Biodiversity loss poses major risk to global economy — Report

A new United Nations-backed report has warned that the rapid growth of the global economy is driving unprecedented biodiversity loss, which is posing a serious systemic threat to economic stability, financial systems and human wellbeing,

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The finding is contained in a landmark assessment report released on Monday by the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES).

In the report, it was concluded that businesses depend on biodiversity and that they directly or indirectly contribute to its decline.

The report, titled “Methodological Assessment Report on the Impact and Dependence of Business on Biodiversity and Nature’s Contributions to People”, was approved by representatives of more than 150 governments during the 12th IPBES Plenary session held in Manchester, United Kingdom.

According to the assessment, even businesses that appear far removed from nature rely on ecosystem services such as water supply, flood regulation, climate moderation, tourism spaces and cultural values.

Yet, the scientists argued that many companies bear little or no financial cost for damaging biodiversity and often lack mechanisms to profit from positive environmental outcomes.

“Businesses are central to halting and reversing biodiversity loss, but many lack the information needed to understand their impacts, dependencies, risks and opportunities,” the report stated.

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Prepared over three years by 79 experts from 35 countries, the assessment finds that the current business environment is poorly aligned with the goal of a just and sustainable future.

It identifies harmful incentives, weak regulation, data gaps and short-term profit models as key drivers of continued ecosystem degradation.

Biodiversity loss is caused by five primary drivers: habitat loss, invasive species, overexploitation (extreme hunting and fishing pressure), pollution, and climate change associated with global warming. In each case, human beings and their activities play direct roles.

According to the United Nations Environment Programme (UNEP), the biggest driver of biodiversity loss is how people use the land and sea. This includes the conversion of land covers such as forests, wetlands and other natural habitats for agricultural and urban uses.

Since 1990, the UNEP noted that around 420 million hectares of forest have been lost through conversion to other land uses. Agricultural expansion, the UN said, continues to be the main driver of deforestation, forest degradation and forest biodiversity loss.

The global food system is the primary driver of biodiversity loss, with agriculture alone being the identified threat of more than 85 per cent of the 28,000 species at risk of extinction.

Harvesting materials such as minerals from the ocean floor and the building of towns and cities also impact the natural environment and biodiversity.

Reconsidering the way people grow and consume food is one way of reducing the pressure on ecosystems. Degraded and disused farmland can be ideal for restoration, which can support protecting and restoring critical ecosystems such as forests, peatlands and wetlands, the UN said.

In Nigeria, biodiversity is facing a severe crisis, with at least 40 per cent decline in wildlife and habitat reported over the last 25 years. Major drivers include rapid population growth, habitat fragmentation, agricultural expansion, illegal logging, and oil pollution.

Based on this, no fewer than 309 species are threatened, this loss impacts food security and livelihoods.

Harmful finance dwarfs conservation spending

Meanwhile, the IPBES report released on Monday, highlights stark imbalances in global finance flows. In 2023, public and private finance activities with direct negative impacts on nature were estimated at $7.3 trillion, including $4.9 trillion from private finance and about $2.4 trillion in environmentally harmful public subsidies.

By contrast, the report said only $220 billion—around three per cent of harmful public incentives—was directed towards biodiversity conservation and restoration.

“The loss of biodiversity is among the most serious threats to business,” said Stephen Polasky, a co-chair of the assessment.

“Yet it often appears more profitable in the short term to degrade nature than to protect it, even though cumulative impacts risk crossing ecological tipping points that undermine long-term profitability.”

Data gaps limit business action

The assessment finds that although tools exist to measure corporate impacts on biodiversity, adoption remains low. Less than one per cent of publicly reporting companies currently disclose biodiversity impacts, the report said.

A survey of financial institutions representing 30 per cent of global market capitalisation identified lack of reliable data, models and future scenarios as major barriers to integrating nature-related risks into decision-making.

Another co-chair, Matt Jones, described the report as a turning point.

“This assessment cuts through the confusion of competing frameworks and offers clarity on how businesses and financial institutions can move from voluntary pledges to science-based action,” he said.

Indigenous knowledge overlooked

The report also underscores the importance of Indigenous Peoples and local communities, noting that industrial development threatens about 60 per cent of Indigenous lands globally, while a quarter of Indigenous territories face intense pressure from resource extraction.

“Scientific and Indigenous knowledge are often siloed, limiting effective decision-making,” said Ximena Rueda, another co-chair of the assessment. “Respectful collaboration can significantly improve how businesses manage risks and opportunities related to biodiversity.”

Call for collective action

While emphasising that businesses must act, the report stresses that transformative change cannot be achieved by the private sector alone. Governments, financial institutions and civil society are urged to collaborate to create an enabling environment through better policies, financial systems, data access, cultural norms and institutional capacity.

The assessment outlines over 100 concrete actions that can be taken across these areas to help align economic activity with biodiversity protection.

“Better stewardship of biodiversity is not optional—it is a business necessity,” Prof. Rueda said, adding that transparent disclosure and credible strategies are essential to avoid greenwashing.

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IPBES Chair David Obura said the report provides critical guidance for achieving global commitments under the Global Biodiversity Framework, the Sustainable Development Goals, and the Paris Climate Agreement.

“Nature is everybody’s business,” said Luthando Dziba, Executive Secretary of IPBES. “The conservation and sustainable use of biodiversity are central to long-term economic resilience and success.”

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In her reaction to the report, UNEP’s Executive Director, Inger Andersen, explained that Nature remains one of the most undervalued foundations of the global economy, despite underpinning food systems, supply chains, and long-term prosperity.

At a time when some may question the role of science, she said IPBES continues to lead the way and provide independent, authoritative evidence because science-based decision making is not optional, it is essential.

“Time is not on our side, but this Assessment offers a clear pathway on how we can align economic decision-making with environmental reality, delivering lasting benefits for people and for the planet,” she said.

On his part, the Director-General, Food and Agriculture Organization of the United Nations (FAO), QU Dongyu, argued that businesses across the agrifood systems both depend on and significantly impact biodiversity.

To build a resilient future, he said there is a need to transform these systems to ensure what he described as the “Four Betters”: better production, better nutrition, a better environment, and a better life, leaving no one behind.

The FAO chief explained that by effectively assessing and managing the “four betters” relationship with nature, businesses can strengthen their resilience, drive innovation, and establish themselves as leaders in the global economy.

He said every business along the value chain has a role in advancing sustainable practices that support biodiversity.

“Key actions include scaling up investments in innovative, biodiversity-friendly technologies across production, processing, distribution and consumption, as well as implementing robust systems to monitor and report the impacts of their business operations,” he noted.