The Nature Positive Imperative

Luis Prato, President, Liberty International Insurance UK & MENA, and Denise Delaney, Head of Sustainability, Global Risk Solutions, Liberty Mutual.

We recently had the pleasure of hosting a roundtable with a group of sustainability and risk professionals across a variety of industries to discuss some of the issues that businesses face in managing their environmental impact. 

Recently, the climate emergency may have somewhat dropped off the radar of some, with economic volatility and major political developments overshadowing the issue. But it remains urgent, and we were driven to host this discussion to put the spotlight back on the topic, delving deeper into one specific, highly inter-related area that is often overlooked: how businesses can mitigate their impact on nature and biodiversity. 

The scale of the challenge

Climate discussions have traditionally centred on carbon emissions and net-zero targets, but the focus has begun to expand toward a more comprehensive understanding of environmental impacts. Nature and climate are intrinsically linked, with ecosystem degradation exacerbating climate risks. 

According to a 2023 PwC report, 55% of global GDP, amounting to approximately $58 trillion, relies moderately or highly on nature[1]. As natural resources diminish, both economies and communities face heightened vulnerability, reinforcing the urgency for a nature-positive transition.

Businesses are becoming increasingly aware of the fact that they must transform their practices to help preserve nature and biodiversity - not only to meet their environmental commitments but often to ensure they can rely on the supply chains and inputs their business thrives on. Most of our guests shared the sentiment that while businesses have shown willingness to take action, they often don’t know where to begin. 

Several of our participants noted that a valuable first step for a business looking to make a significant change is to measure their environmental impact. Quantifying impact is critical to setting actionable targets and tracking progress. Recognising this need, governing bodies are stepping in with new regulatory frameworks to enforce standardised reporting. For instance, the EU has introduced the Corporate Sustainability Reporting Directive (CSRD) requiring that large and listed companies share information on how they monitor a wide range of ESG issues.

Our guests also shared their experience of navigating new regulatory requirements and the overall response was that it is proving to be a huge task to collate the data necessary for accurate reporting – and the enormity of the disclosures can even distract from taking meaningful action in their businesses. Carbon emissions are hard enough to identify and measure, but when it comes to nature it is even more complex as a wealth of factors must be taken into consideration. 

As such, many sustainability professionals are feeling drowned by these new reporting requirements and often lack the capacity to focus on meaningful initiatives that help advance their sustainability commitments. 

Identifying solutions 

To make a lasting impact, businesses need streamlined processes and tools to support understanding their business and reporting. 

At Liberty, we are exploring ways to leverage our expertise in risk assessment to support clients in understanding and managing their environmental footprint. For example, we have already implemented climate-related risk mapping using drones and satellite technology, which could potentially be adapted to track nature-specific impacts as well. 

The insurance industry, with partners, has also made some progress in innovating to directly protect nature through insurance. For example, The Nature Conservancy is currently developing a reef insurance program in The Bahamas, based on the first of its kind implemented in Mexico in 2019. These programs recognize that while the cost of reef restoration may be high, the cost of not repairing damage – including increased flooding and erosion, loss of reef and beach dependent livelihoods, and loss of critical sources of sustenance – would be much higher. This helps to ensure that communities, industries, and economies that rely on reefs can continue to do so. Since the initial project, this type of insurance has expanded to other areas of the Caribbean region, to Hawaii, and to Asia and the Pacific. It is still an emerging market but there is scope for the concept to expand and in doing so enhance the resilience of both people and nature.

Beyond these measures, the insurance industry has an opportunity to drive meaningful change by fostering collaboration across sectors, sharing insights, and promoting best practices. Through active engagement in the development of nature-positive solutions, insurers can support businesses in reducing environmental impact and promoting resilience in the face of nature-related risks.

It is inspiring to see a growing commitment among businesses to embrace the challenge and imperative of protecting nature. Although substantial work remains, these early actions signify a meaningful shift in mindset. Through a shared focus on nature and climate resilience, the business community can help drive the systemic change needed to protect our planet for future generations.

References:

[1] PWC