Sustainability and responsible investing are front of mind for so many of us in the investment management industry. This article examines the increasingly prominent biodiversity crisis, delving into why biodiversity and wilderness areas are so important for human health and wellbeing, as well as the global economy. 

Biodiversity and why it matters 

"Biodiversity, noun: the number and types of plants and animals that exist in a particular area or in the world generally, or the problem of protecting this.” 

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 when we consider the importance of biodiversity (or its growing absence) to human life.  

Human health and wellbeing 

From Covid-19 illuminating how much we value outdoor space to the shared desire to bask in the 40°C highs of summer 2022’s heatwave, access to outdoor spaces is something that we all value. Being deprived of it – whether through lockdowns, bad weather, or oppressive heat – can exact a toll on our wellbeing.  

However, this is not the only way in which the Covid-19 crisis highlighted our reliance on outdoor spaces. Although the exact mechanism is still up for debate, the broad consensus is that the Covid-19 virus first infected humans by jumping the species barrier. Disease ecologists have been able to trace recent emerging diseases including 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 land use change1, as humans delve deeper into previously undisturbed ecosystems and come into contact with animals and viruses previously unknown to our species2. 

Thus, activities by which humans are contributing to the reduction in wilderness spaces around the world (such as logging, land clearing and infrastructure projects) are both reducing biodiversity and heightening our exposure to disease. With the wildlife trade expanding as the human population does, 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 to the maintenance of our planet’s fragile habitable environments. 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 and soil that are essential to our survival3. Indeed, according to the World Economic Forum (WEF), three quarters of jobs globally are dependent on water. 

The references to water and soil reflect the most important factor of all: our ability to grow food. Local ecosystems have developed over thousands of years to create the optimal growing conditions for a number of staple crops, which in turn are integral to global food production. Alterations to those ecosystems could have catastrophic consequences for our ability to provide the most basic of requirements for human survival. 

Global economies 

The risks posed by decreasing biodiversity are also incredibly high in terms of economic growth. 2020 exposed us all to the devastating economic and social impacts of the repeated lockdowns that a highly contagious virus like Covid-19 may necessitate. 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 recessions they will entail is a bleak possibility for global economies4. 

On a more micro level, the WEF's 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 of those regions has the potential to impact millions of livelihoods globally. Devastating economic effects will lead to significant social upheaval, from civil and global unrest driven by an increasing poverty gap to the physical and mental health impacts 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 crisis that we face today. 

Sources:

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

3 - World Economic Forum: https://www.weforum.org/agenda/2020/05/5-reasons-why-biodiversity-matters-human-health-economies-business-wellbeing-coronavirus-covid19-animals-nature-ecosystems/

4 -  BBC's Extinction: the facts

5- Conservation international: https://www.conservation.org/priorities/livelihoods

MSCI: https://www.msci.com/documents/10199/a7a02609-aeef-a6a3-1968-4000f1c8d559