the sector aggregated and converted to estimates of GDP by adjusting
in question. The sum of supply chain GVA is calculated for transfers (selected taxes), which are excluded from
as the sum of GVA created in all of the sectors that make sector-level GVA figures.

Contributors
The World Economic Forum would like to acknowledge the valuable contributions of the following
people in the development of this document:
Lead authors
Celine Herweijer (PwC UK), Will Evison (PwC UK), Samra Mariam (PwC UK), Akanksha Khatri
(World Economic Forum), Marco Albani (World Economic Forum), Alexia Semov (World Economic
Forum), Euan Long (PwC UK)
Other contributors
Tassilo von Hirsch (PwC UK), Lara Jackson (PwC UK), Paisley Ashton Holt (PwC UK),
Kimberly Pope (World Economic Forum)
Editing and design

Janet Hill (World Economic Forum),
Floris Landi (World Economic Forum)
Global Future Council on Biodiversity

Chair:
Carlos Manuel Rodriguez Echandi, Minister of Environment and Energy of Costa Rica
Members:
Aoife Bennett, Extraordinary Research Scholar, Universidad Nacional Intercultural de la
Amazonía, Peru; Cameron Hepburn, Director and Professor of Environmental Economics, Smith
School of Enterprise and the Environment (SSEE), UK; Carlos Afonso Nobre, Director, Research
Brazilian Academy of Sciences; Corli Pretorius, Deputy Director, World Conservation Monitoring
Centre, United Nations Environment Programme (UNEP); Diane Banino Holdorf, Managing
Director, Food and Nature, World Business Council for Sustainable Development (WBCSD);
Dimitri de Boer, Chief Representative, China, Client Earth; Edward Barbier, University Distinguished
Professor, Department of Economics, Colorado State University; Fang Li, Chief Representative, China,
World Resources Institute, People’s Republic of China; Guido Schmidt-Traub, Executive Director, UN
Sustainable Development Solutions Network; Helen Crowley, Fellow and Senior Advisor, Resilient
Supply Chains; Jamie Cross, Vice-President Partner Marketing, Conservation International, USA;
Li Lin, Director, Global Policy and Advocacy, WWF International; Per Fredrik Ilsaas Pharo, Director,
International Climate and Forest Initiative, Government of Norway; Sebastian Troëng, Executive
Vice-President, Global Conservation, Conservation International (CI); Seema Arora, Deputy Director
General, Confederation of Indian Industry (CII); Robert Watson, Chair of the Fourth IPBES Plenary,
Intergovernmental Panel on Biodiversity Ecosystem Services (IPBES)
Contact
For questions about the New Nature Economy series of publications, contact:
Akanksha Khatri ([email protected]) and
Alexia Semov ([email protected])

Endnotes
1 A. Maddison, 2017, “Historical statistics of the world economy: 1–2008 AD”, http://www.ggdc.net/
maddison/oriindex.htm (link as of 16th Dec 2019).
2 L. Kotzé, 2016, “Global environmental constitutionalism in the Anthropocene”, 2.
3 W. Steffen et al., 2015, “The trajectory of the Anthropocene: The great acceleration”, The Anthropocene
Review, 2, 81–98, https://doi: 10.1177/2053019614564785 (link as of 9th Jan 2020).
4 UNICEF, 2019, “Child mortality estimates”, https://data.unicef.org/resources/dataset/child-mortality/ (link as

of 16th Dec 2019).
5 J. Riley, 2005, “Estimates of regional and global life expectancy, 1800–2001”, Population and Development
Review, 31 (3), 537–543, https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1728-4457.2005.00083.x (link as
of 16th Dec 2019).
6 R. Zijdeman et al., 2015, “Life expectancy at birth (total)”, UN Population Division, https://population.un.org/
wpp/Download/Standard/Mortality/ (link as of 16th Dec 2019).
7 World Bank, 2018, “Poverty and shared prosperity 2018: Piecing together the poverty puzzle”, https://
openknowledge.worldbank.org/bitstream/handle/10986/30418/9781464813306.pdf (link as of 16th Dec
2019).
8 IPBES, 2019, “Summary for policymakers of the global assessment report on biodiversity and ecosystem
services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services”, https://
ipbes.net/news/ipbes-global-assessment-summary-policymakers-pdf (link as of 16th Dec 2019).
9 Ibid.
10 H. Kharas, 2017, “The unprecedented expansion of the global middle class – an update”, The Brookings
Institution, https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-
class.pdf (link as of 7th Jan 2020).
11 IPBES, “Summary for policymakers of the global assessment report on biodiversity and ecosystem services
of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services”.
12 Ibid.
13 Ibid.
14 G. E. Jia, et al., 2019, “Land–climate interactions”, in IPCC, “Climate Change and Land: An IPCC special
report on climate change, desertification, land degradation, sustainable land management, food security,
and greenhouse gas fluxes in terrestrial ecosystems”, https://www.ipcc.ch/site/assets/uploads/2019/11/1.-
SRCCL-Review-Editor-Reports-1.pdf (link as of 8th Jan 2020).
15 IPCC, 2018, “Summary for policymakers of IPCC Special Report: Global warming of 1.5°C”,
https://www.ipcc.ch/sr15/chapter/spm/ (link as of 16th Dec 2019).
16 Ibid.
17 Y.M. Bar-On et al., 2018, “The biomass distribution on Earth”, PNAS, 115 (25), 6506–6511, https://www.
pnas.org/content/115/25/6506 (link as of 7th Jan 2020).
18 IPBES, 2019, “Global assessment report on biodiversity and ecosystem services”, https://ipbes.net/global-

assessment-report-biodiversity-ecosystem-services (link as of 16th Dec 2019).
19 C. Waters et al., 2016, “The Anthropocene is functionally and stratigraphically distinct from the Holocene”,
Science, 351 (6269), https://science.sciencemag.org/content/351/6269/aad2622.full (link as of 16th Dec
2019).
20 WWF, 2018, “Living planet report – 2018: Aiming higher”, https://www.worldwildlife.org/pages/living-planet-

report-2018 (link as of 16th Dec 2019).

21 IPCC, “Summary for policymakers of IPCC Special Report: Global warming of 1.5°C”.
22 H. Ritchie and M. Roser, 2019, “Land use”, OurWorldInData.org, https://ourworldindata.org/land-use (link

as of 7th Jan 2020).
23 NYDF Assessment Partners, 2019, “Protecting and restoring forests: A story of large commitments yet
limited progress”, New York Declaration on Forests Five-Year Assessment Report, https://forestdeclaration.
org/images/uploads/resource/2019NYDFReport.pdf (link as of 7th Jan 2020).
24 D. Breitburg et al., 2018, “Declining oxygen in the global ocean and coastal waters”, Science, 359 (46),
https://science.sciencemag.org/content/sci/359/6371/eaam7240.full.pdf (link as of 7th Jan 2020).
25 R. Diaz et al., 2008, “Spreading dead zones and consequences for marine ecosystems”, Science, 321
(5891), 926–929, https://science.sciencemag.org/content/321/5891/926 (link as of 16th Dec 2019).
26 R. Kelly et al., 2013, “Recent burning of boreal forests exceeds fire regime limits of the past 10,000 years”,
PNAS, 110 (32), 13055–13060, https://doi.org/10.1073/pnas.1305069110 (link as of 7th Jan 2020).
27 W.J. de Groot, M.D. Flannigan and A.S. Cantin, 2013, “Climate change impacts on future boreal fire
regimes”, Forest Ecology and Management, 294, 35–44, https://doi.org/10.1016/j.foreco.2012.09.027 (link
as of 7th Jan 2020).
30 IRP, 2019, “Global Resources Outlook 2019: Natural resources for the future we want”, United Nations
Environment Programme, https://wedocs.unep.org/bitstream/handle/20.500.11822/27517/GRO_2019.
pdf?sequence=3&isAllowed=y (link as of 15th Jan 2020).
31 FAO and IWMI, 2018, “More people, more food, worse water? A global review of water pollution from
agriculture”, http://www.fao.org/3/CA0146EN/ca0146en.pdf (link as of 7th Jan 2020).
32 IPBES, 2019, “Summary for policymakers of the global assessment report on biodiversity and ecosystem
services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services”.
33 T.M. Lenton, and H.T.P. Williams, 2013, “On the origin of planetary-scale tipping points, Trends in Ecology
and Evolution, 28, 380–382, doi:10.1016/j.tree.2013.06.001 (link as of 7th Jan 2020.)
34 C. Nobre et al., 2016, “Land-use and climate change risks and the need for a novel sustainable
development paradigm”, Proceedings of the National Academy of Sciences, 113 (39), 10759–10768,
https://doi.org/10.1073/pnas.1605516113 (link as of 16th Dec 2019).
35 WWF, 2019, “Inside the Amazon”, https://wwf.panda.org/knowledge_hub/where_we_work/amazon/about_

the_amazon/ (link as of 16th Dec 2019).
36 T.E. Lovejoy and C. Nobre, 2019, “Winds of will: Tipping change in the Amazon”, Science Advances,
5, https://advances.sciencemag.org/content/advances/5/12/eaba2949.full.pdf (link as of 16th Dec 2019).
37 A.M. Makarieva and V.G. Gorshkov, 2014, “Why does air passage over forest yield more rain? Examining
the coupling between rainfall, pressure, and atmospheric moisture content”, Journal of Hydrometeorology,
15, 411–426, https://doi.org/10.1175/JHM-D-12-0190.1 (link as of 16th Dec 2019).
38 J. Strand et al., 2018, “Spatially explicit valuation of the Brazilian Amazon Forest’s ecosystem services”,
Nature Sustainability, 11, 657–664, https://www.nature.com/articles/s41893-018-0175-0?WT.feed_
name=subjects_economics (link as of 16th Dec 2019).
39 OECD, 2019, “Beyond growth: Towards a new economic approach”, https://www.oecd.org/naec/averting-

systemic-collapse/SG-NAEC(2019)3_Beyond%20Growth.pdf (link as of 16th Dec 2019).

40 Edelman, 2019, “Edelman trust barometer”, https://www.edelman.com/sites/g/files/aatuss191/
files/2019-02/2019_Edelman_Trust_Barometer_Executive_Summary.pdf (link as of 7th Jan 2020).
41 GDP values are sourced from World Bank data available at the time of analysis and up to date as of 7th
December 2019.
42 Gross value added (GVA) represents the value of goods and services produced by a given industry, less
the cost of inputs and raw materials attributable to that production. It is typically used to measure producer,
industry or sector-level contributions to the economy, as opposed to gross domestic product (GDP), which
is a standard measure for national- or multinational-level economic analysis.
43 Includes tobacco.
44 A.P. Davis et al., 2019, “High extinction risk for wild coffee species and implications for coffee sector
sustainability”, Science Advances, https://advances.sciencemag.org/content/5/1/eaav3473 (link as of 16th
Dec 2019).
45 Euromonitor International, 2018, “Five most promising markets in coffee“, http://go.euromonitor.

com/rs/805-KOK-719/images/Five_Most_Promising_Markets_in_Coffee.pdf?mkt_
tok=eyJpIjoiT1RrME56TTFNalUxWmpoaSIsIn (link as of 16th Dec 2019).
46 Centre for Agriculture and Bioscience International, 2018, “Invasive species: The hidden threat to
sustainable development”, https://www.invasive-species.org/wp-content/uploads/sites/2/2019/02/Invasive-
Species-The-hidden-threat-to-sustainable-development.pdf (link as of 16th Dec 2019).
47 M.A. Altieri et al., 2015, “Agroecology and the design of climate change-resilient farming systems”,
Agronomy, Sustainable Development, 35, 869–890, https://doi:10.1007/s13593-015-0285-2 (link as of 7th
Jan 2020).
48 Ibid.
49 B. Lin, 2011, “Resilience in agriculture through crop diversification: Adaptive management for environmental
change”, BioScience, 61 (3), 183–193, https://academic.oup.com/bioscience/article/61/3/183/238071 (link
as of 16th Dec 2019).
52 M. Spalding et al., 2017, “Mapping the global value and distribution of coral reef tourism”, Marine Policy,
82, 104–113, https://thought-leadership-production.s3.amazonaws.com/2017/05/18/19/52/44/c655fbee-
b0a5-4e48-a34f-2806ff724061/paper_coralreeftourism_spalding_2017.pdf (link as of 16th Dec 2019).
53 United States Environmental Protection Agency, 2002, “Functions and values of wetlands”, https://nepis.
epa.gov/Exe/ZyPDF.cgi/200053Q1.PDF?Dockey=200053Q1.PDF (link as of 16th Dec 2019).
54 S. Narayan et al., 2016, “Coastal wetlands and flood damage reduction: Using risk industry-based models
to assess natural defenses in the northeastern USA”, Lloyd’s Tercentenary Research Foundation, https://
www.nature.org/content/dam/tnc/nature/en/documents/Coastal_wetlands_and_flood_damage_reduction.
pdf (link as of 16th Dec 2019).
55 E.B. Barbier et al., 2018, “How to pay for saving biodiversity”, Science, 360 (6388), 486–488, https://
papers.ssrn.com/sol3/papers.cfm?abstract_id=3210349 (link as of 16th Dec 2019).
56 This figure increases to 27% when South Africa is excluded.
57 K. Park, et al., 2016, “Condensation on slippery asymmetric bumps”, Nature, 531, 78–82, https://doi.
org/10.1038/nature16956 (link as of 7th Jan 2020).

58 Reuters, 2017, “Indonesia president approves two-year extension of forest moratorium”, https://www.
reuters.com/article/us-indonesia-environment-forests/indonesia-president-approves-two-year-extension-of-
forest-moratorium-idUSKBN18K0CV (link as of 16th Dec 2019).
59 The Food and Land Use Coalition (FOLU), 2019, “Growing better: Ten critical transitions to transform
food and land use”, https://www.foodandlandusecoalition.org/wp-content/uploads/2019/09/FOLU-
GrowingBetter-GlobalReport.pdf (link as of 16th Dec 2019).
60 S. Cossart, 2017, “The French law on duty of care: A historic step towards making globalization work
for all”, Business and Human Rights Journal, 2 (2), 317–323, https://www.cambridge.org/core/journals/
business-and-human-rights-journal/article/french-law-on-duty-of-care-a-historic-step-towards-making-
globalization-work-for-all/7C85F4E2B2F7DD1E1397FC8EFCFE9BDD/core-reader (link as of 16th Dec
2019).
61 The Institute of Chartered Accountants in England and Wales (ICAEW), 2015, “Institutional investors
demand non-financial risk information”, https://economia.icaew.com/news/october-2015/institutional-
investors-demand-non-financial-risk-information (link as of 16th Dec 2019).
62 The Tropical Forest Alliance, 2017, “The role of the financial sector in deforestation-free supply chains”, 4,
http://www.tfa2020.org/wp-content/uploads/2017/01/TFA2020_Framing_Paper_130117.pdf (link as of
16th Dec 2019).
63 B. Caldecott et al., 2013, “Stranded assets in agriculture: Protecting value from environment-related risks”,
https://www.smithschool.ox.ac.uk/publications/reports/stranded-assets-agriculture-report-final.pdf (link as
of 16th Dec 2019).
64 Ibid.
65 Buranyi, B., 2018, “The plastic backlash: What’s behind our sudden rage – and will it make a difference?”,
The Guardian, https://www.theguardian.com/environment/2018/nov/13/the-plastic-backlash-whats-behind-
our-sudden-rage-and-will-it-make-a-difference (link as of 16th Dec 2019).
GrowingBetter-GlobalReport.pdf (link as of 16th Dec 2019).
67 Ellen MacArthur Foundation, 2017, “A new textiles economy: Redesigning fashion’s future”, http://www.
ellenmacarthurfoundation.org/publications (link as of 7th Jan 2020).
68 Kering, 2019, “24 new companies join the Fashion Pact”, https://www.kering.com/en/news/24-new-
companies-join-the-fashion-pact (link as of 16th Dec 2019).
69 J. Poore and T. Nemecek, 2018, “Reducing food’s environmental impacts through producers and
consumers”, Science, 360, 987–992, doi:10.1126/science.aaq0216 (link as of 7th Jan 2020).
70 The Natural Resources Defense Council, 2017, “Less beef, less carbon”, https://www.nrdc.org/sites/
default/files/less-beef-less-carbon-ip.pdf (link as of 7th Jan 2020).
71 EU Agricultural Outlook, 2018, “For markets and income 2018–2030”, https://ec.europa.eu/info/sites/info/

files/food-farming-fisheries/farming/documents/medium-term-outlook-2018-report_en.pdf (link as of 7th Jan
2020).
72 E.B. Barbier, and J.C. Burgess, 2018, “Policies to support environmental risk management in investment
decisions”, International Journal of Global Environmental Issue, 17 (2/3), 117–129.
73 Mongabay Series: Global Forests, 2019. “Investors warn soy giants of backlash over deforestation in South
America”, https://news.mongabay.com/2019/03/investors-warn-soy-giants-of-backlash-over-deforestation-
in-south-america/ (link as of 7th Jan 2020).
74 NYDF Assessment Partners, 2019, “Protecting and restoring forests”, https://forestdeclaration.

org/images/uploads/resource/2019NYDFReport.pdf (link as of 16th Dec 2019).

75 World Bank, 2016, “The cost of fire: An economic analysis of Indonesia’s 2015 fire crisis”, http://pubdocs.
worldbank.org/en/643781465442350600/Indonesia-forest-fire-notes.pdf (link as of 16th Dec 2019).
76 European Food Safety Authority (EFSA), 2016, “Risks for human health related to the presence of 3- and
2-monochloropropanediol (MCPD), and their fatty acid esters, and glycidyl fatty acid esters in food”, http://
www.efsa.europa.eu/en/efsajournal/pub/4426, (link as of 16th Dec 2019).
77 International Union for Conservation of Nature (IUCN), 2018, “Oil palm and biodiversity”, https://portals.iucn.
org/library/node/47753 (link as of 16th Dec 2019).
78 World Trade Organization (WTO), 2018, “WTO members continue review of technical barriers to trade
agreement, discuss new concerns”, https://www.wto.org/english/news_e/news18_e/tbt_20mar18_e.htm
(link as of 16th Dec 2019).
79 Transport and Environment, 2018, “Up in smoke: Europe’s cars driving deforestation in South East
Asia”, https://www.transportenvironment.org/publications/smoke-europe%E2%80%99s-cars-driving-
deforestation-south-east-asia (link as of 9th Jan 2020).
80 Commission Delegated Regulation (EU) 2019/807, http://data.europa.eu/eli/reg_del/2019/807/oj (link as of

16th Dec 2019).
81 European Union, 2019, “European Union and Indonesia: Facts and figures on palm oil, sustainability and
trade”, https://eeas.europa.eu/sites/eeas/files/fspo-01_palm_oil_20190321_en.pdf (link as of 16th Dec
2019).
82 Millennium Ecosystem Assessment, 2005, “Ecosystems and human well-being: Biodiversity synthesis”,
World Resources Institute, http://www.millenniumassessment.org/documents/document.354.aspx.pdf (link
83 World Economic Forum, 2019, “The Global Risks Report 2019”, http://www3.weforum.org/docs/WEF_
Global_Risks_Report_2019.pdf (link as of 8th Jan 2020).
84 Global Burden of Disease Collaborative Network, 2018, “Global Burden of Disease Study 2017 (GBD 2017):
Results”, Seattle, United States: Institute for Health Metrics and Evaluation (IHME); R. Burnett, H. Chen,
M. Szyszkowicz et al., “Global estimates of mortality associated with long-term exposure to outdoor fine
particulate matter”, PNAS, 2018, 115 (38), 9592–9597, https://doi.org/10.1073/pnas.1803222115 (link as
of 8th Jan 2020).
85 T. Endreny et al, 2017 “Implementing and managing urban forests: A much needed conservation strategy to
increase ecosystem services and urban wellbeing”, Ecological Modelling, 360 (24), 328–335, https://www.
sciencedirect.com/science/article/pii/S0304380017300960?via%3Dihub (link as of 7th Jan 2020).
86 World Bank, 2016, “The cost of fire: An economic analysis of Indonesia’s 2015 fire crisis”, http://pubdocs.
worldbank.org/en/643781465442350600/Indonesia-forest-fire-notes.pdf (link as of 16th Dec 2019).
87 D. Kreamer, 2013, “The past, present, and future of water conflict and international security”, Journal of
Contemporary Water Research and Education, 149, 88–96, https://onlinelibrary.wiley.com/doi/full/10.1111/
j.1936-704X.2012.03130.x (link as of 16th Dec 2019).
88 K. Marvel et al., 2019 “Twentieth-century hydroclimate changes consistent with human influence”, Nature,
569, 59–65, https://www.nature.com/articles/s41586-019-1149-8 (link as of 16th Dec 2019).
89 J. Bagley et al., 2013, “Drought and deforestation: Has land cover change influenced recent precipitation
extremes in the Amazon?”, Journal of Climate, 27 (1), 345–361, https://journals.ametsoc.org/doi/10.1175/
JCLI-D-12-00369.1 (link as of 16th Dec 2019).
90 S. Hsiang, 2014, “Climate, conflict, and social stability: What does the evidence say?”, Climatic Change,
123, 39–55, https://link.springer.com/article/10.1007/s10584-013-0868-3 (link as of 16th Dec 2019).
91 N. Uexkull, 2014, “Sustained drought, vulnerability and civil conflict in sub-Saharan Africa”, Political
Geography, 43, 16–26, https://www.sciencedirect.com/science/article/abs/pii/S0962629814000985 (link

92 G7, 2015, “A new climate for peace”, https://www.adelphi.de/en/publication/new-climate-peace-–-taking-
action-climate-and-fragility-risks (link as of 16th Dec 2019).
93 W. Erian et al., 2014, “Effects of drought and land degradation on crop losses in Africa and the Arab region
with special case study on drought and conflict in Syria”, https://www.preventionweb.net/english/hyogo/
gar/2015/en/bgdocs/Erian%20et%20al.,%202014.pdf (link as of 16th Dec 2019).
94 European Commission, 2019, “Key elements of the EU-Mercosur trade agreement”, http://trade.ec.europa.
eu/doclib/press/index.cfm?id=2040 (link as of 16th Dec 2019).
95 P. Oltermann, 2019, “Austria rejects EU-Mercosur trade deal over Amazon fires”, The Guardian, https://
www.theguardian.com/world/2019/sep/19/austria-rejects-eu-mercosur-trade-deal-over-amazon-fires (link
96 S. Morgan, 2019, “France and Ireland threaten to vote against EU-Mercosur deal”, Euractiv, https://www.
euractiv.com/section/energy-environment/news/ireland-threatens-to-vote-against-eu-mercosur-deal/ (link as
of 16th Dec 2019).
97 TEEB, 2009, “The Economics of Ecosystems and Biodiversity; TEEB for policy makers. Summary:
Responding to the value of nature”, http://www.teebweb.org/publication/teeb-for-policy-makers-summary-
responding-to-the-value-of-nature/ (link as of 16th Dec 2019).
98 P. Sukhdev, 2009, “Costing the earth”, Nature, 462 (7271), 277, https://www.ncbi.nlm.nih.gov/
pubmed/19915547 (link as of 16th Dec 2019).
99 World Bank Group, 2016, “Who are the poor in the developing world?”, https://openknowledge.worldbank.
org/handle/10986/25161 (link as of 16th Dec 2019).
100 WHO, 2010, “Gender, climate change and health”, https://www.who.int/globalchange/

GenderClimateChangeHealthfinal.pdf (link as of 16th Dec 2019).
101 UN Women, 2018, “Turning promises into action: gender equality in the 2030 agenda for sustainable
development”, https://www.unwomen.org/en/digital-library/publications/2018/2/gender-equality-in-the-
2030-agenda-for-sustainable-development-2018 (link as of 16th Dec 2019).
102 Ibid.
103 EvaluatePharma, 2019, “World preview 2019, outlook to 2024”, https://www.evaluate.com/thought-

leadership/pharma/evaluatepharma-world-preview-2019-outlook-2024 (link as of 16th Dec 2019).
104 European Commission, 2015, “EU R&D Scoreboard: The 2015 EU industrial R&D investment scoreboard”,
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/2015-eu-industrial-rd-
investment-scoreboard (link as of 16th Dec 2019).
105 B. Hawkins, 2008, “Plants for life: Medicinal plant conservation and botanic gardens”, https://www.bgci.org/
files/Worldwide/Publications/PDFs/medicinal.pdf (link as of 16th Dec 2019).
107 D. Newman, 2012, “Natural products as sources of new drugs over the 30 years from 1981 to 2010”,
Journal of Natural Products, 75 (3), 311–335, https://www.ncbi.nlm.nih.gov/pubmed/22316239 (link as of
16th Dec 2019).
108 N. Dharani et al., 2010, “Common antimalarial trees and shrubs of East Africa – a description of species and
a guide to cultivation and conservation through use”, World Agroforestry Center.
109 S. Shah, 2019, “Ethnomedicinal knowledge of indigenous communities and pharmaceutical potential
of rainforest ecosystems in Fiji Islands”, Journal of Integrative Medicine, 17, 244–249, https://www.
researchgate.net/publication/331821046_Ethnomedicinal_knowledge_of_indigenous_communities_and_
pharmaceutical_potential_of_rainforest_ecosystems_in_Fiji_Islands (link as of 7th Jan 2020).

110 R. Palhares et al., 2015, “Medicinal plants recommended by the World Health Organization: DNA barcode
identification associated with chemical analyses guarantees their quality”, PLoS One, 10 (5), e0127866,
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4433216/ (link as of 16th Dec 2019).
111 S. Pimm et al., 1995, “The future of biodiversity”, Science 269 (347), https://www.ncbi.nlm.nih.gov/
pubmed/17841251 (link as of 16th Dec 2019).
112 H. Kwok, 2019, “Venom toxins as potential targeted therapies”, Toxins (Basel), 11 (6), 338, https://www.
ncbi.nlm.nih.gov/pmc/articles/PMC6628456/ (link as of 16th Dec 2019).
113 B.L. Furman, 2012, “The development of Byetta (exenatide) from the venom of the Gila monster as an
anti-diabetic agent”, Toxicon: 59 (4), 464–471, https://doi:10.1016/j.toxicon.2010.12.016 (link as of 8th Jan
2020).
114 TCFD, 2019, “Task Force on climate-related financial disclosures: Status report 2019”, https://www.fsb-
tcfd.org/publications/tcfd-2019-status-report/ (link as of 16th Dec 2019)
115 TCFD, 2017, “Implementing the recommendations of the task force on climate-related financial disclosures”,
https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Annex-062817.pdf (link as of 16th
Dec 2019).
GrowingBetter-GlobalReport.pdf (link as of 16th Dec 2019) .
117 UNEP WCMC, https://www.unep-wcmc.org/ (link as of 7th Jan 2020).
118 Natural Capital Finance Alliance, https://naturalcapital.finance/ (link as of 7th Jan 2020).
119 NCFA and UNEP WCMC, 2018, “Exploring natural capital opportunities, risks and exposure: A practical
guide for financial institutions”, https://naturalcapital.finance/wp-content/uploads/2018/11/Exploring-
Natural-Capital-Opportunities-Risks-and-Exposure.pdf (link as of 16th Dec 2019).
120 NCFA and PwC, 2018, “Integrating natural capital in risk assessments: A step-by-step guide for banks”,
https://www.globalcanopy.org/sites/default/files/documents/resources/NCFA%20Phase%202%20
Report%20WEB%20Single%20Pages.pdf (link as of 16th Dec 2019).
121 NCFA and UNEP WCMC, “Exploring natural capital opportunities, risks and exposure: a practical guide for
financial institutions”.

The World Economic Forum,
committed to improving
the state of the world, is the
International Organization for
Public-Private Cooperation.
The Forum engages the

foremost political, business
and other leaders of society
to shape global, regional
and industry agendas.
World Economic Forum

91–93 route de la Capite
CH-1223 Cologny/Geneva
Switzerland
Tel.: +41 (0) 22 869 1212

Fax: +41 (0) 22 786 2744
[email protected]
www.weforum.org

WEF New Nature Economy Report 2020

Uploaded by

Copyright:

Available Formats

WEF New Nature Economy Report 2020

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

WEF New Nature Economy Report 2020

Uploaded by

Copyright:

Available Formats

New Nature Economy series

Nature Risk Rising:

© 2020 World Economic Forum. All rights

About the New Nature Economy series

– The scale and urgency of the nature crisis

2. Identify a set of priority socioeconomic systems for transformation:

3. Scope the market and investment opportunities for nature-based

– Research solutions across the biodiversity, climate mitigation, climate

About the World Economic Forum

Nature Risk Rising 3

1. The nature emergency 9

Environmental costs of economic growth 9

Drivers of nature loss 11

Non-linear risks of nature loss 12

2. The hidden risks of nature loss for business 13

Risks emerging from dependency of business on nature 13

Risks emerging from fallout of business impacts on nature 16

Risks emerging from impacts of nature loss on society 17

3. Managing nature-related risk 19

Aligning nature-related risk with existing risk categories 20

Developing a risk-management approach for nature-related risk 22

4. Moving to action on nature-related risks 24

Appendix A: Approach to modelling nature dependency for

Direct nature dependency 25

Supply chain nature dependency 26

Nature Risk Rising 5

How come the most intellectual creature to ever walk Earth is

Jane Goodall, writing in The Guardian, 3 November 2018

Nature Risk Rising 7

Never before have we had such an awareness of what we are

Sir David Attenborough, at the World Economic Forum Annual Meeting

8 Nature Risk Rising

Terrestrial ecosystems Oceanic ecosystems Species

Nature Risk Rising 9

4.0 Climate action

Water crises Biodiversity loss 2020

State collapse Adverse technological

Energy price shock

2.5 3.0 3.5 4.0

Source: World Economic Forum Global Risks Perception Survey 2019–2020

10 Nature Risk Rising

Driver of nature loss Illustrative impact on nature

Invasive alien species

Nature Risk Rising 11

Scientists and researchers predict that if the current rates

Accurately managing and mitigating such risks requires

12 Nature Risk Rising

Nature Risk Rising 13

Direct Supply chain

% of industry GVA % of supply chain GVA

■ High ■ Medium ■ Low

14 Nature Risk Rising

Nature Risk Rising 15

16 Nature Risk Rising

Nature Risk Rising 17

Risks to economic development

18 Nature Risk Rising

Metrics and targets