INTHEBLACK May 2026 - Magazine - Page 45
More than half of global GDP
depends on nature, which
includes biodiversity, ecosystems
and ecosystem services.
Global frameworks help
organisations assess, report
and act on nature-related
risks and opportunities.
Finance leaders play a pivotal
role in translating nature-related
risks and opportunities into
business strategy.
BIODIVERSITY LOSS IS ONE OF THE GREATEST
threats to the planet — and increasingly, to business.
The term refers to the variety of all life forms on earth,
from genes and bacteria to entire ecosystems such as oceans,
forests and deserts. “Biodiversity loss” refers to any decline
in this complex web.
According to the Intergovernmental Science-Policy Platform
on Biodiversity and Ecosystem Services, about one million
animal and plant species face extinction, many within decades,
though some estimates suggest the number could be much
higher. Human activities including deforestation, habitat
fragmentation and climate change are accelerating its decline.
Beyond environmental consequences, the economic
exposure is significant. The World Economic Forum estimates
that USD$44 trillion (A$62.32 trillion) of economic value
generation — more than half of global GDP — is moderately
or highly dependent on nature and ecosystem services.
For businesses, the impacts of biodiversity loss are no
longer abstract.
“Companies are encountering it through water constraints,
degraded land, volatile commodity supply, and rising regulatory
and investor scrutiny,” says Alexandra Banks, EY Global nature
lead. “For finance teams, that brings nature squarely into
the realm of material risk. It shifts biodiversity from being
an abstract environmental issue to something that directly
affects asset values, cash flows and long-term resilience.”
Biodiversity loss triggers impacts that
range from supply-chain disruption
to depreciating asset values, and is
increasingly becoming an economic
burden. As global frameworks and
reporting standards evolve, businesses
must rethink how nature-related risks
and opportunities are identified,
measured and managed.
Words Beth Wallace
NATURE LOSS IN VALUE CHAINS
Businesses are directly and indirectly dependent on nature
across their entire supply chain, from access to water, land
and raw materials through to the stability of the systems that
support production, transport and infrastructure. “When those
natural systems are stressed or degraded, the impacts tend
to show up as financial and operational issues rather than
environmental ones,” says Banks.
Many of the material dependencies on nature only become
visible when they fail, she adds. “Businesses experience them
through production delays, cost volatility, asset impairment
or loss of access to critical inputs.”
Research by the Australian Sustainable Finance Institute
(ASFI) shows ecosystem condition directly affects profitability,
productivity, land values and loan serviceability in
nature-dependent sectors such as agriculture.
Nature degradation such as declining soil health, reduced
water availability or vegetation loss can weaken asset
performance over time.
intheblack.cpaaustralia.com.au 45
