Want your business to weather the climate crisis? Invest in nature.

When it comes to adapting to climate change, the private sector seems to be spinning its wheels. They remain focused solely on hardening their business to climate impacts, when they should be addressing the root causes of climate vulnerability, such as social inequality and nature loss. Too many companies still operate as they did 30 years ago, with a myopic view of what risk entails and a singular focus on achieving short-term profit. If they can muster a broader, longer-term vision, companies could benefit from greater investment in a more holistic and nature-friendly approach to business.

It’s time for companies to assess and value nature for all that it provides, including essential solutions to the most complex and pressing issue humanity has ever faced. Yet despite the urgency, nature remains underfunded, separated out or missing entirely from corporate strategies and industry guidance. As climate change continues to disrupt and devastate communities and economies around the world, the private sector can no longer hide behind the veil of ignorance and security that complex global supply chains afford. Even with mounting financial losses and the recognized need for addressing climate impacts, efforts to invest in nature are often relegated to corporate social responsibility (CSR) and philanthropic giving. And that is if they’re thought about as an adaptation solution at all.

The world needs to invest roughly $8.6 trillion in adaptation finance per year by 2030, but total financial flows for climate currently sit at just $1.3 trillion. The private sector’s contribution is a mere $1.5 billion—far from what’s needed. Only $200 billion was invested in nature-based solutions in 2022, with most of that investment coming from the public sector. Thirty times that amount is spent on activities that destroy nature, the majority of that coming from the private sector. Yet nature provides essential services for society and business to flourish. On the heels of a lackluster COP, the US election, and a recent movement from companies to deprioritize climate and sustainability commitments, we’re headed in the wrong direction.

Businesses are falling behind for a couple of reasons.

First, systems are complex. The global economic system, for example, is shaped by social systems, natural systems, infrastructure and technology — all of which have their own inherent complexities. For companies, this complexity often leads to a narrowed focus on easily quantifiable risk indicators like financial costs, product quality and regulatory compliance, because they are easier to measure and manage. But this traditional approach is no longer sufficient in the face of climate change and an increasingly fragile world.

The World Economic Forum (WEF) notes that as the effects of climate change increase, it will become increasingly difficult for companies to ignore externalities. Those that fail to reduce their contribution to climate risks and negative impacts on communities and nature will face growing financial instability. It’s time for businesses to broaden their scope of risk management to include people, nature, and the long-term health of the planet.

Companies need to foster new accounting methods and philosophies for risk managers, procurement officers, investors and shareholders. The new framing should go beyond the traditional measures of enterprise risk management and profitability, by integrating life cycle assessments, climate vulnerability assessments, as well as ecosystem and community health, into corporate decision-making. Corporate natural capital accounting (CNCA) is one methodology that can help companies systematically measure and report on the state of natural capital assets, as well as the value these assets provide to both business and society.

Companies also need to shift their focus from short-term financial returns to longer time horizons that account for the lasting impacts of climate change and the value of nature. Most business decisions are made with a 2-to-3-year outlook, but both climate change and nature-based solutions — like restoring wetlands to reduce flood risks or planting mangroves to protect coastlines — operate on much longer timelines.

Second, systemic problems and solutions are also often viewed as largely outside of a company’s reach, but company actions can have meaningful impact. Decisions made by a business can significantly impact natural resource management, biodiversity, pollution levels and quality of life for surrounding communities. These are not just abstract concepts; they are real-world issues that businesses can influence — for better or worse.

Investing in solutions to big, system-level problems can be expensive, and the benefits often take time to materialize. Current incentives tend to prioritize short-term gains and immediate growth, but nature-based solutions offer significant long-term returns for businesses across industries. Nature-based solutions can directly benefit companies by cutting operational costs, boosting resource efficiency and enhancing corporate reputation while improving ecosystem health. According to a report by WWF and IFRC, nature-based solutions could reduce the severity of climate-related disasters by 26%, potentially saving the global economy $104 billion by 2030 and $393 billion by 2050.

A shift by business will only happen if society at large — governments, financial institutions and civil organizations — steps in to help push, guide and support. Public institutions and multilateral development banks can play a crucial role by taking on the initial risks, funding necessary infrastructure and creating the connections needed to bring these large-scale visions to life. Entities like the Green Climate Fund (GCF), Global Environment Facility (GEF), Multilateral Investment Guarantee Agency (MIGA) and others provide opportunities for blended finance, tax breaks, risk guarantees, grants and loans to encourage private sector action.

Ultimately, holistic and nature-based solutions for climate adaptation must be integrated into the core strategies of businesses and demanded by society at large. While there is growing interest in nature-based solutions, their potential will remain untapped unless we rethink how we measure success, embrace new approaches to investment and collaborate across sectors.

The challenges are immense, but so are the opportunities. If we want to weather the climate crisis, we must recognize that the health of our businesses is inextricably linked to the health of our planet. It’s time to act accordingly and invest in nature, for the benefit of all.