As the new year gets underway, sustainability and responsible investing are front of mind for so many of us in the investment management industry. It therefore isn't surprising to see so much has been written about the 'ESG trends to watch for 2021'. From climate change and healthcare, to cloud computing and digital ethics, a wide range of topics have been highlighted by the key players and commentators in our industry.
Over the coming weeks the White Marble ESG team will look at six themes that we believe will take centre stage over the next 12 months and beyond. This first article examines the increasingly recognised biodiversity crisis: why biodiversity and wilderness areas are so important for human health and wellbeing, as well as the global economy.
The year of biodiversity, and why it matters
Climate scientists and ecologists have long emphasised the devastating effects that climate change and human activity are having on the biodiversity of our planet, especially the importance of biodiversity (or the increasing lack of it) for human life. The widely discussed link between the emergence of the COVID-19 virus and human interaction with wildlife (a function of a reduction in global biodiversity), and the increased dependence on - and sensitivity to - the natural world that many of us have developed over the last year of on-and-off lockdown, have perhaps acted as a catalyst to drive increased engagement with the biodiversity challenges that our planet is facing.
There is another reason biodiversity is in the spotlight: later this year the 15th Conference of the Parties of the Convention on Biological Diversification is set to take place in Kunming, China. The goal is to adopt global and national measurable and standardised targets, much as the 2015 Paris Agreement set targets to combat climate change. Optimistically, Kunming could mark a tipping point for biodiversity, as Paris did for climate change.
Human health and wellbeing
It will come as a surprise to nobody that the last year has brought home to many of us just how much we value outdoor space at a social level. "At least the weather's good" was an oft-cited mantra during the first lockdown in spring 2020, and as we plough through lockdown 3.0 at the time of writing, the opposite is taking its toll.
However, this is not the only way in which the COVID-19 crisis has highlighted our reliance on outdoor spaces. Although the exact mechanism is still up for debate, it is widely acknowledged that the COVID-19 virus first infected humans by jumping the species barrier. Disease ecologists have been able to trace recent emerging diseases (such as AIDS, swine flu, SARS, ebola and most recently COVID-19) to human interactions with the environment. In fact, 31% of all emerging diseases have originated through the process of land use change1, as humans delve deeper into previously undisturbed ecosystems and come into contact with animals, and their viruses, that were previously unknown.
The very activities by which humans are contributing to the reduction in wilderness spaces around the world (such as logging, land clearing and infrastructure projects) are directly impacting biodiversity with the effect of both promoting, and coming into closer contact with, the species that are most likely to transmit diseases to humans2. With the wildlife trade at unprecedented levels, increased human proximity to distressed animals in enclosed spaces, such as farms and wet markets, is further increasing the chances of viruses jumping the species barrier.
Biodiversity is also crucially important in maintaining the habitable environment on our planet. Biodiverse ecosystems have historically protected the environments in which we live from the worst effects of natural disasters, such as storms and floods, as well as filtering the water that is essential to our survival and economic prosperity, and the soil that we need to grow food.3 According to the World Economic Forum (WEF), three quarters of jobs globally are dependent on water.
These last two aspects point to perhaps the most important factor of all: our ability to grow food. Local ecosystems have developed over thousands of years to provide the optimal growing conditions for a number of staple crops, which in turn are vital for food production globally. Alterations in those ecosystems could have catastrophic consequences on our ability to provide the most basic of requirements for humans to survive and thrive.
The risks posed by decreasing biodiversity are also incredibly high from an economic growth perspective. The last 12 months have exposed us all to the devastating economic and social impacts of repeated lockdowns necessitated by a highly contagious virus like COVID-19. With scientists estimating that there could be "five new emerging diseases affecting people every year", if we do not amend current practices, the prospect of repeated lockdown events and the forced recession that they entail is a bleak possibility for global economies.4
At a more micro level, the WEF's recent Nature Risk Rising Report estimated that more than half of the world's economic growth ($44 trillion) is highly or moderately dependant on nature. This ranges from economies that rely on tourism, to the 60% of the world's working poor who are employed in the agricultural sector5. Any decrease or change to the biodiversity in those regions has the potential to impact millions of livelihoods globally. Hand in hand with with devastating economic effects are the potential subsequent social impacts; from civil and global unrest driven by a further increasing poverty gap, to the physical and mental health impact of living in poverty.
In short, biodiversity is an essential piece of the complex jigsaw puzzle that is our planet. We are hugely dependant on the natural world and as such there is increasing recognition from governments, non-profit organisations and private entities that investing in the maintenance of this delicate and essential system is an investment in the future of human life on planet Earth.
The reduction in biodiversity is intrinsically linked to the climate change crisis that we face today; more on that in the coming weeks.
1 - Dr Peter Daszak, in the BBC's Extinction: the facts. https://www.bbc.co.uk/iplayer/episode/m000mn4n/extinction-the-facts
2 - Prof. Felicia Keesing, in the BBC's Extinction: the facts. https://www.bbc.co.uk/iplayer/episode/m000mn4n/extinction-the-facts
4 - BBC's Extinction: the facts
5- Conservation international: https://www.conservation.org/priorities/livelihoods