Integrating biodiversity into investment decisions

Once considered a separate issue to climate change, biodiversity loss is now regarded as an equally urgent crisis. It builds resilience against climate change, supports communities and livelihoods, and fundamentally underpins our broader society and global economy.

Financial institutions are exposed to multiple types of biodiversity related risk, including risk of default by clients, lower returns from investees, and increasing insurance liabilities due to environmental catastrophes. Working with their client and/or customer bases and investees, financial institutions can turn these risks into opportunities by mitigating impacts on and managing investments in biodiversity in a sustainable way.

Unfortunately there is a lack of consistent tools and frameworks to effectively integrate the value of biodiversity into corporate and investment decisions.

I believe this will soon change, in fact, there are already emerging tools for integration of biodiversity into financial and internal corporate decisions, such as The Biodiversity Guidance Navigation Tool by Capital Coalition.

As many Swedish forestry professionals will know, there is a rather infected debate between the forestry industry and the environmental NGOs mostly connected with biodiversity issues. The forestry industry says they are conducting sustainable forestry and contributing to maintaining the forest biodiversity. The environmental NGOs claim the opposite.

The crisis of biodiversity loss is today globally recognized. Before too long, corporations at large will have to account for how they contribute to and alleviate that loss. Global deforestation and destruction of habitat is already discussed among some investors. It is going to be interesting to see how forest industries will respond to this in order to preserve stock values.

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