Why we’re working to save Earth’s biodiversity
Biodiversity is the environment’s beating heart – but it is under threat. How can finance and investment work to protect these fragile and complex relationships?
4 min read
08 Sep 2022As Liz Truss starts settling into Downing Street, we wanted to share how we think her proposed policies could impact your investments. We also wanted to remind you of how we’re managing your investments through the current, troubled UK economy.2 min
02 Sep 20221 min
Biodiversity represents all the world’s life and how it interacts with and supports the ecosystems in which we live. It’s the beating heart of our world. From the pollination that supports our crops to the mangroves that protect our coastlines, it’s critical to our sustainability. But it’s under threat.
So, what on Earth can the worlds of investment and finance do?
One of the key goals for this year’s UN Conference of Parties on Climate Change at Glasgow (COP26) is to tackle the biodiversity crisis. But our understanding of it is complicated.
Here are just some of the challenges involved and some of the actions we think Coutts and our peers can take.
So, why is it so important?
Biodiversity is crucial to our ability to thrive as a society. It underpins our ability to grow enough food to feed our population and protect the environments that allow us to live sustainably.
A rise in the global temperature of just 1.5 Celsius will likely kill 70-90% of the world’s coral reefs. A rise of 2 Celsius could see 100% of coral reefs die. The loss of these complex ecologies endangers not just the habitats they support but the health of our ocean globally.
Similarly, the recent combination of agricultural and sewage runoff via the Amazon basin led to a bloom in Sargassum seaweed 1,000% larger than the last great bloom. This was exacerbated by stronger hurricanes caused by climate change, which whipped up nutrients from the seabed. As well as impacting sea life throughout the Atlantic and Caribbean, it also affected the economies of many poorer countries reliant on tourism, particularly post-pandemic.
This example is a microcosm of how interconnected biodiversity is with all life on Earth. If biodiversity decreases, our environment becomes harder to live in.
For example, as rising temperatures continue to destroy farmable land, the threat to global agriculture and society will only increase. Today, we already see social inequality increase as food prices and famine rise.
There is another factor here in that biodiversity and climate change work in a negative feedback loop. Our oceans and forests act as carbon sinks; as these environments are lost, more carbon remains in the atmosphere, further speeding global warming, rising sea levels and further biodiversity loss. The rate of change and threat can be exponential.
Earlier this year we reported on how research by the World Economic Forum (WEF) found that more than half the world’s GDP – around $44 trillion – depends on nature. But despite this, the WEF says humanity has caused the loss of 83% of all wild mammals and half of all plants in the world. The organisation says the figures show the need for “a radical reset of humanity’s relationship with nature”.
There is a way forward
The last 20 years saw billions lifted out of poverty. However, to maintain prosperity, we must invest in biodiversity. The social and economic returns are clear: a recent report for the World Economic Forum, New Nature Economy: Asia’s Next Wave, stated that investing in just 59 nature-positive business opportunities could generate $4.3 trillion and 232 million jobs annually by 2030, equivalent to 14% of the Asia Pacific’s GDP in 2019.
What’s Coutts Doing?
COP26, at which Coutts is a Principle Partner, will be critical in forging a pathway for countries, businesses and individuals to limit global warming and find ways for them to limit the destruction of biodiversity. In addition to our commitments to net zero, Coutts has signed the Prince of Wales’ Terra Carta to enshrine the rights of nature and to work towards sustainable civilisation. As supporters of the Terra Carta, we have committed to:
- encourage active collaboration among investors and asset managers to mobilise the capital required to make our economy more sustainable
- collaborate and share knowledge and ideas to propel the world towards sustainability faster through public, private and philanthropic collaboration
- as active shareholders, we also put pressure on companies we own through voting rights and dialogue to engage with them on eliminating deforestation, promoting sustainable water use and limiting pollution
- we scrutinise our investments in agriculture to avoid destructive practices such as palm oil production, and we ask for proof of risk management to prevent environmental disasters
- we’re proud to support the Queen’s Green Canopy tree planting initiative to create new biodiversity through woodland.
We believe the finance industry can be crucial in the fight to protect and grow biodiversity. It can do this by guiding the right investment into sectors and companies that support innovation that enables better land use, sustainable farming, ocean management, smart cities and circular economies.
And if we engage fully in biodiversity as investors, the rewards will be there for all to see.