Nature loss poses financially material risks for asset managers. We explain how biodiversity risks can be assessed, outline our approach to engaging with businesses on the topic and detail our best practice framework.
The Earth’s biodiversity is dwindling at an alarming rate. Around a quarter of species are at risk of extinction by 2050, and global wildlife populations have plummeted by 69% on average since 1970. The key drivers of biodiversity loss are climate change, land-use change, pollution, direct exploitation of natural resources, and invasive species. All five drivers are primarily fuelled by corporate activities. Agriculture-driven habitat loss is an identified threat to 24,000 of the 28,000 species threatened with extinction, 32% of World Heritage Sites are threatened by mining or oil and gas operations, and 27% of total ecosystem service losses are due to chemical pollution.
Corporates both contribute to biodiversity loss and face increasing nature-related risks to their business models due to financial dependencies on nature. Nature contributes between US $44 trillion and $150 trillion to the world’s economy each year – the loss of nature-based services poses severe risks for business. Pandemics such as COVID-19 are made more likely by habitat loss, wildlife trafficking and humanity’s destruction of biodiversity, and 75% of agricultural crops, worth $2.4 trillion rely on insect pollination which is threatened by declining insect populations.
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Nature loss poses financially material risks for asset managers and it’s an issue closely linked to climate change. We explore how biodiversity risks can be assessed, outline our approach to engaging with businesses on the topic and detail our best practice framework. Download the full viewpoint to discover more.