Effective management of natural capital is not only essential to the health our planet, but also to business and economic growth. If left unaddressed, environmental impacts could cost the global economy at least $4.7 trillion. How can companies understand and act on the risk mismanagement of natural capital poses?
Allianz’s new report, Measuring And Managing Environmental Exposure: A Business Sector Analysis of Natural Capital Risk, gives business the tools to grasp the impact of ignoring natural capital risks and to take mitigation action. It warns companies that failure to manage natural capital can leave them facing increased interruption and liability scenarios, depleted profits and business models, rising costs from resource scarcity and regulatory action. Allianz’s analysis includes data from more than 2,500 companies in 12 different sectors with its findings indicating that the oil and gas, mining, food and beverage and transportation sectors are most at risk.
“Companies around the world are increasingly confronted with the negative implications of natural capital depletion,” says Chris Bonnet, Manager, Environmental, Social and Governance (ESG) Business Services, Allianz, “Sustainable use of natural resources is critical for the future success of most businesses. Yet while corporates’ awareness of their natural capital footprint is growing, many still need to gain a better understanding of the specific threats that can impact their industry sector and company in particular, as well as the mitigation options available.”
To help companies identify these threats, Allianz’s analysis identifies three phases of natural capital risk as well as ways for companies to proactively manage them. These methods range from broadening effective risk management and insurance systems to seizing the business opportunity efficient natural capital management presents.
This new report builds upon Allianz’s commitment to operationalizing natural capital frameworks in the private sector. And it also reflects the growing attitudes of stakeholders. Sustainable business is no longer an exception, but an expectation. While measuring and managing natural capital impact remains a challenge for business, Allianz’s latest analysis equips the private sector with the tools to take action.