Green Manufacturing

Investors Want to Commit Capital to Biodiversity, but They Need Better Data

2020 brought the United Nations’ Decade on Biodiversity to a close. Unfortunately, the planet’s ecosystems and habitats remain in dire need. Here is a look at the current gaps and how environmental investors are finding the footing to make an impact.

Progress Still Falls Short

Ten years ago, world leaders laid out 20 targets in Aichi, Japan, with the aim of reaching most of them last year. None of the 20 have been fully met, and only six have been partially met, according to the fifth edition of the UN’s Global Biodiversity Outlook report published in September 2020 by the Convention of Biological Diversity.

The decade also ended in the middle of a global pandemic that scientists have linked to the destruction of wildlife habitat. COVID-19 could be an early view into some of the self-destruction that awaits if humanity does not change its relationship with the natural world. A few months before the Global Biodiversity Outlook, scientists published findings that human activity is precipitating the extinction of millions of species at an even faster rate than previously understood. They pointed to a crucial window of 10 to 15 years to prevent the loss of entire ecosystems and major damage to the planet’s health.

One of the keys to stopping this trajectory is funding. By one estimate, a minimum of $150 billion a year is needed to fill the gap between current funding for nature conservation and what is necessary. By another, an annual $350 billion investment in the transition toward a more sustainable food and land use economy by 2030 could open up $4.5 trillion a year in new business opportunities.

Benefit and risk measurement have the potential to go a long way in scaling the sector.

Scaling Biodiversity Investment Requires Data and Standards

In an attempt to kick-start investment in nature, environmental nonprofits such as the World Wide Fund For Nature (WWF) and The Nature Conservancy have partnered with banks to create their own investment vehicles, but the sector overall has seen scant growth.

This reality reflects less a lack of interest from investors than a lack of data and measurement standards. Earlier this year, pension funds and other investors representing $6.5 trillion in assets called for the creation of a framework to measure biodiversity impact. Companies and investors have also showed concern over the risk biodiversity loss poses to their portfolios.

Damage to natural ecosystems could cost the global economy nearly $10 trillion by 2050, according to a recent report by the WWF.

Benefit and risk measurement have the potential to go a long way in scaling the sector. Moreover, many of the same solutions that target biodiversity also work to tackle the climate crisis. The UN’s report reiterates the organization’s support for nature-based solutions—such as conservation, ecosystem restoration, green infrastructure, and regenerative agricultural practices—that draw down carbon dioxide and provide positive benefits for biodiversity.

As UN secretary-general António Guterres put it, we must “tackle the twin global challenges of climate change and biodiversity loss in a more coordinated manner.”

FacebookTwitterLinkedIn
FacebookTwitterLinkedIn