Nature is moving to the top of the C-suite agenda. BCG associate director Dean Muruven sat down with Erin Billman, executive director of the Science Based Targets Network (SBTN) and Edith Martin, global biodiversity lead at Quantis (a BCG company), to discuss the opportunity for businesses to help address the crisis unfolding in the natural world.

Dean Muruven: SBTN recently launched the first science-based targets for nature, which aim to enable companies to take measurable action to address the nature crisis. And biodiversity and nature will be a major topic at COP28. Why are we seeing such a major push on nature?

Erin Billman: There are a couple reasons. First, there has been real movement at the intergovernmental level. The Global Biodiversity Framework achieved last December at COP15 set out what is essentially the equivalent of the Paris Agreement for nature. And the Corporate Sustainability Reporting Directive in Europe will expand the number of companies that must report detailed ESG information.

Second, there have been real natural shocks that are disrupting the status quo. We’ve witnessed an increase in intensity of droughts, floods, and fires. For instance, in my home state of California, the declining population of pollinators has forced agricultural operations to truck in bees to help sustain almond orchards. In many ways the biodiversity collapse is starting to feel real to businesses.

Edith Martin: I agree completely. There are nine planetary boundaries that define the thresholds for key biophysical processes that, if crossed, can cause abrupt environmental changes. These include not only climate but also biodiversity and freshwater. We’ve already crossed six of them. This not only has severe consequences for the stability and resilience of the Earth system; it also puts companies that depend on natural resources and ecosystems services—which is almost every company—at risk.

For a long time, companies have been operating without taking nature into account. This trend is no longer an option. We’re seeing many examples of how this is playing out poorly for business right now. One company in France wanted to build a new manufacturing operation and spent ten years working towards this only to have the government reject its plans because they included wetland conversion. The company was unable to expand production, which hurt its competitive standing.

Companies that are not factoring nature into their business face real risks—and are missing out on important opportunities.

SBTN has issued new guidelines. What does this mean for companies aiming to reduce their impact on nature?

Billman: People are familiar with the Science Based Targets initiative (SBTi), which provides guidance for companies to set time-bound, measurable targets for greenhouse-gas emission reduction. We are taking that approach and expanding it beyond climate to nature and the drivers of nature loss. A few weeks ago, we released the first set of guidelines that focus on freshwater use and pollution as well as land use. And we’ll expand the scope in the future.

We have 17 global multinationals that are actually using this first release to set validated science-based targets. That is a pilot and we’ll have a broader rollout next year. And in the meantime, the companies that are not in that pilot have the tools to ensure that they are both ready to set targets and are taking “no regrets” actions in the meantime.

What does the journey look like for a company that wants to move to address its impact on nature?

Martin: We’ve been involved in some 40 projects looking at this very topic. The first step is to understand the company’s different impacts on nature and where those impacts are occurring. Next, we work together to set targets and align them with the company’s previous commitments and plans, especially as it relates to climate. From there we develop the strategy and action plan to move forward.

Billman: It’s really important for these efforts to be oriented around the conservation and mitigation hierarchy—what we at SBTN call the action framework. The top priority will be avoiding and reducing any impact on nature. Then, when there is impact that can’t be avoided or reduced, companies can work to regenerate and restore the landscapes in which they operate. At the same time, we want to help companies transform their business models and the broader systems in which they operate.
 
How does this effort on nature differ from the drive to address climate change? And how are they connected?

Martin: When it comes to nature, you need to consider the context in which the impact occurs. For example, if you withdraw a cubic meter of water from a landscape in France, the impact on nature will be quite different than if you did the same thing in the Sahara. And while there is one core metric for climate—greenhouse gas emissions—there are more than 350 metrics that can be used to assess biodiversity.

At the same time, you cannot achieve net zero without considering nature. Climate change and biodiversity loss are intertwined. Climate change exacerbates biodiversity risks, while biodiversity is key for climate mitigation and adaptation. Action taken to address one can have synergies with the other. But in some cases, there are tradeoffs where actions to advance one can actually have unintended negative impacts on the other.      

What are the regional differences in corporate action on nature?

Billman: Right now, the bulk of the companies that are engaging with SBTN are based in the US and Europe. But the impact will go far beyond those regions. When companies set science-based targets they look upstream at where they are sourcing. Once you do that, those targets become leverage in changing practices elsewhere in the world.

We are also expanding our reach, setting up regional corporate-engagement working groups to build engagement on this around the world. And our guidance does include how companies can work with stakeholders, including local communities—part of an overall focus on staying within both safe and just boundaries that do not leave vulnerable groups behind.

Do you expect institutional and private equity investors to factor this into their investment decisions?

Billman: Yes—that is starting to happen now. Investors are seeing the parallel between SBTi and SBTN. These investors are beginning to look at the companies in their portfolio in terms of their impact on nature.

Martin: We have more client requests from the finance sector than from any other sector. But these are just inquiries. Many are not ready to jump in just yet. But they are looking for guidance. I think there will be a lot of traction there very soon.

It is obvious in speaking to both of you how passionate you are about this work. What motivates you and keeps you going?

Billman: I guess the question is what else would I work on? Our generation is stealing from our children and our children’s children. It is a worthwhile life’s purpose to do anything I can to help. I think as children we all had that passion for the natural world. I encourage everyone to find that spark and connect with nature as an adult. That can fuel whatever work you are doing on this front.

Martin: That's a tough act to follow. I would say that the thing is—the environment is degrading, but we can do something to stop it. And each time I see a light go on in a client’s head—that they understand, have a clear vision of the situation, and see a way that they can change the world—it’s a huge win.