Biodiversity in the EU is a challenge for businesses between costs and benefits

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The still image is from February 27th. In the midst of the tractor protest and with the European People’s Party voting against, the European Parliament gave the green light to the first EU law on nature restoration, the Nature restoration law regulation. It is one of the key texts of the Green Deal and puts in black and white the European commitments to respect the National Biodiversity Framework established by the UN in 2022 in Montreal.

All eyes are now on the EU Council which will be called upon to give the final approval, most likely in April. If there are no surprises, the provision will come into force directly in the twenty-seven days after its publication in the European Official Journal. Environmentalists rejoice, farmers protest (again). The protection of biodiversity in Europe is a tortuous path: a key factor for reducing emissions, but at the same time a source of concern for the potential economic impact of the new measures. Will businesses be able to keep up, between costs and benefits?

If today – as underlined by the EU Commission – around 80% of European habitats are in poor condition, the new law establishes three major stages with binding objectives to restore the good state of health of forests, prairies, wetlands, lakes, rivers and marine ecosystems: 30% by 2030, 60% by 2040 and 90% by 2050. Particular efforts will be required from the agricultural sector which will have to focus on three indicators: improvement of the common butterfly index, percentage of surface area with Characteristic landscape elements with high diversity, organic carbon stocks in cultivated mineral soils. Cities will also have to do their part in terms of green spaces and tree cover.

By 2026, the Twenty-Seven will have to adopt national recovery plans detailing how they intend to achieve the objectives. They will also have to send annual reports to Brussels on the progress and implementation of the planned measures. And in case of failure to respect the objectives they will risk an infringement procedure. Compared to the text presented by the EU Commission in June 2022, the definitive one contains some changes that address the concerns of the agricultural world. For example, the so-called emergency brake is envisaged: in exceptional circumstances the objectives relating to agricultural ecosystems may be suspended if they reduce the cultivated area to the point of compromising food production and making it inadequate for EU consumption.

«The impacts of climate change on humans, on biodiversity and on ecosystems – underlines Fabio Alberto Favorido, principal of Bcg – are relevant for companies in every sector, since they also have direct consequences on their economic activity. In fact, over 50% of the world’s GDP depends directly or in part on nature: think of the supply of raw materials, water resources or pollination.” The new European law, he points out, “is not without economic impacts, in particular for the measures that some operators will have to implement to achieve the set objectives”. Companies in the agricultural, fishing and agri-food sectors, he explains, “will have to change their way of operating along the entire value chain, adopting regenerative practices to the detriment of intensive ones”.

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