The economic value of plants and animals
Throughout the world, plants and animals are disappearing due to human activities. 'This decreasing biodiversity deserves attention from investors, says Judith Sanders, investment strategist at ABN AMRO. It has a major impact on our society and the global economy.'
The crested mushroom, the blue mason bee and the white-beaked dolphin. These are just a few of the plants and animals that are threatened in their existence. And even if you have never seen them, they are very important for our life and well-being. After all, everything in nature is connected. For example, the growth of many fruits and vegetables in the supermarket depends on pollination by - endangered - bees. We also need nature for medicines. Not only the social value, but also the economic value of nature is enormous. It is also one of the greatest economic risks. The World Economic Forum (WEF) estimates that USD 44 trillion of global economic output, more than half, depends on nature1. Yet, the role nature plays is often not recognised.
Reinforcing climate change
Plants and animals disappear because of human activities. Mainly due to deforestation, monoculture (agriculture with one specific crop), urbanisation, pollution and climate change. This is bad news in all respects. The disappearance of biodiversity is seen as a challenge similar to climate change. They are also closely related. For example, cutting down forests not only leads to the disappearance of animal and plant species, it also limits the possibility of storing CO2 and thus combating climate change. Biodiversity was therefore high on the agenda at the recent climate conference in Glasgow.
Restoring biodiversity
Good news too. Through international cooperation, we can preserve and even restore biodiversity, concludes the international research institute IIASA in cooperation with Wageningen University2. But nature must be protected. It also requires major adjustments to our food system. Intensive agriculture, for example, has a major impact on the soil and thus on plants and animals.
There is also an important role for companies and their shareholders: investors. Companies must make a positive contribution to society and not engage in activities that harm the environment. Fortunately, companies are becoming increasingly aware of this. Partly because reputation damage is an ever-increasing risk. Chemical concern Bayer choked on the purchase of Monsanto, the American producer of agricultural chemicals. This led to angry shareholders and environmental activists, and a sharp fall in the share price.
Products from the rainforest
Taking biodiversity into account in the sustainable portfolio is challenging. A company's production processes, raw materials used, transport and even location: everything affects biodiversity to a greater or lesser degree. Fortunately, we are increasingly able to map out the impact on the living environment. We see that more companies are making efforts to contribute to preservation and restoration of biodiversity. An increasing number of food producers are only buying bananas, tropical fruits, chocolate, coffee and tea grown in accordance with the rules of the Rainforest Alliance, a nature conservation hallmark for products from areas in the rainforest.