Fighting Biodiversity loss

“The costs of inaction on biodiversity loss are high. Between 1997 and 2011, the world lost an estimated USD 4-20 trillion per year in ecosystem services owing to land-cover change and USD 6-11 trillion per year from land degradation. Action to halt and subsequently reverse biodiversity loss needs to be scaled up dramatically and urgently. Biodiversity protection is fundamental to achieving food security, poverty reduction and more inclusive and equitable development.”

Biodiversity: Finance and the Economic and Business Case for Action, OECD, May 2019

The downward trend in natural capital is especially concerning when examining how crucial its availability is to productivity in multiple industries:

Image

Industries that are highly dependent on nature generate 15% of global GDP ($13 trillion)2 while moderately dependent industries generate 37% of global GDP ($31 trillion).2 Together, the three largest sectors that are highly dependent on nature generate close to $8 trillion of gross value added (CVA) - (this is roughly twice the size of the German economy). These are construction ($4 trillion), agriculture ($2.5 trillion) and food and beverages ($1.4 trillion).2

Percentage of direct and supply chain GVA with high, medium and low nature dependency, by industry:

Image

Source: PwC

Image

Drivers on nature loss and their impact⁴

Image	Land and sea-use change In recent years, we have lost more than 3 million hectares annually of tropical primary forests, one of the most biodiverse ecosystems in the world.
Image	Climate change Coral reefs are projected to decline by a further 70%    to 90% at 1.5°C of warming, with larger losses (>99%) at 2°C.
Image	Natural resource use and exploitation 93% of fish stocks today are fished, at or beyond maximum sustainable levels.
Image	Pollution Globally, around 115 million tons of mineral nitrogen fertilizers are applied to cropland each year; a fifth of this nitrogen inputs accumulate in soils and biomass while 35% enter the oceans
Image	Invasive alien species There has been a 70% increase in non-native species with adverse impact on local ecosystems and biodiversity

Global risks from biodiversity loss have evolved significantly over the last three years 

Environmental risk analysis has highlighted a growing consensus that not only is the likelihood of biodiversity loss growing, but the severity of resulting global impacts is also set to increase. The time for action is now:

Evolution of the biodiversity loss risk in the past three years

Survey respondents were asked to assess the likelihood of the individual global risk on a scale of 1 to 5, with 1 representing a risk that is very unlikely to happen and 5 being a risk that is very likely to occur. They were also asked to assess the impact of each global risk on a scale of 1 to 5 (1: minimal impact, 2: minor impact, 3: moderate impact, 4: severe impact and 5: catastrophic impact).

Image

Source: World Economic Forum Global Risks Perception Survey 2019–2020

Preventing pandemics by restoring biodiversity

Biodiversity loss is expected to increase the likelihood of further global pandemics and the crippling cost to global economy by preventing loss of habitations and greater resilience to disease through genetic diversity.
Today, investors can have important parts to play in the effort to reduce biodiversity destruction. This can be achieved through deploying capital into companies who can deliver technologies and solutions to address the pressing need to mitigate biodiversity loss and restore ecosystems.

Image

Global commitments are already taking shape

Image

Governments and corporates are taking notice. The European Commission advocates reallocating capital away from corporations harmful to the environment and towards those who champion biodiversity via investing in sustainable finance.⁷

Sources:

• [1] Biodiversity: Finance and the Economic and Business Case for Action, OECD, May 2019
• [2] WEF_New_Nature_Economy_Report_2020.pdf (weforum.org) Gross value added (GVA) represents the value of goods and services produced by a given industry, less the cost of inputs and raw materials attributable to that production. It is typically used to measure producer, industry or sector-level contributions to the economy, as opposed to gross domestic product (GDP), which is a standard measure for national- or multinational-level economic analysis
• [3] Ibid
• [4] World Economic Forum, New Nature Economy Report, 2020
• [5] Global Biodiversity Outlook 5, Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), 2020 gbo-5-en.pdf (cbd.int)
• [6] Loss of Biodiversity Facts: 18 Worrying Statistics About Biodiversity (ecofriendlyhabits.com)
• [7] European Commission Knowledge Centre for Biodiversity, July 2022 Brief me on biodiversity financing | Knowledge for policy (europa.eu)