ESG investors should carefully consider what companies are doing to alleviate the effects of biodiversity loss, says Dominic Rowles, lead ESG analyst at Hargreave Lansdown.
With the UN’s 15th biodiversity conference underway in Canada, Rowles said the impact of biodiversity may have greater ramifications for investors than previously thought.
“Biodiversity is quickly rising up the agenda for investors. Many of the products and services that drive economic growth are derived from the natural world so the loss of biodiversity could have serious economic impacts. For example, a loss of biodiversity in forests can affect the productivity of these ecosystems, leading to reduced timber yields. This would have knock-on impacts for industries like construction and energy and affect the production of things like paper, furniture and firewood.
“Forests also help to moderate the climate by locking in carbon dioxide, support food supplies and provide important cultural and recreational value – all of this could be compromised by biodiversity loss.”
Scientists, business leaders and delegates from almost 200 countries are gathering at the conference with the aim of agreeing a set of actions to halt and reverse the loss of biodiversity, which is being harmed by the over-exploitation of resources, habitat destruction, pollution and climate change.
Rowles added: “The loss of biodiversity could have serious consequences for the functioning of natural systems and the long-term sustainability of the planet. It’s more important than ever to consider the impact of biodiversity loss on the companies you invest in and what plans those companies have to avert the worst effects.
“If you invest in funds you should make sure they’re run by managers that consider the impact biodiversity loss could have on the funds’ investments.”
[Main image: james-wainscoat-GGewLGcQD-I-unsplash]
