View all newsletters
Receive our newsletter - data, insights and analysis delivered to you

Explainer: Why is International Day for Biological Diversity important?

Celebrating 30 years, 22 May is The UN International Day for Biological Diversity. Its aim is to increase awareness of our impact on nature.

By Silvia Pellegrino

Biodiversity, UN, biological diversity
Richness is in biodiversity. Understanding how populations can influence ecosystems could prove to be a matter of life and death for many animals – humans included. (Photo by Adrien Ledeul via Shutterstock)
  • The extinction rate of species is now about 1,000 times higher than before humans exerted their influence on the world.
  • Current investment in biodiversity barely covers 0.1% of global GDP.
  • Crucial sector investors can make a difference in agriculture, water treatment and sustainable materials.

Biological diversity, or simply biodiversity, encapsulates all the different kinds of life on Earth. From tiny organisms to whole ecosystems, it takes into account the evolutionary, ecological and cultural processes that help to sustain life.

All forms of life, from plants to humans, live in their own ecosystems, such as forests for plants and cities for humans, and their interaction too is part of the concept of biodiversity. Professor David Macdonald from Oxford University explained to The Guardian that “without biodiversity, there is no future for humanity”.

In order to increase understanding and awareness of biodiversity, the United Nations celebrates the International Day for Biological Diversity on May 22. This year’s theme, ‘From Agreement to Action: Build Back Biodiversity’, aims to focus on implementing effective action to support biodiversity.

Healthy biodiversity is vital, and the reasons are both utilitarian and intrinsic. Not only do humans rely on biodiversity for food, water and shelter, but biodiversity also regulates climate, water purification, pollination and seed dispersal that, consequently, allows for food growth. Even modern medicines rely on biodiversity – for instance, some fungi that is grown on sloths’ fur can fight cancer.

Howard Gunstock, CEO of Carbon Kapture, an initiative that aims to grow seaweed to absorb CO2, described biodiversity’s importance to Capital Monitor: “Our planet as we have it… exists because of [biodiversity].” 

Why do we need to raise awareness of it?

So far, Earth has already gone through five mass extinctions of biodiversity, mostly caused by natural phenomena like volcanic eruptions, deep ice ages, meteorite impacts and clashing continents. However, some believe a sixth one is impending and this time it will be caused by humans.

As Gunstock argues: “We have all these different critical issues happening to our planet at the exact same time. We are at the precipice of extinction. It won’t happen tomorrow, but the consequences of this are what we are starting to see already in our daily life.”

Content from our partners
What you need to know about private markets 
Why investors should consider investing in nature
Green for go: Transforming trade in the UK

It’s approximated that livestock consumes 25–40% of the Earth’s energy that is captured by plants, which helps biodiversity sustain itself, and that 97% of all vertebrate land beings are either humans or farm animals. The process of evolution is being tampered with by human interference, either by relocating species or genetic modifications. This can be devastating for the delicate balance of biological diversity.

Because of these factors, the extinction rate of species is now about 1,000 times higher than in the 60 million years before people came along. While only 5% of known species have been assessed and placed on The IUCN Red List, scientists think at least 25% of mammals, 41% of amphibians and 13% of birds are threatened. WWF’s Living Planet Report 2022 found the wildlife population has dropped by 69% in the past 50 years alone.

It is important to raise awareness of biodiversity and its alarming extinction rate not only to ensure every form of life can continue to interact in a healthy and balanced way, but also to prevent damaging the global economy. As Gunstock put it, “It’s such a difficult balancing act.”

From an economic point of view, The Guardian reports the services provided by ecosystems are valued at trillions of dollars, which is double the world’s GDP. Biodiversity loss and damage in Europe alone costs the continent 3% of its GDP, £400m a year. 

If biodiversity continues to decline on this same trajectory as it has done for the past five decades, it will heavily impact the daily lives of humans and the planet as a whole. 

What does biodiversity influence?

Climate change

Climate is also a vital part of ecosystems and human health. For instance, marine biodiversity is negatively impacted by higher levels of carbon in the atmosphere as it makes the ocean more acidic. 

Climate instability such as extreme events like floods or droughts, affects the health of all ecosystems and consequently the amount of goods available to humans. Significant changes in climate can completely destroy ecosystems, resulting in the adaptation of plants, animals and even humans. 

The global surface temperature was measured for the first time in 1880 and, according to studies, over the last century, the average surface temperature has increased by about 1°C, which makes a huge difference overall. 

The 2022 Global Climate Report from the NOAA’s National Centers for Environmental Information (NCEI) found every month of 2022 was among the top ten warmest for that month since global records began in 1880 – the coolest month was November, which was only 0.75˚C warmer than average. In general, 2022 was the sixth warmest year, registering 0.86°C above the 20th-century average of 13.9°C. 

Overall, 2016 was the warmest year since 1880, 0.13˚C hotter than compared to 2022. The year 2021, on the other hand, ranks in seventh position, one behind 2022. 

Nutrition

Biological diversity ensures the possibility of nutrition in the world’s food production, as it involves the fertility of soils and genetic resources for all crops, livestock and marine species. 

The World Health Organisation wrote that enhanced and modified food production with the aid of irrigation, fertilisers and pesticides all affect biodiversity and will consequently impact global health and nutrition. 

Traditional medicine and infectious diseases

More than 60% of the world’s population uses traditional medicine, and it is important to note a large number of plants form the basis of the majority of traditional and complementary medicine. Many communities rely on completely natural products that are collected from ecosystems for use in medical and cultural purposes.

This means that, even if synthetic lab-made medicines are available and can cover a wide spectrum of purposes, the global need for natural products is still very strong. Natural remedies can be very useful to understand human physiology and treat human diseases.

On the subject of human diseases, the disturbances caused by humans to existing functioning ecosystems are altering biodiversity. This is leading to the decline of certain organisms and growth in others, but is also changing how organisms interact with one another and with the surrounding environment. Infectious diseases are particularly sensitive to these changes.

The main responsible parties are deforestation, land-use change, water management like irrigation or dam construction, resistance to pesticides used to control a number of plant diseases, climate change, unnatural migrations and human introduction of pathogens, whether natural or chemical.

How much investment goes into biodiversity?

From a public domestic finance point of view – meaning finance in a country by national and sub-national governments and public institutions – 2020 biodiversity investments averaged between $78–92bn per year and included contributions from 81 countries.

In 2022, there had been some movement in the biodiversity financial department. Almost 190 countries signed a landmark United Nations biodiversity agreement called Kunming-Montreal Global Biodiversity Framework. The treaty sees a set of targets to achieve by 2030, such as cutting global food waste by half and ensuring the effective conservation of 30% of the world’s lands, waters, oceans and coasts. 

The Framework also includes funding conditions to increase investment in biodiversity, which barely covers 0.1% of the global GDP. There currently is a financing gap of $700bn per year, according to BIOFIN, a biodiversity finance initiative, and thinktank the Paulson Institute. 

In order to reduce the gap, the agreement seeks to make available at least $200bn per year in biodiversity-related funding from both private and public sources, as well as creating more investment in developing countries to reach around $30bn per year by 2030. 

During COP15 in Montreal last year, the international donor community decided to invest billions of dollars to ensure the preservation of biodiversity and the restoration of ecosystems. All parties agreed to significantly increase their investments by 2025, balancing on both private and public sources.

Some examples of commitments are:

  • The Netherlands will increase its total biodiversity-related finance by 50% in 2025, which corresponds to an extra $150m by that year.
  • Spain will dedicate around $607.9m of its Official Development Aid for biodiversity by 2025.
  • Germany will augment its international biodiversity funding to $1.1bn by 2025, also thanks to the increase to its international climate budget.

In addition, 11 philanthropies formed the Protecting Our Planet challenge, which entails doubling their financial support for nature conservation to $5bn. These include the Bezos Earth Fund, which pledged $1bn, the Wyss Foundation and Rainforest Trust, – which invested $500m each – Bloomberg Philanthropies and Arcadia.

According to the World Economic Forum (WEF), nature-positive policies could eventually drive more than $10tn per year in business value and create almost 400m jobs by 2030. Internationally, there is an estimated public expenditure on biodiversity of between $3.9–$9.3bn per year, with an average of $6.1bn. 

When it comes to private investments, on the other hand, assets in biodiversity funds reached $984m in 2022, while they averaged $313m in 2021. Specifically, nine different biodiversity funds were created in 2022 and generated a return of $616m in combined assets. 

Five strategies were also launched by asset managers in France, with the introduction of biodiversity reporting legislation Article 29 that states all organisations must now disclose their biodiversity-related risks and strategies, present and future. For example, Axa Investment Managers had the largest fund in the biodiversity field, corresponding to $458m by the end of 2022.

What opportunities are there for investors to support biodiversity?

“There are a myriad of innovative technologies, processes and approaches being developed across sectors that help companies lessen their impact on the environment and biodiversity in particular,” says Tom Atkinson, portfolio manager at AXA Investment Managers. The main sectors that investors should support when it comes to biodiversity are agriculture, water treatment and sustainable materials. 

On the topic of investment, Gunstock highlighted the importance of “renewable energy, circular economy solutions and nature-based solutions”.

In the tech-driven agriculture category, new and innovative systems are already helping food producers to reduce waste and biodiversity impact, all while simultaneously improving productivity. For instance, John Deere’s precision agriculture systems can, at the same time, plant, fertilise and treat crops. This leads to less wasteful use of fertiliser and prevents damage to crops and, therefore, biodiversity itself. 

Agricultural companies will also need to align their work with new regulations, such as the European Union’s target to reduce the use of chemical pesticides by 50% by 2030, which should be another incentive for investors

On the same level as agriculture, there is aquaculture, which is the breeding of fish for the purpose of creating food. More than 35.4% of global fish stocks are overfished, which not only creates more waste but also damages biodiversity and ecosystem balance. A solution could be investing in projects like Corbion, which creates plant-based omega-3. This reduces the need for fish breeding and offers a sustainable alternative to live fish that respects marine resources.

As Gunstock puts it: “Aquaculture is where [the] recovery lies. We have to start to cool down our oceans, we need to repopulate our oceans’ biodiversity.”

Even if not strictly linked to oceans and marine resources, water treatment is also a good starting point to safeguard biodiversity. Filtration and purification, for instance, significantly help the issue of water scarcity. As Atkinson explains, “Innovative companies are harnessing artificial intelligence and digitalisation to provide solutions for their customers, helping them to reduce their biodiversity impact.” 

Companies like Evoqua have created smart water systems that can be monitored and analysed remotely. These systems use biogas that is created by wastewater treatment cycles to produce enough renewable energy to power an average of 5,000 homes a day. 

Websites in our network
Select and enter your corporate email address To receive our weekly newsletter – to your inbox, simply send us your work email.
  • Chief executive officer
  • Chief investment officer
  • Portfolio manager
  • Chief operating officer
  • Chief financial officer
  • Treasurer
  • Chief technology officer
  • Chairperson
  • Managing director
  • Director
  • Group or senior manager
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.
THANK YOU

Thank you for subscribing to Capital Monitor.