Know Your Nature Impacts and Opportunities

Assessing your nature dependencies (see last month’s blog) is only the first step in establishing a positive and sustainable relationship with nature. Dependency analysis reveals business reliance on nature’s assets; the next step is to identify areas of business impact.

This is where business activities – either directly from operations or indirectly through the supply chain – contribute to biodiversity loss. Dependencies and impacts are the two elements that make up a double materiality assessment, as required by many reporting frameworks and regulations.

In this blog, we explain what nature-related impact analysis is and why it is essential to understanding your interface with nature.

What is nature?

Nature is a collective term for all living things on Earth (biodiversity) and their interaction with the physical environment (e.g. water, climate), as well as the forces, processes and outputs that result. Many of these outcomes benefit people and our societies in the form of:

• Natural resources – raw materials such as freshwater, soils, minerals, and species of animal and plant.
• Ecosystem services – processes that deliver benefits including pollination, soil formation, disease control, air and water purification, and carbon storage.

Any degradation of nature or disruption to ecosystems is a material impact, and can lead to natural resource shortages and the disruption of supply chains.

How could your business be contributing to nature loss?

The internationally-recognised five drivers of nature loss are:

• Changes in Land and Sea Use – including habitat destruction and fragmentation due to activities like agriculture, urbanisation, and infrastructure development.
• Direct Exploitation of Natural Resources – including unsustainable fishing, hunting, and other harvesting of plants and animals, for instance for timber or ornaments.
• Climate Change – including changes in temperature and weather patterns and increases in extreme weather events.
• Pollution – including chemicals, plastics, air pollution and other forms of contamination.
• Invasive Species – introduced non-native species can displace native species and disrupt ecosystems.

Why impacts matter

All parts of the economy contribute to these drivers. How, and how much, a particular business contributes to nature’s decline depends on the specifics of its direct and indirect operations and activities. Given our reliance on nature, understanding each business’ impact is essential to managing nature risk and ensuring future growth and resilience for the business and for the global economy.

A commitment to halt and reverse nature loss requires businesses to understand how they currently contribute to the five drivers above.

Identifying the impacts

A full impact analysis starts with a comprehensive assessment of how your business interacts with nature. This needs to cover direct operations, suppliers, and customers. It should include mapping out the upward and downward value chain to identify where impacts occur – from sourcing raw materials to transporting people or commodities.

How does it work?

To take an example from the travel & tourism sector, a tour operator will likely have minimal direct impacts (e.g. a small, city-based office). However, the value chain for the products it sells includes air transport, ground transfer, hotels and excursions – all of which are essential to its business. So, its indirect impacts could include all five drivers, but in particular,

• carbon emissions from transport and power;
• use of natural resources such as freshwater and seafood; and
• pollution from plastic, food waste and wastewater.

However, a cruise company, which provides transportation and accommodation itself, will likely have greater direct operational impacts, as well as indirect ones relating to activities like onshore activities and food sourcing.

Businesses need a comprehensive understanding of how materials are sourced, and services are provided, throughout their operations and value chain to accurately assess their impacts on nature.

Identifying opportunities

Understanding your nature impacts offers an opportunity to improve operations and reduce your contribution to global nature loss. It can also highlight areas where you could be supporting and investing in nature to compensate for any ongoing harm. Businesses need to explore the many opportunities they have to help halt and reverse nature loss if they are to pursue a nature-positive approach.

Planning for a nature positive future

The Taskforce on Nature-related Financial Disclosure has developed a universal approach for conducting initial nature impact assessments. Known as LEAP – Locate, Evaluate, Assess, Prepare – this provides an integrated process that any business can follow. The steps can be applied to all the key parts of an assessment – mapping operations and value chains, assessing dependencies and impacts, and evaluating nature-related risks and opportunities.

The Bottom Line

Ultimately, if you haven’t done a double-materiality assessment, including dependencies and impacts, any environmental policy you make is based on assumptions and guesswork. To create a policy commitment and business plan that addresses your dependencies and impacts, your opportunities and, most importantly, your nature risks, you need to know what those are. Otherwise, you could be continuing to affect nature in ways that accelerate the global biodiversity and climate crises. And that could affect your bottom line.

Daniel Turner

Director of Strategy, ANMONDIAL

Find out more …

• Full guidance on the LEAP approach can be found on the TNFD website
• ANIMONDIAL is here to help you with your double materiality or impact analysis. Our team of experienced tourism and biodiversity professionals can guide you through the detailed process to provide the insight you need for policy and strategy development and robust reporting and disclosure.