How investors can counter biodiversity loss

GIVEN that climate change and biodiversity loss are intricately linked, we believe environmental investment strategies can help address climate change and biodiversity loss. It will require trillions of dollars in the decades ahead to restore, protect and preserve Earth’s resources and achieve the transition to a sustainable, net-zero economy.

Studies have shown that funding biodiversity is an investment, not a cost. The funding maintains critical ecosystem services that underpin the world economy and yields financial, economic and ecological returns. One study found that destruction of nature results in an estimated US$1.4 trillion of economic losses each year, or 1.6 per cent of global gross domestic product (GDP). An estimated US$44 trillion of economic value generation – over half the world’s GDP – depends moderately or highly on nature and its services.

While the number of biodiversity-focused asset management products is increasing, these are outnumbered by funds focusing on climate. There are 14 funds managing around US$1.6 billion that have biodiversity-focused strategies. By contrast, there are about 1,100 funds with US$350 billion in global assets that focus on climate, according to Morningstar.