Impact vs Dependencies and Corporate Action on Nature (and a quick note on NYCW)

Taking a look at Volvo's new Nature and Biodiversity Position Paper

I had a moment of inspiration to write as I woke up early feeling like Christmas morning with all the great events and meetings planned for the week. Quick note before diving into impacts and dependencies, for everyone at NYCW, I’ll be around the nature positive hub today and hope to cross paths. And for everyone that kept down your carbon footprint by staying at home, I’m aiming to write a NYCW recap at the end of the week with my main highlights/learnings from the nature perspective to bring you into the fun!

Ok, back to the topic at hand, impact vs dependency for corporate action on nature.

Volvo Group just released their first position paper on nature and biodiversity. It's encouraging to see such a strong commitment and I wanted to share a couple of highlights and reflect on how these high-level position papers might translate into corporate action on nature and biodiversity.

🐝 Biodiversity - Difficult to establish material dependency (Impact)

1️⃣ "Since a large part of our biodiversity impact occurs in our upstream value, we will focus on avoiding and reducing the impacts of the materials and processes used for producing our cars."

2️⃣ "As a producer of goods, it will be impossible to avoid and reduce all negative impacts on nature and biodiversity. As such, an investment in restoration and conservation will be required to counterbalance our residual impacts.

This is a ‘Yes, And’ approach that I believe we need to embrace for achieving our biodiversity targets. The reality of supporting 8B growing towards 10B humans is that some portion of land has to be for productive use. Yes we can get more efficient in our land use with more efficient production and circularity/reuse, but we will always need to have some land producing resources for human use/consumption. Yes we should push corporates to get more efficient and we should push corporates to compensate for impacts that cannot be avoided.

The question for me is whether biodiversity impact will fall under the CSR budget or the core operational budget of companies. With Volvo, it is harder to demonstrate the material impacts of biodiversity on their bottomline. For example, when Volvo makes an investment into protecting forests in the Congo to compensate for mining cobalt for it's EVs, what budget does that come from and how large is that budget?

Unless we have regulation, I think it will be quite difficult to unlock large sums of money from corporates to compensate for their impacts on nature, particularly their impact on biodiversity.

🚰 🌲 Water - Clear material dependency

Beyond biodiversity, Volvo states "water usage and its impact on terrestrial and aquatic systems are the largest in upstream value chain".

This framing notes Volvo’s commitment to understanding the impact of water usage on terrestrial and aquatic systems, but what about the impact of terrestrial and aquatic systems on Volvo's water resources? IE, what about the dependencies that Volvo has on intact ecosystems providing water for their operations or the operations of suppliers in their value chain?

The last line in the report states, "In 2024, we are assessing our dependencies on nature and biodiversity in terms of risks and opportunities, to better understand the biodiversity impacts of our business".

The key question in my mind is where does Volvo have water dependencies for which the most cost efficient solution is to invest in conservation and restoration of ecosystems (#NBS) to ensure that water continues to flow.

🏮Today, we value the consumption of water but we largely do not value the production of water. This is key!!!

Corporates should invest in the production of water via nature just as energy companies are investing in the production of renewable energy.

This is a risk mitigation approach. If you have a water dependency, as almost every corporate on the planet does, you should be investing to mitigate the risk of that resource or ecosystem service decreasing or ceasing to exist. And if corporates mitigate their water risk through conserving and/or restoring ecosystems, that's a direct investment in biodiversity as well.

For corporate action on biodiversity and nature, I think impact vs dependencies and what budgets go towards each is the question of the moment.

All for now, happy climate (and nature) week everyone! Eric