Episode 42: Beyond the bees and the birds - The business case for nature

The transcript highlights below have been edited for clarity 

Mark Lee 

Hi, everyone, and welcome to this next episode of the Sustainable Connections podcast. I'm Mark Lee, Global Director of Thought Leadership at ERM and your usual host. If you're a returning listener, really delighted to have you with us. If it's the first time, then an extra welcome.  

In today's episode, we're going to focus on nature. This is a topic that we've on touched at different points in the Sustainable Connections series. But it's an issue that's fast becoming one of the most complex and critical issues facing business, and one that we want to keep returning to and go deeper into it. People will know some of the landscape from biodiversity loss and water scarcity to the growing expectations coming from investors, regulators, and society. It's all putting companies under increasing pressure to understand their impacts and dependencies on nature, and to act even though the landscape of data and the frameworks and solutions available to address nature challenges, aren’t all fully mature. It keeps evolving. It's a really dynamic and sometimes tricky landscape.  

Today, we're going to dig into some of the key challenges that companies are facing in the nature space right now and where we're seeing opportunities to accelerate solutions. We'll look ahead to what companies can do now to position themselves for how things are likely to evolve in the next few years as well.  

I'm joined by three experts who are working at the forefront of this agenda. Sebastian Leape is the CEO of Natcap. Nadine McCormick is the Senior Manager of Nature Action at WBCSD. Daniele Strippoli is ERM's Nature Lead in Europe, and my colleague here at ERM. Welcome everyone, and I'm going to ask all three of you to introduce yourself and give a little sense of how your own work came into the nature space.  

Sebastian Leape 

Thank you for having me, Mark. It's wonderful to be here. I run Natcap, a nature intelligence company. We work with corporates and financial institutions to help them measure and manage those interactions with nature, and particularly move from not just a physical assessment, but understanding the financial value at stake for those entities. We're really delighted to be working closely with ERM and some of your clients, providing that data engine behind the great consulting work that you are doing. Very good to be here. 

Mark Lee 

Great to have you and we are so appreciative of the partnership as well and we hope it's one that just deepens and has more impact over time.  

Nadine McCormick 

Thanks Mark, it's a pleasure to be here and it was fun preparing for this question because if I think about it, I've been in this space for quite a while now. I started my career more than 20 years ago, that's not revealing my age too much, at IUCN (the International Union for Conservation of Nature) and I was primarily working with the business and biodiversity program. It was very trendy at the time, all the NGOs had a business and biodiversity program, and there the topic was really dominated by large footprint companies. Mainly energy extractors, because of some of the legal requirements, the financial performance standards that were on them, and the main thing you have to do was put in place a biodiversity action plan. I think that over time what's evolved is the millennium ecosystem assessment that came out in 2005. We started thinking more about ecosystem services which are things like climate regulation, pollination, biomass provisioning, and then different sectors started to realize their link, especially on the dependency side. Agriculture, forestry and other ones. We started going beyond just those big footprint companies and now I've been at WBCSD (the World Business Council for Sustainable Development), I joined five years ago. As I started literally that month, the global goal for nature-positive came out. Quite quickly member companies were asking, what's that then? How is that different to what we've been doing on biodiverse and ecosystem services? A common thread about how I've been working is really trying to break down that complexity of nature and make it more actionable for business. 

Mark Lee 

Decades of experience and we still find it complex, which I think we all do, but if we can keep breaking it down, all the better. I commented on the ERM Natcap partnership and WBCSD is such a great partner for us and our organization as well. We love all the work that we get to do with you and your colleagues. Daniele, can you round out this introduction for us? 

Daniele Strippoli 

Thank you, Mark. Nice to be back again for another podcast focusing on nature. I like the introduction from Nadine because we have some common pathways over the last 20 years. By background, I'm an agronomist and understand a little bit about biodiversity and ecosystem services complexity. Over the last 20 years, I started doing a lot of environmental social impact assessments, running very complex biodiversity baselines across the globe for extractive industry, mainly trying to address the impact, but also trying to define the possible opportunity to create value for local communities, pioneering ecosystem services 10 years ago.  

Nadine, you mentioned that in the last years, we have seen a new trend in the market. Biodiversity is complex and nature has become a bigger equation, where biodiversity is a component of the ecosystem services, and a very important aspect that creates business dependencies. We discovered the concept of DIROS (dependencies, impacts, risks, and opportunities), the complexity to understand where risk and opportunity are for businesses in terms of dependencies and impact.  

So what does it mean to be a nature lead at ERM. It means helping clients to understand this complexity, turning the challenges into opportunities, running global strategies, but at the very end, implementing them in the field because nature is place based, nature needs to be addressed in the location where the operations and the supply chains are. This is quite a challenging time, but very interesting. We’re learning something new every day because as mentioned by Nadine and Sebastian, there is a lot of movement in the market, new standards and new trends. 

Mark Lee 

Yeah, it's interesting that you share some of that common history with Nadine. We'll probably crisscross some of that history again as we go forward. You're my first acronym check on the day, Daniele, and I think you threw in DIROS. Can you explain for people what that means? 

Daniele Strippoli 

DIROS - dependencies, impact, risk and opportunity. Dependencies are how businesses and economic systems depend on nature and on the ecosystem services that Nadine was describing. Impact, is the impact of business on nature but also the potential impact from nature on business, and we know that we are in a climate change world, with a lot of natural disasters where the dependency can be the supply chain, the supply side of managing the impacts. Risk and opportunity. We look at risks a lot, but there are a lot of opportunities and unlocking opportunities can create business resilience. This is where we see the market moving now. 

Mark Lee 

Terrific. Thanks for breaking it down. We've all mentioned complexity. We've all mentioned how the language is somewhat evolved and changed over time. We're going to try and break some of that down now over the next 45 minutes or so.  

Daniele, you work directly with a lot of private sector organizations that are trying to operationalize nature strategies, to figure out how to really embed or integrate them into their businesses. Can you give us an example or two of what clients are coming to ERM for help with right now, and what that tells us about where the market is, how mature it is?  

Daniele Strippoli 

That’s a very good question. And if I may, let me take a step back. You asked what the clients are asking now, I would say what has changed from what clients are asking from the last 12 to 18 months, because recently, the question has always been about what is nature risk? That was the typical question. Now, it depends on maturity, but generally I've seen a shift. The question is not, what is the nature risk? It is what do I do about it, where do I start, how I can address it? This means that there are some typical requests that we see. We can categorize them in three. Number one is how we can move the high-level screening, the global screening to a location-specific analysis of impact, but also how do I act locally, how can I turn these into local actions in a way. Number two is how can I integrate these into core processes. We have started to see discussions about how addressing the risk and therefore unlocking opportunity can speak to capital allocation, to supply chain strategies, to enterprise risk management. So, it's not only an ESG agenda. How to address nature is becoming a business agenda. The third point is action pathways. We have moved a lot from the discovery phase through the TNFD lens into how I can act. And when I act, what can be my ambition level? So it's about target investment plans and how to finance nature ground interventions. We will come back to this next, I'm sure. So, as I said, there are different maturity levels in the market. But now I think we are in at a crossroads in the market in terms of moving from awareness to implementation, where we see that the bottleneck is not only on the intent now, but is also about the capability to execute at scale, the confidence to invest money on this, and to shift from risk to opportunities, to come back to the DIROS definition. 

Mark Lee 

Super helpful. I don't mean to oversimplify, but I think I just hear in there, we've moved from a what, a definitional stage to a how. Sebastian, if I can bring this towards you, that suggests to me that there's some pressure that maybe nature is moving more quickly up the corporate agenda. You and Natcap sit right at that intersection of science and data and business decision making. It's one thing to have all that data and it's another thing to turn that into how and action. So are things moving more quickly? Do you agree with that sentiment of what Daniele said? And if so, why? What's pushing it forward now? 

Sebastian Leape 

I would agree, violently with Daniele's assessment there. 

Mark Lee 

No need for violence, Sebastian! 

Sebastian Leape 

He just got me so excited. I couldn't help but feel that way. That maturity and that difference in evolution and maturity perspective is very pronounced, particularly in Europe and Japan, but in other regions too. I think we've moved from, what is nature risk? Is it just about the bees and the birds to a broad understanding, as Daniele was mentioning, about the importance of these impacts from pollution, water use, deforestation, these dependencies on soil, pollinators, and pests, and all the risks that they imply and the opportunities that opens up. So, there has been that shift in maturity.  

To answer your question directly, the simple reason why this has moved up so quickly is because there's growing recognition that there's value from engaging in this agenda. We recently worked with a big food and beverage client, and we were as Daniele mentioned, doing a global assessment across all their operations and supply chains of the impacts of their dependencies and quantifying their risks. We found that lots of sites across Europe and Asia were engaged in really significant water pollution events. Local site managers were paying pretty significant fines to local authorities, were spending a lot of time with local bureaucracy and compliance to manage these events. But nobody centrally had really pieced together the scale of that impact, how similar it was across all operations, and quantified the scale of the cost to the organization overall. Bringing that together in one central view allows for relatively cheap investment in some technologies to mitigate that risk, and both benefit the sites and their financials, but also reduce reputational and transition risk across the business.  

I think these types of cases and examples are now happening because this work is maturing. As a result, the industry, and particularly in food and beverage, infrastructure and pharmaceuticals, and those most exposed to those risks are realizing that there's value in pursuing this analysis and this agenda. I think it’s also worth mentioning the importance of reporting in this as well, which has, I think diminished a bit as a focus. But the plethora of EU Green New Deal directives, the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, the Deforestation Directive, the voluntary TNFD framework (Task Force on Nature-related Financial Disclosures), all of these have forced the issue a bit. So, it's impossible to ignore it if you're in a corporate finance, corporate sustainability or corporate risk team, but the excitement really comes from recognition that there's value. 

Mark Lee 

I feel simultaneously incredibly well directed by all those directives, but it's still kind of confusing. I think that's maybe where a lot of companies are. Sebastian, given so many drivers, do you see any common points as to what usually prompts companies to take their first step? 

Sebastian Leape 

The first step has changed over time. I'd say two years ago it was, how on earth do we get ready for this new wave of EU regulation that's coming in, if you're in the corporate world. I think in the financial institution’s world, the ECB (the European Central Bank) back in 2020, laid out some pretty clear expectations on climate risk management that included a significant amount of nature references. So initially, we were in a world of how on earth do we comply and how do we meet the ECB's expectations? But I think now it's really moved on to this recognition that whether it's CEOs looking at the cocoa price shock or the price shocks in oranges or olive oil or the increase in frequency of some of these nature-related physical risks, that's really triggering a broader conversation about how do we get on top of this and invest today to capture and avoid big losses tomorrow and as a result, just make ourselves a stronger, more resilient business for the long term. 

Mark Lee 

Thanks, Sebastian. You mentioned the orange story and I was listening the other day about the degree to which Minute Maid's orange sourcing, which was 80% to 90% from Florida just three to five years ago, is now that equivalent from Brazil, because Florida can no longer grow oranges. We're just seeing these sudden shifts, certain crops, certain places. Maybe some of that will cycle back, but maybe it won't. We've got to figure out how those products and resources that come from nature to us, and that we value and enjoy, can be maintained and supported.  

Nadine, we've had both Daniele and Sebastian talk about what they're seeing from companies or their perception of the reason for company demand. You sit in this unique place with 200 corporate members, businesses across sectors. I'm curious, do you see your corporate members' expectations on nature evolving in the same way that it's being described? Or maybe what do you see driving companies beyond the high-level commitments into this integration implementation space that our other panelists have described so far? 

Nadine McCormick 

Yeah, I was thinking I don't agree as violently. I guess because we see a broader intersect of maturity because, even though, as you said, we're a global network of over 200 companies, we usually add leading companies driving sustainability, even though they're leading companies, there's a massive maturity gap. So we have to tailor our support to those different needs and expectations. Even if the leading companies, those innovators, their questions are getting more advanced, as was just shared by both Sebastian and Daniele. I am still getting companies or individuals in that company going, “Yes, I was working on net zero or circularity last week, and now I have to do nature. Like, where do I possibly begin? There are so many acronyms out there. Where do I get started?”. And that's why we run out a masterclass series, for example, whether it's for companies who are new to the topic, or actually what we're now starting to see is a full cycle, where some of the leading companies are then sending their procurement team, corporate affairs, risk to the masterclasses so that they understand the basis. So, the maturity is interesting, both at a company level and the individual asking the question.  

We still have a lot of companies who are going through their first LEAP assessments. That's another acronym for us now, but from TNFD, the Task Force for Nature-Related Financial Disclosures, the LEAP (location, evaluate, assess, prepare) framework to understand location, evaluate those impacts and dependencies, assess the risks and opportunities, and get prepared. It's pretty much becoming the standard framework for systematically looking across dependencies, impacts, risks and opportunities in a systematic way. But then that's not enough. You then need to apply it into a strategy. And then the more advanced companies are then thinking, well, then how do I roll out that strategy into those key functions? So there, I think that's where we do see alignment.  

But then what is driving those high-level commitments? Well, I guess a bit like then what Sebastian was sharing, once they've done this assessment, and actually I have had members say, you know what, the CSRD process, even though it was really annoying and sucked up so many resources, it was actually pretty helpful in the end, because it has helped us think systematically, because water risks are showing up and you can start connecting it to a pollution risk, and you start connecting it to some of the restoration activities you're doing. So, being able to look systematically across those dependencies and impacts and then think, how do we address these in a systematic way. I think the high-level commitments, we're going beyond that because they're starting to realize, look at these hidden risks in our supply chain, like the oranges example. We know risk isn't enough to then sell the action. What is pretty cool is some really great stories of some members who then are seeing better financing options, like green bonds, which have been like four times oversubscribed compared to a typical bond, or new products that are going on market to help halt and reverse nature loss. I think that's the direction that we see, but yes still a massive range of maturity as more and more companies come on board this nature journey. 

Sebastian Leape 

I think there's an important point here about the diversity within companies, Nadine, that I agree with. I think one thing that we often overlook is that companies aren't monolithic entities. Within companies, there is a diverse range of stakeholders with different views. I think one trend we're seeing is, yes, there is still that difference between companies, but there's actually probably a growing divergence within companies as well over the last year, whereby often sustainability teams are quite mature on this topic, certainly recognize the materiality of the topic, recognize its importance, often come from the world of science and academia and nonprofits and intuitively get it and a growing divergence from the more commercially minded colleagues in the CFO office or in the C-suite who maybe are feeling quite pressured by tariffs, by increasing oil prices, by perceived changes to regulatory frameworks. There is this growing chasm, not just between companies, but within companies. Part of the work that we work on and I know the work that we've been working with ERM on, is really helping sustainability teams often articulate that business case, which is strong on this topic, but really has to be articulated very clearly in a world where C-suites are so distracted by these other things going on. 

Mark Lee 

Sebastian, I want to come back to you on that because you said a growing chasm, which suggests that literally the groups are moving apart. I recognize all the pressures you just listed off, that companies are under so much pressure in a volatile environment, energy security, and access is very top of mind as well as physical security. But does that just make the environment more demanding, therefore the business case needs to be that much better to keep it on the CFO's agenda, rather than they have less interest or appreciation in the topic, because I think there's a difference there that's quite important. 

Sebastian Leape 

I think that this environment requires a really evidenced, rigorous, financially quantified business case. On this topic that exists in spades for particularly the most material industries we've been referencing. There's definitely a change in what is required for businesses to move forward with new initiatives and invest in this topic. But it just requires framing in a really evidenced and quantified way. So that's one thing I'd say. The second thing I'd say is that the destination in sustainability is for it to be integrated across the business. I think the siloed sustainability team is something that is starting to already pass at the very most leading companies and is something that we want to move away from across the industry, I think over the long term. There's also a divergence between companies where some still have a real centralized sustainability team, but some have managed to really start to spread that knowledge and spread that enthusiasm across supply chain, across risk, across finance, and embed it more across the whole business. To your question, the bar for investment has gone up and I think the language has to change. But it's not just always this dynamic of sustainability pitching to a C-suite, there is also this embedding going on across the business. 

The key challenges shaping the nature agenda for business 

Mark Lee 

Sebastian, if you're going to make a fantastic business case, you need data, you need to be able to measure, prioritize, and build that case. This is kind of Natcap's game in some ways. So where are we at in terms of the technical or data related challenges that limit the quality of the business case that companies can make right now? 

Sebastian Leape 

I'm going to be bold and say that I think a lot of the issues with measurement and prioritization can already be solved. I think we've made tremendous progress the last five years in solving them. Let me just talk you through a few of them and just reflect on where we are. Historically, there was a concern that nature was too complex to measure. We didn't know what metrics to pick and we didn't know how to measure them. I think TNFD was probably the single biggest step forward there, but we have increasing consensus about what are the core metrics that you need to measure when addressing this topic. And it's not that complicated. There are a few you need to think about when you're measuring your impacts, things like land use change, water use pollution, and a few when you're thinking about dependencies. Then you just need to understand the value at risk from physical and transition risk and the opportunities and the values from the opportunities. So, the metric selection, I think we've made real progress on.  

I think historically there was real concern over traceability. It's that so much of this nature-related risk and opportunity lies, particularly in your supply chain, where you just don't really know what's happening. I think we've made tremendous progress there as well. At Natcap, we have a commodity first methodology that doesn't require perfect supplier location, doesn't require any new supplier surveys, but gets a pretty good estimate of site-based commodity traceability. EUDR (EU Deforestation Regulation) has also helped forcing transparency for lots of companies. There are new methodologies and more data that make that traceability problem much more manageable. A third one is financial quantification. As we were saying, the business case here is important. Turning this into a financial value at risk or a financial opportunity number has been a struggle. But we've made real progress on this and I think now there is a growing consensus as to an approach to turning impact interdependencies into quantified physical and transition risk and putting a value at risk number for those risks. So, I think there's real progress there. Historically we've been worried that data is not specific enough to a given company. We've been using country level average data, we've been using industry level average data. And now because of that traceability point I made, we can actually get really specific to where and how companies are operating and tailor that assessment for them. I think a lot of these issues have really seen real progress, but a few gaps do remain. 

Mark Lee 

Nadine, I'm wondering if you pick up from Sebastian's really quite positive answer, like we've got tools and skills, but you talked about that difference in maturity even among leading companies. Do you see places in WBCSD's membership or in companies generally where companies still most often get stuck? What do they have to overcome to drive this forward? 

Nadine McCormick 

Definitely, I'd say half the battle is getting that right data, in the right form, and in the right Excel table or a much more sophisticated tool. But then there's also a lot of analysis paralysis, right? So we don't need that much data, we need the right data, for the right decisions. The other half of the battle then is internal buy-in, like that organizational change that needs to go alongside, so it's that softer side, but honestly it's the hardest side, and if I give you an anecdote. A few years ago, we were piloting TNFD's LEAP approach (the locate, evaluate, assess and prepare approach). The companies at the end of that process, we had 20 something companies. At the end of it, it was interesting, those who had all typically worked with service providers, no offense to the folks on the call today, the nature team with isolated sustainability teams got to the end, had their assessment and maybe even started disclosing something, nothing changed for them. Versus those nature leads in a company who had set up potentially something like a cross-functional task force of different representatives, worked through that assessment process with them, so they understood the terminology, they understood the language, they understood the implications for their particular function. So then when it came to the “so what” part of the assessment, it became obvious, well, here are the actions we're going to take, and here are the targets we're going to set, and that led to change. So really that softer side, we can't just produce the data. The data is a key part, but even a business case isn't going to lead to change, organizational change. It's an important component. But really thinking about that softer side of how you bring using the, as we said earlier, the language that we use, the narrative that we use, maybe even not mentioning the word nature, and certainly not biodiversity at the beginning at least. Going in with language that makes sense in terms of hidden physical risk in the supply chain. What? Tell me more. And then bringing them along on that journey. And so, I think yes, the getting stuck part, data is only part of it, but it's really that organizational change. You can see that our nature leads really have to be a jack of all trades to be able to get stuff done. 

Mark Lee 

I like that pause at the end and the after all of that good information, I think yes, and just the emphatic yes, we're doing this, we're moving this.  

Daniele, she still left some problems hanging out there for you, which is that even with the right language selected, with improving metrics available, where there's awareness of nature risk, translating it into investment decisions and making it investment decision relevant is still hard. Can you talk about how we move this into the language and practice of finance and operations and capital allocation? 

Daniele Strippoli 

Not an easy question, to be honest. Just echoing the challenges or the increased maturity described by Nadine and Sebastian. There is for sure a language gap. But even when you translate the language gap and you qualify what is biodiversity in nature and business relevant. At the end we're speaking about, exposure to shock to supply chain, for example. Even when we have the data to describe the complexity of nature and the location-specific situation, the problem is how we connect this to financial decision making. How do we make the business case? How can we make sure that the risks are identified and then connected into the governance, the business processes that define the capital allocation, define the procurement decision, define the way the assets are valued, define internal cost for natural resources, like the internal cost for water. What is the true cost of water? To help companies set business priorities from a different lens, that at the end is the lens that provides business resilience.  

I really like the contribution from Nadine about a new level of maturity. It's not only the company maturity, it's also the internal function maturity. I like to hear more and more of the World Business Council working group, non-sustainability people speaking to procurement people, for example. I think in the end, we are still at a bias mark. I think the solution is here. We already have all the ingredients to take a decision. 

If you take a very simple example, I’ll speak for one second about regenerative agriculture. Regenerative agriculture is probably easy to implement in theory, as the only big problem for one to two years is that you lose production. Who is going to pay that loss of production? Who is going to finance it? What is the catalytic capital to make the transition that away? But think for one second about where we are now in the market. Everyone speaks about shock. Sebastian mentioned the short term agenda and the focus on energy shock. What is the implication of this shock to the cost of fertilizer and the dependencies of agriculture, to the increased cost of fertilizer and the new business case? Return of investment of regenerative agriculture. Those who invested in that years ago are now more business resilient.  

So, in conclusion, what I see more and more coming from our client’s sustainability functions is them asking us to come in and explain what is nature to my CFO (chief financial officer), to my procurement officer? Can you speak to my operation, explain why it's important they focus on nature-positive actions on the site level and this great business resilience. Can you help me translate this language? Because as Sebastian was saying, it's not anymore only the CSO’s (chief sustainability officer) business here. We're speaking about how to integrate nature, and I will say widely sustainability into the way you transform business and ensure business resilience for the future. 

Where businesses can accelerate action on nature 

Mark Lee 

Yeah, and presumably, can you come in and help explain this to my finance team or my operations team or whoever in their language, right? We've got to bring it to them in terms that makes sense for them. The fertilizer shock example is such a fantastic one of investments in resilience tend to be longer term. We can't exactly predict when they pay off. When they pay off, they pay off big. How do we bring these things together and make people see that benefit?  

Nadine, I want to come back to you. So far we've been talking mostly about just nature and business. We've touched on other things, of course, but there's a collaboration thing here too, right? That lots of the knowledge is out in the NGO or policy world. We've got to bring it all together. And is collaboration at the heart of the nature agenda for business? If so, is there a good collaboration example you can give us? 

Nadine McCormick 

Yes, I have lots of examples. The challenge was picking one. In addition to just getting their own house in order, once companies then realize, what actions do I need to take? Typically, especially when they're going to get into value chains or in those operational or sourcing landscapes or seascapes, they can't and shouldn't take action on their own. And so, when you look across collaboration and what good collaboration looks like, it's a great question actually, I was thinking, what would be the secret? For me, it's been really targeted on what is the change, what is the purpose, and what's the actual barrier right now?  

If I speak through the example of nature-based solutions and how our work on that has evolved over the years, in terms of the actual barrier. In the beginning, actually first let's do a pause check. So that's another acronym, NBS. So for those who don't know, NBS are actions that address societal challenges, such as disaster risk, or water security by protecting, sustainably managing, or restoring ecosystems. But until a few years ago, it still very much felt like a societal thing for others to do. What's the link to business? So with business members, with some other stakeholders, a few years ago, we pulled together a solutions map where we looked at business challenges, across different biomes, and where different types of nature-based solutions could fit in. So that's a really cool resource. I recommend checking that out.  

We developed a blueprint for how to make a business case for a nature-based solution. Several examples like Arcadis investing in coastal ecosystem restoration, which leads to better protection, and creating recreational educational values. Or Inca Group, who own Ikea retail stores, they restored local ecosystems which reduced maintenance cost, reduced water use, and improved employee and customer well-being. So really stacking these benefits. We worked on the what, and then we worked on the why. But then as Daniele was saying earlier, for the example of regenerative agriculture, there's typically a financing gap because maybe upfront the costs are higher, but over the long run, they're actually going to be better value. So how do you close that financing gap? So now WBCSD is working on matching investors with corporates to be able to unleash investments in nature-based solutions. For good collaboration, it's got to be really focused and targeted to the actual barrier and evolve over time. 

Mark Lee 

I like the matchmaking part too of finding the right investor, and the right money, for the right problem. So much of that work needed too.  

Daniele, I'm going to continue on how companies get through this. From collaboration to integrated approaches, which is what we talk about in the partnership between ERM and Natcap, bringing together advisory and technology and partnerships to help companies move faster. What does that mean? At the same time as we're trying to simplify this and bring it into everybody's language, it sounds like there's a level of complexity there that we need to solve hard problems. So please break that down. 

Daniele Strippoli 

Let me describe how I see the challenge first, Mark, because to me, addressing nature-positive or addressing the nature loss is a systemic challenge. It's something that you cannot do alone and I think was well described by Nadine. But look for one second what is needed to address it. I think we need four steps. On one side, yes, we need to have good science and analysis. We need to have data. This is where company like Natcap comes to the party and brings data at speed consistently across the globe. Then when you have the data, you need to understand what to do it, and this is where you need strategic advisory, you need someone that can help you translate it into business language and define business priorities to steer a strategy to understand how to address the topic. This is where advisory, like ERM can come to bring the solution, and to translate different maturity among different geographies, among different sectors, among different functions.  

This is just the start of the game because you have to implement. Otherwise, there is no local actions. And this is where the implementation capability angle is very important. How do you address this at project level, and on the location-based level in the operation, in the supply chain, etcetera. This requires a global spread of implementation in the field, partnership with NGOs that often are the right player to implement the NBS described by Nadine. I introduced a new acronym, but I hope everyone knows what is an NGO (non-governmental organization) here. The first step is to implement, but how do you monitor the result? How can you demonstrate that the outcome that you intended to achieve is real. Are we really implementing a biodiversity net gain? Yes or no? This is where science comes back again. So to me, this is a cycle of different capabilities, different experiences that needs to be integrated to provide a one-stop solution to avoid fragmentation, to enhance credibility, but at the very end, to bring speed and confidence, because we need to act now for the actions and the outcome of tomorrow. We have a goal for 2030 and 2030 is already tomorrow. I think speed and confidence are key words when you address integrated approach. 

Mark Lee 

Yeah, 2030 now feels so terrifyingly close and having trouble getting my own head around it.  

Sebastian, I want to ask you a question about acceleration, also how we bring these things together and then do a final lightning round with all of you. We're most of the way through our conversation, as a listener I feel more optimistic about where we are in this agenda than when we started. So you're all convincing me and I hope our listeners, that we've got many of the tools, we've got many of the skills, and we've got some case studies of how to do this well.  

Sebastian, if you look across that set, where's maybe the biggest opportunity to accelerate further? Is it still the toolkit? Is it data? Is it actually executive education? Like where's a weak link that we could pounce on to move this faster and better? 

Sebastian Leape 

I'm going to make a bit of a generalization, but for most companies, the biggest opportunities right now lie in their supply chain. And within their supply chain, another generalization that I think is helpful is that a lot of the risk and opportunity occurs when a commodity is extracted from the earth, when it's extracted from the mine, when it's grown in the field. Those two simplifications are already quite clarifying. So, it's the extraction point of commodities for a lot of companies, which is where the biggest opportunities lie. And then the challenge is how do we get folks to act on those opportunities that are identified at those points. I think what we're seeing with our clients is that there are certain conditions under which you're really incentivized to act. It all has to do with how high your switching costs are from that particular extraction point. 

In a world where there are lots of alternatives, it's a super liquid global commodity market and you can buy from any one of hundreds of different suppliers, it's going to be hard to make strong cases for change. But where for whatever reason those switching costs are higher, maybe because you have long-term agreements, maybe because you own that piece of land, maybe because you can't source from other countries that easily, for whatever the reason, then that combination of a supply chain with commodities exposed to nature risk and issues related to switching, that's where we really see opportunity for action and folks starting to take some of the nature-based solutions we've just mentioned, whether that's regenerative agriculture or elsewhere, taking them really seriously. So that's where we've been focusing our analytical work, helping create the evidence base for action under those conditions. And that's where we've seen the most momentum recently. 

Building business resilience through nature by 2030 

Mark Lee 

So if anybody's wondering where to look first, it's your supply chain people. Many of the answers and the challenges that need to be overcome are there. If we take that 2030 horizon that we mentioned a minute ago and think, what do we hope for? What are we going to push for over those years? Sebastian, what's it going to look like if companies have actually embedded nature into their decision making by 2030? What's a visible tangible change we will see in business and markets as a result? 

Sebastian Leape 

Well, if we just paint a little bit of a picture, it's 2030, a global food company is reviewing its quarterly performance. Alongside revenue and margin and cash flow, they're also now looking at impacts and dependencies on ecosystem. Hopefully in this example, soil health is trending up, water stress exposure is down, pollinator abundance is stabilized. I think it is not inconceivable to see that nature starts to be managed in the same way as we manage energy or currency, not because of altruism, but because of a broad recognition that these interactions are critical for security of supply, for managing reputation, for aligning with regulation.  

I think that view of just this being integrated with your quality performance and how you manage your business is feasible. I think we have a lot of the tools to do it. So, what we're looking for now is how do we keep up this cultural momentum and that cultural conviction that this is where we're heading? And then how do we support governments to make the regulatory landscape increasingly favorable for that transition? On select impact drivers, particularly related to water, consumption, and pollution. We do still have some technology gaps still in terms of how do we help low cost transition to lower impacting approaches. But a lot of what we need is already there and that future feels rational and it feels achievable. And so, it's about that cultural conviction and keeping up that regulatory momentum. 

Mark Lee 

That's great. We'd have nature intrinsic to business because of the value it's adding, right? Nadine, I wonder, now just four years to 2030, but we've already been talking about how dynamic this field is. Over this period to 2030, which nature-related expectations for business do you think will shift fastest again? 

Nadine McCormick 

I like coming after Sebastian and just that positive vision, right? Because if you can imagine the vision, then it actually feels more realistic. It is doable. It is logical, actually. What we've painted all of us today is actually a very logical way of breaking down the complexity of this nature agenda, in a way that we can be more resilient. While we are all kind of skilling up on the corporate side, when we say expectations, I think one of the useful levers that we have, especially with, some of the government transition risks, which are a bit wobbly around the world, but investors are skilling up. The level of scrutiny that they're applying is getting more advanced. So to take an example, a couple of years ago, one of our members was like, “oh, I had another investor meeting. So it's great that I now have more meetings on nature with the investors, but they're totally asking the wrong questions. They're always asking, how many threatened species do you have?”. Which is kind of old school. That's not necessarily the wrong answer in the right context. But what is the right questions right now? What do we need investors to be asking? So they are skilling up and I'm starting to hear great stories, great letters being sent, which are able to then trigger more action in the company.  

I'm on the Nature Action 100 Advisory Committee, the Science Council. What we are advising to companies is to check. So, what are your nature-related risks and opportunities? And if a chemicals company, this is a real example, turns around and said, but we did our materiality assessment and it's not material. This is a wonderful engagement opportunity because they're probably thinking about pandas or they're thinking about beehives. What we're seeing, the trend and expectations, it's not just this moral issue of something you should be doing, but actually there's a material issue to taking action. 

There are guides out there, there's really nice sector summaries for 16 high impact sectors which lay out the main dependencies and impacts and the actions that those companies can take. So you can use your search engine of choice to search sector actions for nature positive. That's a great four pager you can give to somebody who thinks nature loss isn't material. Don't wait. This is the direction of travel. It's going to keep evolving. As our understanding gets more mature, it's not that the goalposts keep changing, but we're just getting more granular and more specific. So don't wait. The ones who are going to move now are going to be better positioned in the future for a more resilient business. 

Mark Lee 

Don't wait. Words to live by. Daniele, the closing words are going to be to you. Assuming that folks will not wait and having recognized already that 2030 is absurdly close, what first step do you recommend folks take so that the vision that Sebastian and Nadine just laid out for us is attained? 

Daniele Strippoli 

Yes, I will be very practical, Mark. The first step is to translate nature into business. Try to understand what it means for business. Don't pretend to do this holistically for the full company. So be focused, test interventions at a small scale, maybe test with procurement in the language of procurement. What does it mean by embedding procurement criteria to reduce exposure to nature dependencies? Look at water stewardship at operational level to understand how this drives business resilience of operation, and if this can help you prioritize how you locate capital expenditure, how you select your new expansion strategy. Work on landscape partnerships to experiment with how you can increase your social license to operate your operation in a given region. So be very practical. With all these very practical steps, be ready to scale. Scale consistently through learning by doing.  

This way, you will be in hero delivering impact to 2030. Because if we are still trying to understand what it means, how to translate into business, how to set a target that is global, and then needs to be translated locally, 2030 will be just tomorrow, and we will start acting in 2040 probably. It will be too late, and business will not be resilient anymore. So we will have another problem to face, not only nature will be a disruption to business continuity. So very simple. Translate, test, scale, integrate, and make sure that nature becomes more of a business as usual language in the organization. 

Mark Lee 

Yeah, and do it now and keep doing it. I was at another event yesterday and thinking about this conversation today, one of the themes running through that conversation yesterday was volatility. It's been on people's lips a lot the last couple of years. And the speaker said in simplest form. Get over it. Business and markets are always volatile. Policy will continue to change. It will be different. There will be swings, but none of us can afford to wait for it to be perfect because it won't. We need to act and act now. You've all made a great case today that not only could we or should we act on nature, but given us examples of the resources that are available to us, and some examples of how companies are already doing it, that I hope others are going to be inspired by and follow.  

To all of you who've listened all the way through, I've been speaking today with Sebastian Leape of Natcap, Nadine McCormick of WBCSD, and Daniele Strippoli of ERM. If you're interested in this podcast and the sustainable podcast series, you can find them on ERM's own website at erm.com or your favorite podcast platform of choice. We'd love any feedback you might have on this episode or any other one. Thank you so much to my panelists, to the speakers today for your contributions. Thanks to everyone who joined us for this really interesting and rich conversation.