The quiet crisis: why biodiversity loss matters

Biodiversity – Why is it important?

I have a distinct memory from road trips as a child. Whenever we went for a long drive, the windscreen would be splattered with squished bugs. Cleaning the windscreen was a must any time you stopped at a petrol station. As an empathetic child, I always felt sad for these bugs taken unawares by a speeding car. I still have that same empathy for the beings of our planet but with a much greater awareness of their importance.

Fast forward to today, I rarely see any insects on my windshield. This is because our planet’s biodiversity, the variety and richness of plant and animal life on Earth, is in severe decline. Biodiversity is a delicate system that sustains all life on our planet, with every species playing its own important role. Throw it off balance, and we will start to suffer the effects. Ecological balance is crucial for providing food, energy, shelter and medicines. It helps us sustain water and soil quality and regulate the Earth’s climate. We also enjoy biodiversity through our recreation, recuperation, and inspiration in nature.

According to the 2023 State of Nature Report, the wildlife abundance in the UK continues to fall, with species declining an average of 19% over the past 40 years and nearly one in six species from Great Britain threatened with extinction. One BBC article notes, “a study found that the UK is one of the world’s most nature-depleted countries, with an average of about half its biodiversity left – far below the global average of 75%.”

Why is this happening?

So, what are the reasons for nature’s decline? In terms of the effects on wildlife on our land, rivers and lakes, it comes down to climate change and how we manage our land for farming. According to a report from the Environment Agency on ‘Potential impacts of climate change on river quality,’ higher air temperatures correlate to increased temperatures in our rivers and lakes. One particularly negative influence this can have is an increase in harmful algal blooms (HABs) in lakes, such as the one suffered by Lough Neagh in Northern Ireland. Not only were warmer temperatures to blame, but run-off fertiliser from surrounding farms also aided the bacteria’s growth. HABs can be toxic to humans, wildlife and pets, so should be avoided at all costs.

When it comes to the marine and coastal ecosystems, negative impacts are due to unsustainable fishing tactics, marine development, and, once again, climate change. The ocean plays a significant role in our planet’s carbon cycle and has absorbed 93% of the excess heat from greenhouse gas emissions since the 1970s. The UK & Ireland Marine Stewardship Council notes that “sudden rises in temperature and acidification can lead to loss of marine habitat and species. Shifting ocean currents and warming waters are changing the distribution of fish stocks and altering the structure of ecosystems.” These deviations began long before we started significant data collection in 1970. The biodiversity of the UK has been in long-term decline due to centuries of development and habitat loss.

It’s clear that biodiversity loss affects all of us, not just in our personal lives but in business as well. It does not discriminate. According to the Office for National Statistics (ONS), only 3% of companies monitor nature and biodiversity risks. Industry is heavily reliant on natural resources, but many are unaware that these resources’ availability and quality depend on healthy, biodiverse ecosystems. When we can’t sustain our biodiversity levels, supply chains can become vulnerable, escalating operational costs and leading to higher prices for consumers. For example, when pollinator populations are reduced, crop yields are adversely affected, directly impacting food and beverage companies. This is where organisations like Innovate UK Business Connect come in. The Climate Change Adaptation Innovation Network was established in 2023 to support collaborative industry-based communities that are taking action to adapt to the impacts of climate change in the next 10 years to build resilience and enable prosperity. Biodiversity, water, and cooling systems were chosen as the three focus areas for the network.

The biodiversity focus area has explored if and how we might support other organisations in building their awareness and reducing their impacts on biodiversity. For businesses, many risks need to be mitigated regarding biodiversity loss and impacts. These include ecological, liability, regulatory, market, financial, reputational and materiality risks. For instance, when it comes to regulatory risks, as policymakers scale up policy action on biodiversity, businesses and financial institutions must anticipate and respond promptly to regulatory changes, or they risk being caught out. Regulatory risks include land and resource access restrictions (e.g., in ecologically sensitive areas for threatened biodiversity resources), clean-up and compensation costs, procurement standards, licensing and permitting procedures (e.g., infrastructure) or moratorium on new permits.

Innovate UK Business Connect’s mission is to connect ideas, people and communities to respond to ever-changing societal, environmental and economic challenges and drive positive change through innovation. How can we support innovation that reduces our impacts on biodiversity and has a positive effect? Let’s explore this.

Significant interest in biodiversity arose following the Conference of the Parties (COP) 15, which took place in Montreal, Canada, in 2022. The most important outcome of this COP was the adoption of the Kunming-Montreal Global Biodiversity Framework, which aims to protect 30% of land and oceans by 2030, address biodiversity loss, restore ecosystems and protect indigenous rights. It’s a mighty task, but just as important as tackling climate change, which is addressed by its counterpart COP 28.

The outputs of COP 15 provided an understanding that there is much at stake in restoring and maintaining our planet’s biodiversity. From this began a focus on biodiversity within the Climate Change Adaptation Innovation Network.

Where does this lead us?

Following months of research and discussions with experts working in roles focusing on biodiversity, Innovate UK Business Connect facilitated a Biodiversity Workshop to convene expertise and knowledge from key stakeholders in the biodiversity space, including NERC, Defra, Innovate UK, Daera-NI, UK Centre for Ecology and Hydrology, Essex County Council (Local Nature Partnership), Accelar, Cambridge Consultants, Cleantech Group and Selva. The key aims of the workshop were to review and validate the key themes and trends that emerged during the research related to biodiversity, which included topics such as Monitoring & Surveillance, Digital Monitoring, Reporting & Verification (D-MRV), Deep Biotech/Bio-Economy, Data Collection & Analysis, Nature Based Solutions, Green Finance and Nature Risk. We also worked to clarify where Innovate UK Business Connect should focus support for the ecosystem between academia, industry and government – to enable the adoption of innovative technology and processes that would help support and protect our biodiversity and provide networking and opportunities for collaboration around biodiversity and climate change adaptation.

We also explored the wins and challenges in the field of biodiversity. This expanded into a ‘How Might We’ exercise to help us address the challenges and ideate possible solutions. Finally, we voted on which questions were most relevant/important to the group and mapped these across a potential difficulty versus potential impact matrix. Please see the appendix for a more in-depth look at the themes and challenges discussed in the workshop.

Though the discussion was extensive, three major themes emerged: New technology for monitoring and mapping, financial tools, and regenerative or sustainable agriculture. Let’s look at what these themes encompass, including current academic understanding, recent progress, opportunities and challenges, and the policy landscape.

New technology for monitoring and mapping

Many workshop participants mentioned the growing application of new technologies for biodiversity challenges, including satellite data, AI and machine learning for establishing baselines and monitoring habitat change, and the use of digital measurement, reporting and verification (dMCV) tools. The growing importance of these technologies is partly due to the rising desire to verify carbon credit traded on the voluntary carbon market and improve transparency and accountability. In addition, an improved understanding of the state of habitats can support the effective allocation of funds, research and time to areas most in need of protection or restoration.

Another driving factor is the newly mandatory Biodiversity Net Gain legislation, which requires any development to account for and replace any biodiversity lost. For this legislation to be followed effectively, detailed monitoring of baseline and changes to habitats are essential.

Over the past few years, Innovate UK and Defra have worked together to fund 19 new environmental monitoring projects focused on biodiversity and other environmental markers. An example of an organisation funded was Gentian, who use AI pattern recognition for ecological characterisation and habitat monitoring. Other organisations, such as the European Space Agency, have also been interested in this area, and they have funded several projects using space technology to monitor and map marine and terrestrial biodiversity and associated anthropogenic activities.

Financial tools for supporting biodiversity

Another key emergent theme was financial tools for supporting biodiversity, including green credits, biodiversity credits, green finance, greening finance, and natural capital. This closely aligns with the increased focus on monitoring, mapping and understanding the impact of projects on biodiversity discussed above. A greater understanding of existing and potential biodiversity lends the accountability and transparency required for effective carbon and biodiversity credit markets. The UK Centre for Greening Finance and Investment (CGFI) was established to accelerate the use of environmental data and monitoring technologies by UK financial institutions to support green and greening finance.

Green finance is any financial activity, such as loans, debt mechanisms or investments, that encourages the development of green projects (including biodiversity conservation, sustainable use of land and resources, and pollution prevention) or improves the environmental outcomes of projects. The UK government’s Green Finance Strategy aims to strengthen the UK’s position in the global green finance market, which has risen by 20% each year this decade and is projected to more than double by 2030.

Greening finance differs from green finance as it transforms the financial system to become sustainable and integrates environmental risks and opportunities into financial decision-making. The UK government has released guidance on this to ensure that the information exists to enable financial decisions in the UK to factor in climate change and the environment. This has the potential to put businesses in a better position to withstand climate-related risks while proactively reducing the impact of the financial system on biodiversity and natural systems.

The workshop participants agreed that corporate interest in biodiversity has accelerated in recent years, and they see nature enhancement and restoration becoming more of a priority for companies. In addition, 196 countries signed a new Global Biodiversity Framework in 2022, which stated the importance of increasing conservation funding. Finally, the growth of technology for monitoring the state of habitats has allowed greater trust in the efficacy of conservation efforts. As a result, tools like biodiversity credits have grown in popularity for companies to finance nature recovery by purchasing biodiversity credits from nature conservation, stewardship or restoration programmes.

To support work in this area, Innovate UK has collaborated with the Natural Environment Research Council (NERC) to develop the Integrating Finance and Biodiversity for a Nature Positive Future programme.

Regenerative and sustainable agriculture

The final theme of the workshop was the progress toward regenerative and sustainable agriculture. This type of agriculture involves supporting biodiversity by creating riparian woodland, reducing tilling, using cover crops to maintain soil integrity, and bringing grazing animals back to the land (Beacham et al., 2023). This type of land management can often generate many co-benefits beyond habitat creation, including improved soil health, reduced soil erosion, carbon sequestration, reduced downstream flood risk, and improved water quality. As such, there may be long-term economic benefits for land managers in adopting regenerative farming practices, although removing some land from circulation or reducing grazing or cropping density can require a financial investment in the short term.

Research from Wales found that many farmers felt a strong connection to the land they worked on and strongly supported environmentally-oriented practices, as they had a sense of guardianship over their land (Follett et al., 2024). This was supported by the Sustainable Farming Incentive (SFI) within the post-CAP Environmental Land Management scheme, although applications for SFI have now closed. The SFI aimed to cover some of the initial outlay required by farmers to implement some of the nature-positive measures. Still available are funding opportunities for agricultural innovation, research, and development through Defra’s Farming Innovation Programme for projects that reduce the environmental impact of agriculture and increase farm sustainability, among other objectives.

As the SFI scheme was launched in mid-2023, there is insufficient data to conclude its effectiveness for biodiversity, flood management or any other co-benefit. However, developing biodiversity monitoring and surveillance technologies supports regenerative and sustainable agriculture evaluation.

Conclusion

As an organisation with a broad network across government, industry and academia and a focus on convening and collaborating across many sectors, we are well-positioned to support efforts in the biodiversity space. Although the Climate Change Adaptation Innovation Network is ending in its current capacity, the Net Zero Team will continue to fly the flag for biodiversity and adaptation. We are working closely with our counterparts across the Innovate UK Net Zero domain to make the case for more funding and research related to climate resilience (including the role of biodiversity and nature in this effort).

We will continue to explore ways we can work with colleagues across our various teams and projects to influence policy, raise awareness, and better support organisations that consider their part in reducing their impact on the biodiversity ecosystems on our planet. We will address this by participating in the newly formed UKRI Biodiversity Interest Group, which consists of members from various UK research councils, including Innovate UK. This group aims to share information, better align our activities, spot future opportunities, and raise awareness of biodiversity as a thematic area across internal and external stakeholders.

If your work relates to the theme of biodiversity or is a topic you would like to be better informed about, please share your views and interests in this area with our Net Zero team at Innovate UK Business Connect. Reducing our impacts on biodiversity requires cooperation and collaboration – locally, nationally and globally. It can’t be addressed in isolation. Let’s continue to work together to better our planet and our people.