Biodiversity: the next frontier in Sustainable Investing ?

Biodiversity is the essential basis for the normal functioning of ecosystems, which provide humans with clean water, oxygen-rich air and nutritious food. And while climate change has understandably been a priority concern for governments, a collapse in biodiversity is a closely related threat which can significantly amplify the destruction caused by global warming.

The big problem for the planet is that today biodiversity – the variety of species of animals and plants on our planet – is declining at a pace that is ten to a hundred times higher than was the case on average over the past 10 million years—and this is accelerating^[1].

Apart from climate change, the main reasons for this decline are habitat loss and fragmentation, invasive species, pollution and, of course, unsustainable resource use. According to WWF’s latest Living Planet Report, our society’s current rate of consumption means that Earth’s biological resources are being overused by at least 56%.

A growing number of institutional and long-term investors are searching for the best approach to embed biodiversity consideration into financial decision-making. This is being encouraged by regulators (i.e. the Do No Significant Harm principle in the EU Taxonomy and SFDR), and initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD)