The sustainable investor for a changing world

Search for

Filter by

Asset class




Colorado USA

Closing the biodiversity funding gap: a call to investors

In this article:

    Over 50% of global gross domestic product (GDP) is ‘moderately or highly dependent’ on nature and ecosystem services, according to WEF New Nature Economy  Report 2020. Capital markets are called upon to act.  

    Investors showed up in numbers at last year’s COP15, the Conference of the Parties on Biodiversity, marking a new, but fitting development as negotiators stressed the urgency of investing to halt and reverse nature loss by 2030.

    While the annual biodiversity financing gap is pegged at USD 700 billion, according to the Paulson Institute Financing Nature report, the cost of inaction is higher still: a collapse of ecosystem services would cause annual losses estimated at USD 2.7 trillion by 2030, with some of the poorer countries hit the hardest, according to World Bank.

    Much like climate mitigation, the scale of the challenge makes a case for blended finance. Investors can also act via biodiversity funds (a small, but growing segment), carbon markets and biodiversity credits. Investor stewardship – engaging with both corporates and governments – will be critically important.

    “Funding biodiversity will not only help species and ecosystems to recover, this is also important to maintaining the world economy and reducing social injustice.”

    Robert-Alexandre Poujade, Biodiversity Lead

    Applying climate lessons to biodiversity

    How then should investors approach biodiversity conservation? At COP15, parties took a non-binding,  but important step towards more transparency, agreeing to call on governments to take measures to encourage businesses to disclose their biodiversity risks, dependencies and impacts. Turning disclosure into decision-useful data, however, will require reliable biodiversity indicators.

    Going forward, investors can glean valuable insights from their experience with climate indicators: 

    • Biodiversity risks should be quantified with clearly expressed metrics (e.g., mean species abundance per km²) designed to allow investors to understand each company’s impact on nature as well as their dependencies. Impact and dependencies must be disaggregated.
    • Effective action requires specific goals. Science has set an ambition to reverse nature loss by 2030. Investors can adopt biodiversity roadmaps, e.g., prioritise key biodiversity topics such as reducing plastic pollution or deforestation, but they need a combination of environment, social and governance (ESG) data, stewardship and capital allocations to meet their goals.
    • Nature loss is a systemic risk. As such, engagement must be done to reduce the drivers of nature loss, guided by the best available science. Portfolio management techniques alone will not protect investors from these risks. Effective stewardship, including public policy advocacy, will also be necessary. 

    “Investors can and should support consistent regulation, especially through an open innovation approach focused on quality data. They will be better equipped to engage with, and evaluate, the companies in their portfolio.”

    Valérie Charrière-Pousse, Senior Portfolio Manager European Large Cap Equities

    Opportunities for asset managers

    Momentum is building in the investment sphere, backed by cross-sectional initiatives such as CDP[1] or Nature Action 100[2]. This opens opportunities for investors to actively engage with companies across supply chains, especially the biggest polluters – whether via corporate engagement or policy advocacy.

    Incentivising companies to reduce their biodiversity footprints and work to reverse nature loss by 2030 is fully in line with the fiduciary role enshrined in the Principles for Responsible Investment (PRI).[3] Preserving nature is in everyone’s interest.

    “The collapse of nature will touch every aspect of our lives and our economies. We must act now to end deforestation, but we must go further, engaging on all key drivers of nature loss, which include climate change, land use change, exploitation of species, invasive species and pollution, including chemical and pesticide use.”

    Adam Kanzer, Head of Stewardship – Americas

    This article is part of the COLLECTIVE INSIGHTS section of our 2022 Sustainability Report where our experts share their views on three key topics: climate, biodiversity and geopolitics.

    [1] CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts  

    [2] Nature Action 100 is a global investor engagement initiative focused on driving greater corporate ambition and action to reverse nature and biodiversity loss  

    [3] The PRI works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions 


    Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
    Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund's) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.

    Related posts

    Talking Heads – ‘Time to be serious about climate action financing’
    Forward thinking | Podcast - 15:14 MIN

    Talking Heads – ‘Time to be serious about climate action financing’

    Investors can help to speed climate mitigation and adaptation measures by allocating more and more actively to the protection of...

    +1 other(s)
    | 25.09.2023
    How creative financial approaches can advance climate adaptation
    Forward thinking | Article - 4 Min

    How creative financial approaches can advance climate adaptation

    Climate change increases the likelihood of weather-related natural disasters. Their  occurrence has increased tenfold since the 1960s, resulting in estimated...

    | 22.09.2023

    Viewpoint highlights

    Subscribe to receive this week’s articles straight to your inbox.

    Please enter a valid email
    Please check the boxes below to subscribe


    Receive daily updates