Is nature loss a growing global risk for outdoor companies? From supply chains to outdoor enthusiasts’ natural playgrounds, the risks are rising, says Bettina Faust of the Global Nature Fund.

It is something our kids learn at school: biodiversity is the foundation of our survival. It encompasses species diversity, genetic diversity within species, and the diversity of ecosystems. The latter, in particular, is immensely important to us, as it provides us with water, oxygen, food and much more.

“If biodiversity disappears, we will face not only an ecological problem but also an economic one, because the basis of our economy will be lost. And many people are not yet aware of this,” says Bettina Faust, Project Manager, Business & Biodiversity – Textiles.

The Global Nature Fund (GNF) is based in Germany. Founded in 1998, the non-profit organization allocates anywhere between €1.5 million to €3 million annually toward its worldwide nature and environmental protection projects. At the same time, the GNF is also working together with industry to make companies and supply chains more sustainable.

“When it comes to biodiversity, we are already working with many major companies in the financial and food sectors. However, the issue is also important for the textile industry, as many of its raw materials are grown agriculturally,” explains Faust.

In its latest Global Risks Report the World Economic Forum identified biodiversity loss and ecosystem collapse as the second-greatest long-term risk to the global economy, behind extreme weather events. How far has this loss already progressed – and what are the main causes of this trend?

“That is difficult to say. We are only just beginning to develop appropriate metrics and indicators. But one thing can be said with certainty: the situation is catastrophic. 75 percent of the Earth’s land surface and 66 percent of its ocean surface have already been altered by human activity. Worldwide, up to one million species are threatened with extinction, many of them within the next few decades.

“The main cause is changes in land use, such as the clearing of rainforests for agriculture or the construction of new residential or industrial estates on our doorstep. Another driver is the over-exploitation of natural resources. Furthermore, as a result of the global economy, we face a problem with invasive species – that is, animals and plants spreading into areas where they do not belong and destabilizing the local ecosystem.”

Is the urgency of this issue recognized by the business world and society at large?

“In recent years, many ESG departments have addressed this issue in response to legislation such as the CSRD, but unfortunately that is often as far as it has gone. As the reporting requirement currently applies only to companies with more than 1,000 employees, the issue is once again slipping out of focus. In the finance and insurance sectors, however, the situation is different.

“As soon as companies rely on financing or insurance, they must therefore address biodiversity risks in their supply chains.”

Does this prompt companies to take action?

“To some extent. Some companies with which we carried out our biodiversity assessment have decided to use only certified organic cotton. Of course, one might ask how much of a difference this makes, given that organic cotton accounts for only 2.3 percent of global production. Nevertheless, it is an important step.

“These companies have realized that organic farming causes less harm to biodiversity and, in the long term, to their business operations as well.”

How does this affect the textile and outdoor industries?

“More than half of global economic output depends directly on intact ecosystems. If, for example, a region suffers from water scarcity, crop yields will be lower. The same applies if the soil is no longer fertile. In addition to these physical risks, biodiversity loss brings with it legal, representational and market risks.

“In the textile industry in particular, biodiversity plays a vital role at every stage of the value chain. For example, there used to be 50 different varieties of cotton; today, only four of these are still in use. In fact, 90 percent of global cotton production comes from a single species, which is highly risky. The outdoor industry is also a driver of biodiversity loss because it produces highly functional and technical textiles, most of which are of fossil origin.”

At the other end of the value chain – the natural playgrounds where outdoor products come to use – biodiversity loss is also felt, after wildfires, severe droughts, and more. But how is this also a business risk?

“The industry appeals to people who love nature and the outdoors. In other words, they experience nature firsthand and want to continue doing so. These people are often already engaged with this issue. And they ask questions like: How do you produce your goods? Where do you manufacture them?

“If it suddenly comes to light that a facility, for example, polluted the groundwater, then I’m not only facing an environmental problem but also a reputational one.”

How should companies tackle challenges strategically and identify, assess and manage risks to biodiversity?

“By starting to engage with the issue. Our Significance Quick Check, for example, helps you to first work out how relevant biodiversity is to your business. We have also published a biodiversity checklist for textile companies. This will answer questions such as: ‘What is actually relevant?’ or ‘Where might risks arise?’

“We want to highlight that biodiversity isn’t just a sustainability issue, but is also relevant to purchasing and sourcing. At some point, our raw materials will become more expensive or harder to source. We must therefore work together to develop strategies to counteract this. A first step is therefore to address the risks within one’s own supply chain. It is also very important to use existing raw materials wisely: simply by consuming fewer resources, I am contributing to the protection of biodiversity.”

Can companies simply pay “lip service” to biodiversity whilst avoiding taking meaningful action?

“Some companies think, ‘Let’s do something about this and set up a garden or a bee hotel at our site.’ Whilst that’s great, they haven’t grasped the real problem. The main loss of biodiversity stems from unsustainable sourcing of raw materials. That is why analyzing supply chains is so important. If the supply chain for the main raw material is long and complex, we recommend starting with a ‘simpler’ raw material first. Nobody is perfect; but it’s important to start at some point.”

Photo: NOAA, 2014

Global Risks Report, the World Economic Forum