The Financial Sector’s Gain Must Not Be Biodiversity’s Loss
When it comes to biodiversity and natural capital more broadly, most investors still behave as if these assets were unlimited and the services they provide were free. But change – and financial opportunity – is coming.
LONDON – You would expect financial institutions to understand investing in assets that deliver outsize returns. But when it comes to biodiversity and the broader category of natural capital, most investors still behave as if these assets were unlimited, even as they are being depleted or destroyed. They continue to assume that the services these assets provide are free, even as the COVID-19 pandemic shows the almost limitless cost of ignoring human encroachment on the natural world.
Human-induced decline in the natural environment is a fact, and it is happening fast. The World Wildlife Fund’s recent Living Planet report showed an average decrease of 68% in wildlife population sizes between 1970 and 2016. Inevitably, where populations crash, extinction follows. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services, around one million species – or about a quarter of all assessed animal and plant groups – are threatened with extinction within decades, unless action is taken to mitigate the drivers of biodiversity loss.
Aware of such wildlife population declines and projections of extinction, politicians often call for action but stop short of implementing the necessary measures. And yet, as is clear from the response to climate change, if citizens engage and apply pressure on their leaders, inaction becomes too politically costly. European policymakers decided to embrace bold action on climate change – through measures ranging from binding renewable-energy targets to carbon pricing – because they knew that it was their responsibility to avoid the massive disruption that awaited a world which had heated up by several degrees.