According to a study by Sweco, an expert in the built environment and industry, biodiversity is not widely recognized as a material issue for business, even though large companies reasonably acknowledge the impacts of their own operations on biodiversity.
The World Economic Forum (WEF) has classified biodiversity loss as one of the greatest global risks of the next decade. Many industries, from mining and forestry to construction and energy, depend on healthy and functioning ecosystem services. Ecosystems enable access to raw materials and support services critical to companies.
The aim of Sweco’s study was to understand how Finnish companies view biodiversity loss and how material they classify it in the double materiality analyses included in their sustainability reporting. Here, materiality refers to identifying impacts that are significant both to a company’s business and to the environment and society.
The study examined the sustainability reports and annual reports of the 100 largest Finnish companies for 2024. According to the findings, 45 percent of companies consider the impact of their own operations on biodiversity to be material, and 36 percent regard biodiversity as financially material.
“It is therefore possible that companies do not sufficiently recognize the risks biodiversity loss poses to their business,” says Piia Pessala, Executive Director at Sweco.
Different Views Across Industries
According to Pessala, many companies may have focused their double materiality analyses only on local impacts of their operations on biodiversity, such as the location of facilities or the effects of raw material sourcing. However, value chains or raw materials may not have been considered broadly. Pessala notes that this could signal a potential blind spot in corporate risk management.
Among Finland’s largest companies, there are particularly many from manufacturing and energy. The list includes 34 manufacturing companies and 10 energy companies. Other large sectors are finance and insurance (16), construction and real estate (8), and trade (11). The largest companies also include firms in healthcare, technology, and various service industries.
More than half (59%) of manufacturing companies consider the impact of their operations on biodiversity to be material, while in the energy sector the figure is even higher, 70%. However, biodiversity is not as often regarded as financially material. In manufacturing, 50% of companies see it as financially material, while in energy the figure is 40%.
In the construction and real estate sector, half of the companies consider their impact on biodiversity to be material, but only two companies see biodiversity as financially material to their business. By contrast, the finance and insurance sector has recognized biodiversity as financially material more often than other industries: 44% of companies in the sector regard its financial impacts as material to their business.
Pessala believes that attention to biodiversity will increasingly be reflected, for example, in the ability of projects to secure financing. Investors and financial institutions have already begun to assess biodiversity impacts more closely.
Nature Provides Essential Value – and Business Potential
Nature regulates the climate, purifies water, pollinates crops, and protects infrastructure. These are all ecosystem services essential to society. According to the WEF, more than €50 trillion of global economic activity is moderately or highly dependent on nature. Therefore, protecting biodiversity is both an economic and a strategic necessity for business.
Supporting biodiversity helps safeguard business continuity. In addition, nature-positive solutions can, according to the WEF, create hundreds of millions of new jobs globally in the coming years. Pessala emphasizes that understanding biodiversity is becoming a critical factor in corporate success. Combating biodiversity loss is a global challenge.
Now more than ever, it is time for companies to consider how their business can be integrated into supporting biodiversity.