The Biodiversity Imperative: Why Our Economies Depend on Thriving Ecosystems

As sustainability continues to dominate boardroom agendas, a critical truth is rising to the surface: nature is not a fringe topic — it is the foundation of our global economy. While climate change has (rightfully) been in the spotlight for years, biodiversity loss is rapidly becoming an equal threat to economic stability, corporate resilience, and long-term value creation.

When we talk about climate and sustainability, we often focus on climate change and directly think about emissions. But the picture is bigger. We need to talk about how massively important intact ecosystems and thriving biodiversity are for our economy and businesses across industries.

This article explores the real-world dependencies of the German and international economy on intact ecosystems and provides practical insights and data to help companies, investors, and decision-makers understand what's at stake.

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Why Biodiversity Is an Economic Issue

Ecosystems provide services that underpin every industry: fertile soil, clean water, pollination, carbon sequestration, natural disease control, and climate regulation. According to the World Economic Forum, over 50% of global GDP — around $44 trillion — is moderately or highly dependent on nature.

In other words, if ecosystems collapse, so does our economic system.

Key examples:

• Agriculture relies on pollinators, soil biodiversity, and water cycles. Their decline affects yields and food security.
• Pharmaceuticals depend on genetic diversity: over 50% of drugs are derived from natural compounds.
• Construction and infrastructure rely on wood, minerals, and erosion control provided by natural systems.
• Tourism is devastated when biodiversity-rich destinations deteriorate.

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The German Perspective: High Exposure, Growing Risk

Germany, as one of the world's leading industrial nations, is both a beneficiary and a driver of biodiversity impacts. Recent studies by the German Federal Agency for Nature Conservation (BfN) and the Deutsche Bundesbank highlight several key facts:

• 70% of Germany's natural ecosystems are classified as "in an unfavourable or bad conservation status."
• Nearly one-third of native species are threatened or endangered.
• Export-heavy sectors, including chemicals, automotive, and machinery, are vulnerable to biodiversity-related supply chain disruptions.
• The agri-food sector, worth over €200 billion, is highly exposed to pollinator loss and land degradation.

The European Central Bank (ECB) warns that over 75% of euro area corporate loans are to companies with dependencies or impacts on biodiversity. This makes biodiversity loss not only an ecological problem, but a systemic financial risk.

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Biodiversity Risks for Business: Hidden But Growing

The Taskforce on Nature-related Financial Disclosures (TNFD) has laid out three main channels through which businesses are exposed to biodiversity-related risk:

1. Physical Risks: Loss of ecosystem services (e.g., flood protection, pollination) leading to operational disruption or cost increases.
2. Transition Risks: Regulatory change, such as land-use restrictions or nature-related taxes, affecting business models.
3. Reputation Risks: Public backlash or consumer shifts due to biodiversity harm.

Case in point: In 2022, French food giant Danone faced shareholder criticism over plastic packaging impacts on marine ecosystems. Investors are increasingly scrutinizing companies’ nature-related disclosures.

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International Dependencies: A Global Supply Chain Issue

Biodiversity is a global asset, but many of the industries that rely on it operate in cross-border supply chains. Key international insights:

• Cocoa, crucial to the chocolate industry, is cultivated in biodiversity-rich tropical forests, now threatened by deforestation.
• The fashion industry sources cotton, leather, and viscose from regions under increasing ecological stress.
• Electronics manufacturing depends on rare earth metals mined in ecologically sensitive areas.

Loss of biodiversity in one country can ripple across the globe through disrupted supplies, rising costs, or stranded assets.

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The Role of Finance: Steering Capital Towards Nature

Finance is a powerful lever in halting biodiversity loss. As of 2025, Germany has committed €1.5 billion per year to international biodiversity finance. Globally, the Kunming-Montreal Global Biodiversity Framework (adopted in 2022) urges governments and financial institutions to redirect subsidies and investments away from nature-harming activities.

The Sustainable Finance Beirat (Germany's official advisory body) has called for:

• Integration of biodiversity risks into ESG assessments and credit risk models.
• Development of nature-based financial products.
• Mandatory corporate disclosures aligned with TNFD recommendations.

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Examples of Corporate Leadership

Some German and European companies are already taking action:

• BMW Group has integrated biodiversity into its site development policies, reducing land-sealing.
• Vaude, an outdoor apparel brand, works with the "Biodiversity in Good Company Initiative" to implement nature-focused supply chain guidelines.
• Allianz is developing biodiversity-aware investment screening processes.

These pioneers show that biodiversity can be managed strategically — and can even become a source of competitive advantage.

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Conclusion: Why Every Company Should Care About Biodiversity

Ignoring biodiversity is no longer an option. Whether you're a manufacturer, retailer, software firm, or investor, your business depends on functioning ecosystems — directly or indirectly. The good news? There are frameworks, tools, and best practices emerging every day to help.

Biodiversity is the next material ESG topic, and companies that act now will be:

• Better prepared for regulation.
• More attractive to customers and investors.
• Less vulnerable to supply chain and operational risks.

Protecting nature isn’t just good for the planet — it’s good business.

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