Biodiversity loss is just as pressing as climate change – here’s how we tackle both
Generation Investment Management
Generation is a pure-play sustainable investment manager. It is all we do. It is all we will ever do.
“Fostering and protecting biodiversity requires broad, systemic change alongside strategic private investment and a global vision that recognises the value of nature and its contributions to human well-being." — Sidd Shrikanth, Investment Team, Just Climate
Are we witnessing Earth's sixth mass extinction?
Many scientists believe so.[1]
With around 1 million species on the brink of vanishing forever, according to the 2019 IPBES Global Assessment Report on Biodiversity and Ecosystem Services, human actions are threatening more of our planet's biodiversity than ever before.[2]
Many plant and animal species could be lost within decades, and there’s already been an average 69% decline in the relative abundance of monitored wildlife since 1970.[3]? Habitat destruction and climate change are key drivers of this loss.
This matters because damaged ecosystems undermine food production, threaten the security and health of communities, and make climate change worse.[4]
Alongside global warming, biodiversity loss is one of the biggest threats we face, and we must dedicate our attention and effort to both. In fact, they are inextricably linked, with studies estimating that the proportion of species at risk of extinction due to climate change is 5% at 2°C warming and 16% at 4.3°C warming.[5]
Innovative and adaptive solutions
Bold international agreements have already been forged to protect biodiversity, including a commitment to bring 30% of the world's land and oceans into protected status by 2030.[6] Even so, achieving these goals will require sustained effort and collaboration among all stakeholders.
Conservation commitments continue to be undermined by a lack of money or political courage to deliver on them. Agricultural expansion to meet rising demand for food and other commodities continues to lead to deforestation. And ambiguities around carbon offset programmes mean they often do not deliver on the environmental promises they make.
Innovative and imaginative solutions are the best path forward. Here are three suggestions:
Taking care of our forests
People, policies and financial incentives hold the key to halting and reversing deforestation, one of the main drivers of biodiversity loss. At the same time, rising demand for food and commodities from rich countries has hampered efforts of middle-income countries to enforce forest protection laws.[7]
Each year, we lose around 10 million hectares of forest, underscoring the need for action, including stronger policy action, new laws and direct monetary compensation to landowners to preserve forests. Incentives for reforestation and involving local communities to protect and promote their land can also help.
One of the best-known examples of reforestation comes from Costa Rica – where deforestation has been successfully reversed in a few decades. Around 60% of the nation is covered by forests, up from a low of 40% in 1986.[8]
This is a great example of the role financial incentives can play. Alongside a ban on deforestation, the government Payment for Ecosystem Services (PES) initiative — funded by a tax on fossil fuels — pays farmers to protect watersheds, conserve biodiversity and capture carbon dioxide.
A second example comes from the Amazon, where indigenous communities are playing a role in protection and land management.[9]
While these cases underscore the strides that have been made in addressing deforestation, we see scope for more comprehensive, coordinated efforts at national and international levels to really make a difference.
Changes in consumer demand can help influence companies to commit to reducing deforestation in their supply chains, but policy also has a role to play. The European Union, US and UK are also adopting initiatives to block imports of products of deforestation[10], with the EU looking to adopt a binding law to prohibit the importation of products of deforestation, starting in 2025.[11]
Private sector action and investment
More investment managers are beginning to lean in and help spur action in the private sector.
The Finance Sector Deforestation Action[12] has members with $9 trillion of financial assets under management, including Generation Investment Management.[13] It aims to address deforestation by setting expectations for companies, engaging in collaborative actions, and seeking to end deforestation in their investment and lending portfolios. Large consumer goods companies, Nestlé and Unilever, are reporting steady progress in cleaning up their supply chains.
Changing shareholder, investor and consumer attitudes are driving corporate action on climate commitments. For example, the Science Based Targets initiative requires firms wanting its badge of approval to include plans to counteract deforestation.[14]
Carbon offsets that promote biodiversity
Well-planned, monitored and verified carbon offset initiatives can help mitigate climate change and promote biodiversity. Even so, in recent years, controversy around the effectiveness of such programmes has undermined trust in them.[15]
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Measures that have a twin benefit of restoring natural habitats and storing carbon include restoring ecosystems, conserving wetlands, preventing deforestation and promoting sustainable agriculture practices.
Many companies are also scrutinising their supply chains and investing in carbon reduction projects within it.[16] Insetting is the implementation of nature-based solutions along the supply chain, like reforestation, agroforestry and regenerative agriculture, according to the International Platform for Insetting, and these often come with a biodiversity benefit.[17]
Nespresso, an operating unit of the Néstle group, has invested in tree planting within the coffee farms and surrounding landscapes in which it operates.[18] Microsoft is among companies that are scrutinising their investments and directing money towards verifiable schemes that incorporate biodiversity as a metric.[19]
Biodiversity at risk
It is hard to overstate what is at stake. From the oxygen we breathe, to the food we eat, healthy ecosystems and biodiversity underpin our ability to thrive on this planet.
While we welcome commitments to address species loss, they must be backed up with broad, systemic change and a long-term vision of a world economy that values nature and its contributions to human well-being.
Protecting our natural world and tackling climate change go hand-in-hand as twin priorities for our planet. We can’t hope to deliver lasting, sustainable change on one without also tackling the other.
To learn more about the importance of tackling biodiversity loss, download our Sustainability Trends Report .
[2] https://www.ipbes.net/global-assessment (p11)
[5] https://www.ipbes.net/global-assessment (p16)