Regeneration & Resilience

Protecting Water, Nature Is Critical for Effective Climate Action

Water and nature must be elevated to the same level of importance as carbon — corporate strategies that fail to account for these interdependencies will not have the necessary impacts.

Brand Provided | By Garrett Kephart William Sarni and Kat Hunt | Published 1 month ago | About a 5 minute read

Image: Enrique Hoyos

Fossil-based business models are existentially threatened; and the world’s largest corporations have the resources, capacity for innovation, and global reach to address the long-term effects of these models while creating new business opportunities. The most significant economic opportunity of our generation is the transition to a lower-carbon, nature-positive and regenerative future — and integrating biodiversity targets based on a thorough understanding of our impacts on the natural world is the missing link between ambition and effective action to help stabilize the climate.

Over the last decade, corporate climate ambition has driven material change to business — however, many companies are still off track to meet their 2030 goals. Only 5 percent of companies have high-integrity climate-transition strategies, and less than 1 percent of companies have assessed their dependencies on nature. Why? Corporations face inflationary factors, measurement and verification challenges, lack of clear and consistent policy frameworks, internal resistance to change, pressure from investors focused on short-term profits, and the complexity of integrating sustainability initiatives across entire supply chains.

While Climate Week conversations went beyond ‘carbon tunnel vision’ to include water and nature, most global convenings remain too narrowly focused on carbon. As the COP16 Biodiversity Conference continues this week and we head toward COP29 in Azerbaijan next month, global corporations must begin to elevate their level of attention to water scarcity and ecosystem degradation to that of climate in their sustainability strategies.

Water scarcity, biodiversity loss and climate impacts are deeply interconnected — companies must address them holistically, but many are unsure how to proceed. Tackling these issues will require a new way of thinking that moves beyond emissions targets and accounts for broader environmental and social risks.

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During Climate Week, we convened a cross-sector stakeholder group working on issues at the climate-nature-water nexus. Through those conversations, we learned a significant barrier to action is reputational risk and loss of social license to operate. This risk is exceptionally high when addressing water and nature, which are more challenging to quantify than carbon emissions. Without clear standards, companies fear they will be punished for trying to do the right thing — creating a paralysis that hinders progress.

The lack of consistent and clear national and subnational policies also stalls corporate action. A subsidy-driven policy such as the United States’ Inflation Reduction Act of 2022 can spur innovation, while compliance-driven policies such as the European Union’s Corporate Sustainability Reporting Directive and Regulation on Deforestation-free products mandate action. Companies that operate in the US and EU often are caught between conflicting incentives and requirements. As a result, they struggle to balance compliance with innovation. This is incredibly challenging for effective action on water and nature, which require more nuanced approaches than carbon-based strategies.

3 steps to effectively addressing water, nature and climate

To overcome these barriers, corporations need a roadmap for addressing water, nature and climate that aligns with business strategy, investment and collaboration.

First, they must integrate water, nature and climate strategies into their core business models — ensuring these efforts align with voluntary and compliance reporting standards and include quantifying the environmental and social risks posed by water scarcity and ecosystem degradation. Companies need to understand the long-term business value at risk — including supply chain disruptions, resource scarcity and regulatory penalties — and take steps to address it now. They should also explore new business opportunities that arise from climate, water and nature — whether through market-entry strategies, new products and services, or mergers and acquisitions.
Next, companies should develop innovative funding and investment strategies to drive progress. To tackle these complex challenges, non-traditional financing models are needed. Green and blue bonds, impact investments and public-private partnerships are essential to unlocking the capital required for large-scale initiatives that simultaneously address water, nature and climate issues.
Perhaps most importantly, corporations must lead in building catalytic communities — networks of diverse stakeholders including NGOs, tech companies, investors, governments and Indigenous communities. These pre-competitive partnerships allow companies to share resources and knowledge — particularly in areas such as biodiversity and water conservation, where standards and impact measurement are lacking. By fostering a cross-sector dialogue that challenges norms, pre-competitive partnerships can drive the integrated, systems-level change necessary for meaningful progress.

We’ve already seen promising solutions arise from such collaborations. For instance, one insight we heard from our Climate Week convening was the critical role nature-based solutions can play in restoring ecosystems while generating business value. However, these efforts require careful planning — especially when working with Indigenous People and local communities, which serve as the original stewards of natural capital and hold climate-critical knowledge that can help reverse biodiversity loss. Centering their voices is essential for achieving sustainable and equitable outcomes.

Looking ahead to COP29, it’s clear that water and nature must be elevated to the same level of importance as carbon — corporate strategies that fail to account for these interdependencies will not have the necessary impacts. Bold leadership and integrated systems thinking are essential to addressing the interrelated challenges of water, nature and climate — and creating long-term value for both business and society.

Garrett Kephart

Co-Founder, President & CEO
Earth Finance

Garrett Kephart is the co-founder, President and CEO of Earth Finance — specializing in climate transition strategies for corporations and nonprofits.

William Sarni

Practice Lead, Water and Nature
Earth Finance

Will Sarni is the Practice Lead for Water and Nature at Earth Finance and a globally recognized expert in water strategy, technology innovation and investment.

Kat Hunt

Managing Director
Earth Finance

As Managing Director at Earth Finance, Kat brings over ten years of experience in sustainability and finance — helping corporate clients achieve decarbonization goals and guiding climate tech firms through strategic and operational growth.

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