One million of the estimated eight million plant and animal species on the planet are at risk of extinction, with around 75% of the Earth’s land surface significantly altered by human activities, according to the “Nature Risk Insights” report.
AXA XL, in collaboration with Nature Positive, has released the report, aiming to assist risk management professionals in identifying and mitigating nature-related risks.
According to the report, about 50% of the world’s GDP is moderately or highly dependent on nature. Yet, despite the critical role of ecosystems in economic stability, only 5% of large companies currently disclose their nature-related risks.
The financial consequences of biodiversity loss are staggering. Mangroves alone reduce flood damage by an estimated $65 billion annually, while urban green spaces lower energy costs and mitigate climate effects. Meanwhile, an EU-funded study estimates that replacing natural pollinators with artificial alternatives could cost €153 billion per year.
The link between climate change and biodiversity loss is also drawing greater scrutiny. As ecosystems degrade, carbon sequestration declines, worsening global warming. The risks extend to businesses, with disruptions ranging from raw material shortages to supply chain instability.
Regulators are taking notice, however. Initiatives such as the EU’s Deforestation Regulation are tightening compliance requirements, while investors are ramping up pressure on corporations to act.
More than 1,400 companies, representing $7 trillion in market value, have also signed on to Business for Nature’s Call to Action. Additionally, over 500 organizations are aligning with the Taskforce on Nature-related Financial Disclosures (TNFD), which provides a framework for assessing and reporting nature risks.
Investors are also mobilizing, with Nature Action 100 - backed by more than 220 institutional investors overseeing $30 trillion in assets - pushing for corporate action on biodiversity loss.
As regulatory and stakeholder scrutiny intensifies, businesses that fail to integrate nature-related risks into their strategy may find themselves exposed - not just to environmental consequences, but to financial and reputational fallout as well, according to the report.
Suzanne Scatliffe, AXA XL's global head of sustainability, highlighted the interconnectedness of business and nature.
“To be resilient to the rapid and profound environmental changes occurring now, and in the future, it’s imperative businesses adequately value and manage the nature-related risks across their entire value chain,” she added.
