Environmental degradation in 2025: a strategic lens for ESG leaders

Rising sea levels are damaging coastlines. Polluted air is smothering cities. Degraded soil is silently reducing agricultural yields. Environmental degradation is a present-day crisis. For ESG managers, this is an ecological crisis, a business risk, a regulatory trigger, and a reputational challenge.

In this article, we’ll explore the root causes and far-reaching effects of environmental degradation. You’ll also find an actionable plan tailored for ESG professionals.

What is environmental degradation?

Environmental degradation refers to the progressive deterioration of the Earth’s ecosystems due to:

• the depletion of natural resources
• the loss of biodiversity
• the contamination of air, water, and soil

Some damage is visible, like deforested land, dead coral reefs, barren fields. Other signs are more subtle: disrupted microbial life in soil or collapsing insect populations.

Natural vs. human-induced degradation

Natural events, like volcanoes, earthquakes, climate shifts, can alter ecosystems. But the vast majority of degradation is caused or accelerated by humans.

Industrial expansion, deforestation, urbanization, overfishing, and relentless carbon emissions have pushed natural systems to their limits. According to the Intergovernmental Panel on Climate Change (IPCC), human activity is the dominant driver of planetary warming. As a result, natural hazards like floods and droughts are intensifying.

Degradation vs. pollution

Pollution refers to the introduction of harmful substances into the environment, like plastics, chemicals, or CO₂. On the other hand, degradation is the overall decline in the health, functionality, and resilience of ecosystems. Pollution contributes to degradation, but degradation also results from resource exhaustion, land misuse, or biodiversity collapse, even in the absence of traditional pollutants.

The 2025 context: escalation and irreversibility

Extreme weather has become part of the business risk landscape. Europe’s heatwaves, which made the continent the fastest-warming in 2024 and Asia’s annual “once-in-a-millennium” floods are no longer anomalies, they're patterns.

Also, the ability of tropical forests to absorb CO₂ is declining, in fact, the Amazon rainforest is emitting more CO₂ than it absorbs. Coral bleaching events are also becoming more frequent and severe. These environmental problems represent severe risks to long-term asset value.

What are the causes of environmental degradation?

Here are some key factors causing environmental degradation:

Human-induced causes

Urbanization and industrial expansion

55% of the global population now lives in cities. By 2050, this will rise to 68%. That growth comes at a cost: forests are cleared, rivers rerouted, and wetlands drained to make room. At the same time, industries run on energy-heavy systems. Toxic waste, emissions, and discharges are weakening natural systems, often permanently.

Deforestation and pollution

Forests stabilize ecosystems. They store carbon and regulate rainfall. Yet, deforestation, particularly in tropical regions, is accelerating due to agricultural expansion, logging, and infrastructure development. 2023 alone saw over 28.3 million hectares of tree cover lost.

At the same time, industrial air pollution fuels acid rain, agricultural runoff causes algal blooms and plastic pollution kills marine life every day.

Population growth and consumption habits

A growing population drives increasing demand for food, water, energy, and land. But the bigger concern? In 2024, high-income countries consumed six times more resources and generated ten times the climate impact per capita compared to low-income ones, intensifying degradation.

Unsustainable agriculture

Intensive farming techniques deplete soil fertility, overuse water resources, and depend heavily on chemical fertilizers and pesticides, which contaminate ecosystems. Monocultures and land conversion eliminate biodiversity.

AI and data centers’ rising energy and water use

AI technology is booming. But the infrastructure behind it is resource-hungry. By 2030, electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours (TWh). Many also require water for cooling which is putting pressure on already-scarce freshwater reserves.

Natural causes (often accelerated by humans)

Climate change, largely driven by human actions, is intensifying degradation effects.

Rising global temperatures and erratic weather

Heatwaves, glacial melts, floods, and wildfires have become more intense and frequent. In 2023, forest fires in Canada alone released over 3 billion tonnes of CO₂ into the atmosphere.These environmental issues also disrupt supply chains, displace communities, and test infrastructure resilience.

Sea level rise and droughts

Rising sea levels threaten low-lying islands and coastal cities. Furthermore, prolonged droughts decrease agricultural output and heighten water stress. The frequency and intensity of these events are making traditional business continuity plans obsolete.

Accelerated land use change due to supply chain pressures

A shift toward local manufacturing and resource control post-COVID has intensified land-use transformations. Forests are cleared, wetlands drained, and grasslands paved over to make economic zones. Unfortunately, nature’s long-term value is often left out of short-term business decisions.

What are the effects of environmental degradation?

Environmental degradation undermines every pillar of long-term business sustainability, from resource availability to investor confidence.

Impact on food and water systems

Food security takes a direct hit. Soil, when overused or contaminated, loses its fertility. As a result, crop yields drop and agricultural productivity is compromised. Simultaneously, water bodies polluted by industrial discharge or chemical runoff from farms become unfit for irrigation or consumption. As per a prediction by the UN, about 700 million people could be displaced by intense water scarcity by 2030.

Disease spread, respiratory issues, and poor water quality

As forests shrink and habitats are destroyed, wildlife is forced closer to human populations. This increases the risk of zoonotic disease outbreaks. Respiratory conditions like asthma and bronchitis are being triggered or worsened due to worsening air quality. Meanwhile, inadequate sanitation and toxic water sources continue to cause outbreaks of diseases such as cholera, typhoid, and diarrhea.

Threats to biodiversity and its implications for medicine and climate

Biodiversity is a source of economic resilience and medical discovery. Roughly 50% of modern drugs approved in the last 30 years are derived from natural sources in the last 30 years. As habitats are destroyed and species go extinct, humanity loses access to invaluable medical knowledge and untapped remedies.

The climate also pays the price. Forests, wetlands, and ocean systems have long acted as carbon sinks. However, when these ecosystems are degraded, their ability to absorb carbon is weakened or lost entirely.

Stalled progress on SDGs 13, 14, and 15

Environmental degradation severely affects progress on several Sustainable Development Goals (SDGs):

• SDG 13 – Climate Action: Degraded ecosystems emit more carbon than they sequester, complicating global mitigation efforts.
• SDG 14 – Life Below Water: Ocean acidification, coral bleaching, and plastic waste threaten marine biodiversity and fisheries.
• SDG 15 – Life on Land: Land degradation affects the Earth’s surface, disrupting livelihoods, food systems, and ecological stability.

Material business risks and stakeholder pushback

Key implications of environmental degradation for ESG managers include:

• Governments are tightening environmental laws. Non-compliance due to degradation-linked operations can attract fines or license cancellations. For example, in Louisiana, three chemical firms were fined $1.5M in 2023 for EPA violations.
• Stakeholders, especially Gen Z and institutional investors, are scrutinizing ESG claims. Firms linked to environmental harm face boycotts, protests, and media backlash.
• Degraded assets, like contaminated land and depleted aquifers, lose value. Insurance costs rise in high-risk zones. Climate stress tests now incorporate degradation indices.
• Water shortages, crop failures, extreme weather, and community protests linked to environmental degradation all disrupt business continuity.

It is critical to take these risks into account when developing your sustainability plan and addressing your organization's materiality issues.

How organizations can help prevent environmental degradation

Preventing environmental degradation demands tangible, scalable action. So, here’s a 4-Pillar Framework to guide strategic intervention in 2025 and beyond:

1. Prevention through sustainable practices

Forward-thinking ESG teams are shifting from risk mitigation to value creation by embedding sustainability at the design stage. Here's how:

• Smart and vertical farming decreases land use, improves resource efficiency, and separates food production from weather cycles.
• Companies switching from fossil fuels to solar, wind, or bioenergy decrease their contribution to ecosystem degradation.
• Reforestation, green belts, and mangrove restoration sequester carbon, stabilize soils, and preserve biodiversity to build a sustainable future.

For ESG managers, this pillar guides business units to prioritize preventive, nature-positive models by aligning business strategies with environmental degradation prevention goals, like achieving net zero targets.

2. Adaptation and resource optimization

Your ESG strategy must include resilience-building and resource stewardship:

• Circular economy models: Shifting from linear (take-make-waste) to circular (reuse-repair-recycle) systems reduces pressure on natural resources.
• Water management: From rainwater harvesting to AI-driven irrigation, sustainable water use can reduce ecosystem stress.
• Waste audits and reduction strategies: Identifying hotspots for material leakage helps companies minimize ecological impact while improving efficiency.

You can implement lifecycle analysis tools, supplier scorecards, and employee training programs to drive these adaptations at scale.

3. Protection of natural capital

Ecosystems are the foundation of economic stability. ESG functions must ensure they are treated as core assets.

• Integrating biodiversity metrics into ESG reporting helps stakeholders understand nature-related risks.
• Supporting local and global initiatives, such as REDD+ or conservation credits, strengthens brand positioning while preserving ecosystem services.
• Set no-deforestation or no-extraction zones, especially in operations near ecologically sensitive areas.

 4. Partnerships and policy alignment

No company can prevent environmental degradation in isolation. ESG managers should:

• Stay updated with the Kunming-Montreal Global Biodiversity Framework and the ISO Foresight on environmental degradation.
• Collaborate with public and nonprofit sectors to ensure shared goals, scalable impact, and access to funding.
• Indigenous and local knowledge can be instrumental in protecting habitats and building climate resilience.

Zuno Carbon’s role in combating environmental degradation

Environmental degradation is closely tied to greenhouse gas emissions. Carbon-intensive activities like fossil fuel combustion, deforestation, and industrial processes degrade land, water, and air quality.

Zuno Carbon’s powerful ESG management platform helps businesses measure, manage, and reduce their carbon emissions and track ESG metrics. AI-powered workflows and flexible data management simplify ESG reporting while ensuring compliance with global frameworks like GRI, CDP, and TCFD. Get a single source of truth for emissions and ESG insights, auto-matching of emission factors, and value chain decarbonization support with Zuno Carbon, enabling companies to take data-backed climate action.

Curious how our solution could help your company? Book a demo today to find out more.

Frequently asked questions (FAQs)

What is the meaning of environmental degradation?

Environmental degradation refers to the deterioration of the environment through the depletion of natural resources, the destruction of ecosystems, and the decline in biodiversity. It can be caused by human activities and natural phenomena.

What are examples of environmental degradation?

Examples include deforestation, soil erosion, water pollution, air pollution, coral bleaching, loss of biodiversity, and urban sprawl.

What are the causes of environmental degradation?

Key causes include urbanization, industrialization, deforestation, overconsumption, pollution, and unsustainable farming. Natural causes like wildfires, droughts, and climate shifts also play a role.