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Half of World’s GDP Moderately or Highly Dependent on Nature

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Businesses are more dependent on nature and biodiversity than expected, according to The New Nature Economy Report, released today.

Analysis of 163 industry sectors and their supply chains found that over half of the world’s GDP is moderately or highly dependent on nature and its services. Pollination, water quality and disease control are three examples of the services an ecosystem can provide.

$44 trillion of economic value generation – over half the world’s total GDP – is moderately or highly dependent on nature and its services and, as a result, exposed to risks from nature loss. Construction ($4 trillion), agriculture ($2.5 trillion) and food and beverages ($1.4 trillion) are the three largest industries that depend most on nature. Combined, their value is roughly twice the size of the German economy. Such industries rely on either the direct extraction of resources from forests and oceans or the provision of ecosystem services such as healthy soils, clean water, pollination and a stable climate.

As nature loses its capacity to provide such services, these industries could be significantly disrupted. Industries highly dependent on nature generate 15% of global GDP ($13 trillion), while moderately dependent industries generate 37% ($31 trillion).

This World Economic Forum report, produced in collaboration with PwC UK, found that many industries have significant “hidden dependencies” on nature in their supply chain and may be more at risk of disruption than expected. For instance, there are six industries which have less than 15% of their direct gross value added (GVA) that is highly dependent on nature, yet over 50% of their supply chains’ GVA is highly or moderately nature-dependent. The industries are chemicals and materials; aviation, travel and tourism; real estate; mining and metals; supply chain and transport; and retail, consumer goods and lifestyle.

Country and regional breakdown

In terms of global exposure, larger economies have the highest absolute amounts of GDP in nature-dependent sectors: $2.7 trillion in China, $2.4 trillion in the European Union and $2.1 trillion in the United States. This means even regions with a relatively lower share of their economy at high exposure to nature loss can hold a substantial share of the global exposure and, therefore, cannot be complacent.

“We need to reset the relationship between humans and nature,” said Dominic Waughray, Managing Director at the World Economic Forum. “Damage to nature from economic activity can no longer be considered an ‘externality’. This report shows how exposure to nature loss is both material to all business sectors and is an urgent and non-linear risk to our collective future economic security.”

“Given the scale and severity of nature loss, business needs a wake-up call,” said Celine Herweijer, Partner and Global Innovation and Sustainability Leader, PwC UK. “The cascading physical, regulatory and legal, market and reputation risks we see mean nature risk now needs to be a mainstream issue for corporate enterprise risk management. We have an opportunity to extend the recent response of regulators, businesses and investors on climate change to nature; both are interrelated and both pose a systemic risk to the global economy. As for climate, business leaders need to identify and minimize the material nature-related risks but also play a part in restoring nature.”

“The very need for this report shows that we are in dire straits. We all rely on nature and we all take it for granted,” said Alan Jope, Chief Executive Officer of Unilever. “Business and government leaders still have time to act on the findings of the New Nature Economy Report. If we work together, COP15 and COP26 can generate the commitments we need to move the planet from the emergency room to recovery.”

“Together we can put nature at the heart of a healthy world economy,” said Marco Lambertini, Director-General of WWF International. “This research provides compelling evidence of the tremendous extent to which our economy depends on nature and its services. Business can play a critical role in reversing nature loss by adopting sustainable practices – which make sound business sense. Governments must make ambitious decisions and adopt a New Deal for Nature and People in 2020 for the future of our economies and society.”

Potential for a nature positive-economy

Nature-related risks can be incorporated within existing ERM (enterprise risk management) and ESG (environmental, social and governance) processes, investment decision-making, and financial and non-financial reporting. Using a similar framework across environmental risk, categories should enable more efficient and effective integration into business decision-making.

Many large businesses have already adopted the framework proposed by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) for identifying, measuring and managing climate risks. This could be adapted and leveraged for managing nature risks.

“It is important to note that there is a path forward,” Waughray said. “Businesses can formulate specific pathways to help ‘bend the curve’ of nature loss and damage within the decade by slowing down and halting biodiversity loss, then restoring nature and – as a massive co-benefit – contribute to achieving net-zero emissions by mid-century through smart nature-based solutions, all in the same package. There is potential for a win-win-win for nature, climate, people and the economy, but the science is telling us we must start this urgent transition now.”

As the trend for greater transparency and accountability continues, costs are likely to rise for businesses which have not begun to include nature at the core of their enterprise operations. Businesses that ignore this trend will be left behind while those that have embraced this transformation will exploit new opportunities.

The New Nature Economy Report series aims to catalyse a public-private momentum in 2020 with a focus on the UN Convention on Biological Diversity (CBD) crucial summit (COP15) in Kunming, China, and the related Business for Nature mobilization. In the run-up to this event, the UN CBD has released its zero draft of the post-2020 Biodiversity Framework with the aim of setting the path to transforming society’s relationship with biodiversity and to living in harmony with nature by 2050.

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Free Trade Pact Could Help Lift Up to 50 Million Africans from Extreme Poverty

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The African Continental Free Trade Area (AfCFTA) has the potential to bring significant economic and social gains for the region, leading to higher incomes, lower poverty, and faster economic growth, according to a new World Bank report done in partnership with the AfCFTA Secretariat.

If fully implemented to harmonize investment and competition rules, the trade pact could boost regional incomes by as much as 9 percent—to $571 billion. It could create almost 18 million more jobs, many of them higher-paying and better-quality jobs, with women workers seeing the biggest gains. By 2035, the resulting jobs and income growth could help up to 50 million people exit extreme poverty.

The implementation of the trade agreement would also lead to larger wage gains for women and skilled workers. Wages of female workers are expected to be 11.2 percent higher in 2035 as compared to the wage level without the agreement, outpacing 9.8 percent growth of male workers’ wages.

The report, Making the Most of the African Continental Free Trade Area, extends the work done in 2020 (www.worldbank.org/afcfta2020report), when the World Bank initially assessed the economic potential of AfCFTA. As part of its first phase, which took effect in January 2021, the AfCFTA will gradually eliminate tariffs on 90 percent of goods and reduce barriers to trade in services. The new report, released today, examines the effects of the larger trade market on the continent’s ability to attract investment – both from within Africa and outside—and the resulting economic impact.

“The AfCFTA comes at a critical time when regional cooperation is needed to navigate compounded risks and enhance the resilience of supply chains, to support green, resilient and inclusive growth in Africa,” said Mari Pangestu, Managing Director for Development Policy and Partnerships, World Bank. “Countries must work together to make the AfCFTA a reality and reap its many benefits – including reducing barriers to trade and investment, enhancing competition, and ensuring markets function fairly and efficiently through clear and predictable rules.”

The report discusses two scenarios to assess the benefits for a market of more than 1.3 billion people with a combined GDP of US$3.4 trillion.   

The key findings indicate that the AfCFTA has the potential to encourage greater foreign direct investment (FDI) required for Africa to diversify into new industries, such as agribusiness, manufacturing, and services, and reduce the region’s vulnerability to commodity boom-bust cycles. A deeper integration beyond trade and trade facilitation measures, that harmonizes policies on investment, competition, e-commerce, and intellectual property rights could boost market efficiency and competitiveness, reduce regulatory risks, and attract even more foreign direct investment. By 2035, this integration would increase incomes by 9 percent, or $571 billion, and create 18 million new jobs, with 2.5 percent of the continent’s workers moving to new industries. This would expand the number of people leaving extreme poverty to 50 million.

The report finds that greater FDI could raise Africa’s exports up to 32 percent by 2035, with intra-African exports growing by 109 percent, especially in the manufactured goods sectors.  All countries in Africa will see their intra-African exports increase, that includes Tunisia (165%), Cameroon (144%), Ghana (132%), Tanzania (126%), and South Africa (61%).

As barriers to trade and investment are reduced, export sectors likely to grow the most are textiles and apparel; chemical, rubber and plastic products; and processed foods. Deeper integration would lower trade costs and boost capital inflows boosting exports from services sectors such as transport; communications and hospitality. 

“Today Africa is one of the least integrated regions globally. African countries trade more with the outside world than with each other. The pact can help countries to simplify and harmonize trade and transit procedures, improve infrastructure, transport and logistics and spur the flows of goods, services, capital, and people that are so vital for development,” said Wamkele Mene, Secretary-General of the AfCFTA Secretariat.

To unlock these potential gains in trade, investment, and jobs, countries must first successfully conclude the negotiations and the treaty’s most ambitious goals must be carried out by each country. The report highlights several other areas countries could reform to amplify economic gains from trade.

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Education Cannot Wait: 222 Million Crisis-Impacted Children in Urgent Need of Educational Support

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Image source: educationcannotwait.org

The United Nations global fund for education in emergencies and protracted crises, Education Cannot Wait (ECW), released a shocking new report today that indicates the number of crisis-impacted school-aged children requiring educational support has grown from an estimated 75 million in 2016 to 222 million today.

Of the 222 million crisis-affected children and adolescents in need of urgent support, the study indicates that as many as 78.2 million are out of school, and close to 120 million are in school, but not achieving minimum proficiency in math or reading. In fact, just one in ten crisis-impacted children attending primary or secondary education are actually achieving these proficiency standards.  

The analysis indicates that 84% of the out-of-school crisis-impacted children are living in areas with protracted crises. The vast majority of these are in countries specifically targeted through ECW’s ground-breaking multi-year investments, including Afghanistan, Democratic Republic of the Congo, Ethiopia, Mali, Nigeria, Pakistan, Somalia, South Sudan, Sudan and Yemen. The war in Ukraine is pushing even more children out of school, with recent estimates indicating the conflict has impacted 5.7 million school-aged children.

These alarming new figures are released against the backdrop of a recent ECW study showing that the response to education in emergencies and protracted crises remains chronically underfunded, and that the funding gap appears to have gotten even worse since the COVID-19 pandemic. 

To respond to this pressing global education crisis, ECW and strategic partners launched the #222MillionDreams resource mobilization campaign in Geneva today. The campaign calls on donors, the private sector, philanthropic foundations and high-net-worth individuals to urgently mobilize more resources to scale up ECW’s investments, which are already delivering quality education to over 5 million children across more than 40 crisis-affected countries.

The campaign rallies together donors and other strategic partners in the lead up to the Education Cannot Wait High-Level Financing Conference ­- co-hosted by ECW and Switzerland, and co-convened by Germany, Niger, Norway, and South Sudan – taking place 16-17 February 2023 in Geneva.

“The financial resources to ensure that every child and young person can receive a quality education exist in the world. Now, we need to take responsible action for the 222 million children and youth in emergencies and protracted crisis. Governments, private sector and foundations can and must unlock these resources. Only then can we empower them to reach their potentials and realize their dreams,” said Gordon Brown, the UN Special Envoy for Global Education and Chair of the ECW High-Level Steering Group.

“This is a global call to action: we speak of the 222 million dreams representing each of the 222 million children and adolescents sustaining the extreme hardship of emergencies and protracted crises. Their dreams are profoundly driven by their experience of wars and forced displacement. This is our moment to empower them to turn their dreams into reality. While the world struggles with the devastating impacts of armed conflicts, COVID-19 and climate change, 222 million children and adolescents live through these horrific experiences. They dream to become their potential rather than a victim. Do not let them down. It is our duty to empower them through an education and to make their dreams come true,” said Yasmine Sherif, Director of Education Cannot Wait.

“In times of crisis, children experience uncertainty with regard to their future and are faced with a total disruption of their routines. Going to school provides children with protection, a sense of normalcy and hope and is a means to provide longer-term perspectives. We know that after school disruption and closures, many children will not continue their education. Switzerland is committed to contribute to reducing the risk of lost generations through its support to education in emergencies. We are thus partnering with Education Cannot Wait and look forward to co-hosting the High-Level Financing Conference in Geneva,” said Patricia Danzi, Director General of the Swiss Agency for Development and Cooperation.

Global leaders have committed to “ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all” through the 2030 Agenda for Sustainable Development (SDG4). The new estimates indicate that COVID-19 and other factors have derailed two decades of education gains. According to UN reports, basic school infrastructure is lacking in many Least Developed Countries. Only 54% of schools have access to safe drinking water, 33% have reliable electricity and 40% have handwashing facilities.

United Nations Secretary-General António Guterres is convening the “Transforming Education Summit” in September 2022. The Summit seeks to “mobilize political ambition, action, solutions and solidarity to transform education: to take stock of efforts to recover pandemic-related learning losses; to reimagine education systems for the world of today and tomorrow; and to revitalize national and global efforts to achieve SDG4.”

On the heels of the Summit, the Education Cannot Wait High-Level Financing Conference is the opportunity for leaders to turn commitments into action, by making substantive funding contributions to ECW that will help turn dreams into reality for the children left furthest behind in crises.    

Read UN Secretary-General António Guterres Statement.

#222Million Dreams

The #222MillionDreams campaign encourages people everywhere to call on world leaders and world-leading businesses to address the concerning rise in the number of crisis-impacted children requiring educational support. Join the campaign by making a $222 individual donation to Education Cannot Wait, and by sharing your support on social media with videos, posts and calls to action to support #222MillionDreams.

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Targeted Financing Crucial for Ocean Health and Achieving SDGs

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A new white paper, published on World Ocean Day by the World Economic Forum, outlines critical steps to channel funding to support the health of the ocean and those who depend on it.

SDG14 Financing Landscape Scan: Tracking funds to realize sustainable outcomes for the ocean highlights the fragmented nature of current data on ocean financing and points to the need for innovative tools to track commitments towards and investment in the Sustainable Development Goal for the ocean, SDG14, with better traceability and granularity of information on financial commitments for the ocean.

SDG14 remains the least funded of all 17 global goals, yet achieving it will have significant exponential benefits for people and the planet. Key targets in SDG14 include ending overfishing and harmful fisheries subsidies, tackling marine pollution and minimizing ocean acidification, protecting and restoring ocean ecosystems, and supporting artisanal fishers and Small Island Developing States.

“When accomplished, SDG14 will have impacts that extend far beyond the ocean itself, by boosting food and job security, bolstering our ability to tackle the climate crisis, strengthening coastal defences, and enhancing health and wellbeing for people everywhere,” said Kristian Teleki, Director of Friends of Ocean Action at the World Economic Forum. “We cannot afford to waste precious time or money, and need to direct financing to the areas that need it most. This landscape report is intended to help us do just this.”

Emerging from this new landscape scan is the need to improve the resolution and integration of current data systems and in parallel move towards outcome-based financing. Doing so will require a substantial shift across multiple institutions that track and report on funding. It is also essential to improve SDG14 data capacity at the national and trans-national level. Existing funding streams for SDG14 must be optimized, and critical resources for ocean health must be directed to promote gender equity, target least developed areas, and efficiently leverage funding across sectors to support a sustainable blue economy.

“Our research shows that we must shift to tracking output rather than boosting input in order to overcome the challenges of transparency, traceability, optimization and personalization of financing data,” said Jillian Conrad, Lead Author of the report and Student Fellow at the Nippon Foundation Ocean Nexus Center at UW EarthLab. “The ocean needs ambitious funding and results if we are to promote equitable development of marine systems to benefit coastal communities and stop the decline in ocean health, which has knock-on detrimental effects on us all.

“With a dynamic tool tracking how financing ties to impact, the global community can better direct SDG14 funding with greatest possible positive impact for people and the ocean alike,” she added.

A Friends of Ocean Action statement released earlier this year – No Healthy Planet without a Healthy Ocean – also calls for global action around critical opportunities in 2022 to advance progress for a thriving ocean and stop the decline in its health.

The global community is convening for the UN Ocean Conference from 27 June to 1 July 2022 in Lisbon, Portugal, co-hosted by the governments of Portugal and Kenya. This is a critical opportunity to advance ocean financing and progress towards achieving SDG14.

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