Report highlights need to identify, assess and mitigate nature-related risks

AXA XL has launched a new report, in partnership with Nature Positive, looking at how companies can integrate nature-related risks into their risk management strategy. It notes that nature risks are often underappreciated but are material to all industries.

Dr Richard Young, managing director at Nature Positive, said: “Nature is in trouble. In the past 50 years, wildlife populations have, on average, declined by 69%. Most of the planet’s wild grasslands and freshwater wetlands have been lost or heavily degraded, and a third of our natural forests has been converted for human use. The continuing degradation of nature and biodiversity presents significant risks to business both now and in the future.”

The Nature Risk Insights report is aimed at risk, sustainability and finance professionals to help them identify, assess and mitigate their nature-related risks. AXA XL said the report is designed to help companies consider key nature risks and the opportunities that exist across seven industries with critical relationships to nature: aquaculture; chemicals; construction materials; food, drink and agriculture; mining and metals; renewable energy generation; and textiles, apparel and fashion.

The report also highlights tools and practices for any organisation to begin assessing its nature-related risks. It notes that the rise of nature reporting frameworks, intersecting climate concerns, opportunities for risk reduction, and changing stakeholder expectations are leading more investors and businesses to reconsider their relationship with nature.

“The world is experiencing a nature crisis, with one million of the estimated eight million species of plants and animals in the world at risk of extinction and around 75% of the Earth’s land surface significantly altered by human actions… Nature is in global decline, posing material risks to businesses. These can present themselves as physical risks, transition risks or reputation risks,” says the report, adding that businesses must adequately value and manage the nature-related risks across their entire value chain.

AXA XL’s global head of sustainability, Suzanne Scatliffe, said: “How we impact nature affects how nature impacts us. About 50% of the world’s GDP is moderately or highly dependent on nature. To be resilient to the rapid and profound environmental changes occurring now, and in the future, it’s imperative that businesses adequately value and manage the nature-related risks across their entire value chain.”

She added: “At AXA XL, we’re committed to helping organisations improve their understanding of underappreciated risks and how they impact business operations. This new report aims to support businesses of all sizes to identify where the risk and opportunities exist to accelerate action on nature loss.”

AXA XL and Nature Positive said the goal of the report is to support companies in integrating nature-related risks into their risk management strategy, by:

• Improving companies’ understanding of nature-related risks for a select list of industries and how these risks might impact their operations;
• Showcasing actions that are already available to reduce negative impacts on nature and promote nature protection and restoration;
• Highlighting tools and practices to develop strategies to manage nature-related risks and opportunities.

It stresses that every business has unique impacts and dependencies on nature, and managing nature-related risks will require action and collaboration across a range of business functions and teams. It says risk managers can use the report to begin thinking about how their business may be at risk without access to these ecosystem services and develop risk mitigation strategies. It can also be used as a starting point for internal discussions around corporate sustainability goals, beyond annual sustainability reports.

Young added that the report had been developed to enable businesses, and in particular risk managers, to make a start on their nature journey. “Our aim is for you to understand how to begin identifying your nature-related risks and to start making a meaningful difference for nature and for your business,” he said.

The report can be found at https://axaxl.com/nature-risk-insights.