Eco-Nomics 101: How do you measure a business's biodiversity footprint?

Updated: Feb 24

Nature forms a significant basis upon which the global economy thrives – many industries, such as tourism, agriculture, mining, infrastructure, property and energy are reliant on healthy, functioning ecosystems; in fact, over half of the world's GDP is dependent on biodiversity and ecosystem services.

However, biodiversity is declining at unprecedented rates. To arrest or reverse this decline, and therefore risk to business, it's important for you to quantify and understand your company's biodiversity footprint. But how exactly can a business measure its biodiversity footprint?

What is biodiversity and why is it important?

Biodiversity refers to the variety of living organisms, including plants, animals, and microorganisms, that inhabit a particular ecosystem or the entire planet. It encompasses the diversity of species, their genetic variation, and the various ecosystems and ecological processes of which they are a part. Biodiversity plays a crucial role in maintaining the balance of the earth's ecosystems and is essential to human well-being, providing us with food, medicine, and other vital resources.

Biodiversity can be difficult to quantify due to the vast number of species and ecosystems on the planet. Many species have yet to be discovered, and even those that are known can be difficult to count or track. Additionally, biodiversity encompasses not only the number of species present, but also their genetic variability and the different roles they play in ecosystems, making it a complex and multifaceted concept to measure.

Biodiversity is important for a number of reasons:

• It plays a critical role in maintaining the balance of the earth's ecosystems. Each species has a unique role to play in its ecosystem, and the loss of even one species can have far-reaching consequences for the entire ecosystem
• Biodiversity provides important ecosystem services, such as pollination (required for food production), water purification, and carbon sequestration, that are essential to human well-being
• Biodiversity is a source of food, medicine, and other vital resources that are essential to human survival and well-being.

A recent study found that more than $44 trillion of economic value, or half of the world’s GDP, is reliant on ecosystem services, and therefore potentially threatened as a result of species decline.

Example of a location with high biodiversity

The Amazon rainforest is an example of a place with high biodiversity. It is estimated to contain about 10% of the world's known species, including many unique and rare species that are found nowhere else on earth. The Amazon rainforest is essential to the earth's ecosystem, as it plays a critical role in regulating the planet's climate, storing carbon, and producing oxygen. Additionally, the rainforest provides important ecosystem services, such as regulating the water cycle and supporting global food production through pollination of crops. The Amazon rainforest is also important to the indigenous communities that call it home, who rely on the forest for their livelihoods and cultural traditions. However, the Amazon rainforest is threatened by deforestation, habitat loss, and climate change, which could have devastating consequences for the planet's biodiversity and the ecosystem services it provides.

Example of a place with low biodiversity

An example of a place with low biodiversity could be a desert. Deserts are characterised by extreme temperatures, lack of water, and limited plant growth, which results in a relatively small number of species compared to other biomes. However, even in deserts, biodiversity can be important, as the few species that are present often play unique and important roles in the ecosystem. For example, many desert plants have adapted to store water or tolerate extreme temperatures, and these adaptations can be of great interest to scientists studying climate change and alternative sources of food and water.

What is causing biodiversity decline and how can my company be contributing to pressures?

Direct drivers of biodiversity loss (natural and anthropogenic) are drivers that unequivocally influence biodiversity and ecosystem processes (also referred to as ‘pressures’). According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), five pressures are primarily responsible for driving biodiversity loss:

• Land-use and sea-use change: Human influence on habitats is primarily due to land-use change. This can involve the conversion of land cover, such as deforestation or mining, changes in ecosystem or agro-ecosystem management through agricultural intensification or forest harvesting, or changes in the spatial configuration of the landscape, such as habitat fragmentation.
• Natural resource use and exploitation: Anthropogenic exploitation of wildlife has led to biodiversity loss and extinctions, with the most overexploited species including marine fish, invertebrates, trees, tropical vertebrates hunted for bushmeat, and species harvested for the medicinal and pet trade. Overfishing has significantly affected ocean health and led to drops in commercially valuable species, and proximity to markets and market demand better predict overfishing than population density. Natural resource use and exploitation are heavily influenced by indirect drivers such as socio-economic and demographic trends, as well as societal and cultural influences, with per capita consumption levels potentially more important than population growth.
• Pollution: Pollution is a major contributor to biodiversity loss and ecosystem change in all biomes, with freshwater and marine habitats being particularly affected. Nitrogen deposition, mainly from fossil fuels and fertilisers, is one of the most significant threats to global biodiversity. Once deposited on terrestrial ecosystems, nitrogen can cause a cascade of effects leading to declines in biodiversity. Nitrogen-phosphorus fertilisers have had a more devastating impact on freshwater and marine habitats, leading to eutrophication and hypoxic or 'dead' zones that support no aquatic life. Algal blooms caused by these fertilisers deplete the water of oxygen and can result in toxic algae.
• Climate Change: Climate change is a major driver of biodiversity loss, with rising temperatures posing a threat to as many as one in six species globally. The increase in atmospheric CO2 concentrations leads to higher ocean temperatures and acidification, which have significant impacts on marine ecosystems, particularly coral reefs and marine communities near the seafloor. Recent studies suggest that global warming will lead to the contraction of reefs, negatively affecting the marine biodiversity that depends on these ecosystems. While the direct effects of ocean acidification vary across taxa, it is expected to have profound effects on marine ecosystems.
• Invasive species: Invasive species can be native to an area or introduced from elsewhere, and they are found in both land-based and aquatic ecosystems, such as freshwater and marine environments. They disrupt the ecological balance of natural systems by competing with and often outcompeting native species for resources, which can have negative implications for biodiversity. Invasive and alien species, including weeds, have been reported in various parts of the world and can cause significant economic damage, as well as local and regional biodiversity loss.

Companies can contribute to biodiversity loss directly through their operations, such as through land-use change for housing development, energy distribution, mining and agriculture. They can also contribute indirectly through their supply chains, such as by purchasing products that have been sourced from areas with high rates of deforestation or by supporting industries that rely on unsustainable practices that harm biodiversity. Additionally, companies may contribute to pollution and climate change through their emissions and waste. Using comprehensive global datasets, Xylo Systems can help companies assess and address their impact on biodiversity and take steps to manage biodiversity loss risk.

How can my company calculate its direct biodiversity footprint?

Companies can assess their direct impact on biodiversity using the following steps:

1. Identify areas of operation and amount of land assets under management
2. Identify critical ecosystems and threatened species within, adjacent to or reliant on your land assets or areas of operation
3. Identify pressures on any ecosystems and threatened species within those areas
4. Align pressures in step 3 with company operations, and identify opportunities to take action to alleviate pressures and support biodiversity.

There are a number of frameworks being developed at the global level, including the Taskforce for Nature-Related Financial Disclosures, for companies and financial institutions to report and disclose information about their nature-related financial risks and opportunities. This information will help investors and other stakeholders to make more informed decisions about their investments and support the transition to a more sustainable economy.

Xylo Systems can quantify your company's biodiversity footprint instantly using our extensive, globally recognised biodiversity data libraries. Xylo Systems also directly aligns with the TNFD LEAP Framework, making it easier for you to communicate and disclose your biodiversity action.

Want to assess your business's biodiversity footprint? Get in touch today with our team at Xylo Systems.

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