The Business Case for Investing in Nature

At the heart of the case for sustained corporate support lies a simple truth: the global economy depends heavily on nature. “If nature stopped tomorrow, and all the ecosystem services that nature provides for free were to cease, then the world would stop tomorrow,” Tribolet told the academy’s Finance for Nature programme. It is estimated that 55% of global GDP depends on it – around US$58 trillion.

Companies are increasingly required to recognise nature as both a strategic asset but also a source of business risk, which  especially true for those that rely on extensive land concessions like APRIL. The physical risks around nature deterioration and climate disruption include fires, flooding, pests, plant diseases, worsening soil fertility, acidification and changes to water quality.

Craig Tribolet, Director of Sustainability and External Affairs, APRIL Group, speaking at the IUCN’s Finance for Nature programme

Beyond physical risks, other nature-related factors include national and international regulations and reputational risk. Increasingly, access to finance is tied to environmental performance, with favourable rates offered by lenders to organisations that meet nature-related benchmarks.

“Nature is increasingly understood as an economic asset, but it’s now also viewed as a financial risk and companies today are exceedingly sensitive to risk because it underpins everything they do. If we can build the case that ignoring nature is a core risk, then it makes it easier to build a business case to integrate nature and nature finance into business models,” said Tribolet.

All these factors have prompted a shift at APRIL: from viewing nature finance as a cost to seeing it as a long-term investment. That move happened in parallel with a broader transformation in the market. “Expectations of investors, stakeholders and customers on these issues have risen significantly in the last few years,” Tribolet told the IUCN students.

There is a growing realisation that the nature finance gap – estimated at over US$700 billion annually – is too large to be met by governments and NGOs alone. Mobilising private sector capital is vital to close the gap and prevent further environmental deterioration. For APRIL, this means a long-term commitment to professional, science-based landscape management, across both production forests and extensive natural forest and regeneration areas.

A key element of this commitment to nature is the Restorasi Ekosistem Riau conservation project, which was founded by APRIL in 2013. It is a highly biodiverse area of largely untouched peat swamp rainforest that is around the size of Greater London. It is home to 14 species classified as Critically Endangered by the IUCN, including the Sumatran tiger and Sunda pangolin.

The company funds its conservation work through an ongoing mechanism that directly links production to nature protection. It applies an internal conservation levy of US$1 for every tonne of plantation wood that enters the mill. So as production increases, so does the capacity to invest in conservation – thereby building nature protection into APRIL’s core business strategy. To date, this mechanism has yielded more than US$75 million to support RER and wider nature protection work including community conservation schemes and other projects outside APRIL’s concessions.

Last year, APRIL launched its Thriving Nature strategy at the IUCN World Conservation Congress in Abu Dhabi. It brings together the strategic thinking behind APRIL’s commitment to nature and sets a course for the coming years. Tribolet said the strategy entails continued “significant investments” in nature as the company grows. “We have the support of the shareholder to maintain and increase the focus on our nature-based commitments,” he said.