The sixteenth convention on biodiversity takes place in Columbia this month. It's not as famous as its older sibling, the UN Climate Change Conference of the Parties – usually just referred to as COP. But it's probably more important. After all, the climate crisis can only be reversed with the restoration of nature, and to do this, we urgently need finance.
With 73% of wildlife already lost over the past half century, we have precious few years to make the essential investments. Those who are still investing in companies that deforest, pollute or destroy wildlife show a devastating lack of leadership.
Finance for unsustainable agriculture must stop now
The collapse of biodiversity is so profound that it will severely impact every industry and service if it continues at this pace. According to UN data, one eighth of all known species and plants are now close to extinction. And at the rate we're going, we're using up 1.75 Earths of resources annually for our current needs.
At the centre of the problem is agriculture. Or, more specifically, the intensive deforestation, pesticide use and soil degradation that comes with large-scale agriculture. Disturbingly, 90% of tropical deforestation and 70% of lost terrestrial biodiversity is due to agricultural expansion alone.
Ironically, the profit-hungry desire for an endless supply of "cheap" food has depleted the soil leading to less and less crops each year, ramping-up prices and killing future harvests. Around USD 577 billion is lost annually due to decreasing pollinators, often killed by pesticides. You only need to look at the soaring cost of cocoa earlier this year to watch this play out in real time. Farmers in rural Africa are buckling under extreme weather, depleted pollinators and rampant fauna diseases.
Those who finance nature destruction are not leaders
But it's not just plants. Because of the growing loss of biodiversity, we're far more likely to encounter pandemics and plagues like COVID-19 again. And each circumstance will be harder than the one before, as food sources deplete, illnesses worsen, and the weather gets more extreme.
Finance drove this. The relentless pursuit of profit of the financial sector has enabled agricultural companies to scale-up and drive down the planet far more than they ever would have independently. Our industry may not have cut down the trees, but we handed over the money for the axes. The true leaders in the space, however, now have the obligation and privilege of putting it right. The first thing to do is to stop financing the companies that are destroying our planet. If that sounds really simple, it's because it is.
The world has grown tired of excuses. The concept of risk has evolved. There is no justifiable reason to directly or indirectly finance any firm that harms our planet. The firms that continue to invest in these practices, frankly, have a severe lack of leadership and vision. The clue is in the name. Leaders lead. While those that cannot change their business model are just passive followers. If you can't lead your firm into a sustainable economic future, then you're not a leader at all. And everyone knows it. Build as many wind turbines as you want, it won't make a difference if you keep financing destruction.
Nature-positive investments are all around us
The next step is a lot more optimistic, and for me personally, it's very inspiring. We must channel our finance, strategy and power into companies and projects that revive nature. There are so many profitable and inclusive solutions out there that urgently need finance.
One of our funds recently invested in a company that grows seaweed, which is not only a great sustainable fertiliser and animal feed, it also enhances marine biodiversity and water quality and has valuable carbon capture capacities. It’s these kinds of innovative companies that I find highly inspiring.
They are proof that economically and environmentally profitable investments are already here. These firms are looking to power-up, and all we need to do is support them. And, honestly, if your team is not presenting these opportunities to you, they need to do better. There is a universe out there.
Finance the future
This year’s Biodiversity COP16 will be all about putting our money where our mouth is. The time of signing pledges and expressing good intentions is over. We need to stop financing destruction and start investing in solutions.
We're keen to work with any other firms or institutions looking to create profitable nature-based investments. There is no better time than right now, and no better people than us, those who are already in positions of power. Together, we can restore the planet for the next generation.
This column was originally published in Dutch on IEX Profs.
