Investors have embraced environmental sustainability. In particular, regulators and investors alike have rallied around the fight against climate change. Many portfolios now integrate objectives for carbon emission reductions or for alignment with temperature scenarios. Other environmental issues are being closely examined as a financial issue.
Investors who fail to consider biodiversity in their portfolios increase the global problem, in turn reducing the growth potential and increasing the risk to their own investments. These two connected systems chase each other in a downward spiral.
In contrast to carbon emissions, we do not yet have the tools to measure and monitor the biodiversity problem. Carbon frameworks are young and imprecise, but the consensus is growing. The complexity of biodiversity makes it difficult to measure, and tricky to incorporate in the investment process.
In pushing other species to extinction, humanity is busy sawing off the limb on which it perches.
Paul Ehrlich
For the moment, we should not limit ourselves to published data, or to currently existing investment approaches. We must be open-minded. Not everything in investing can be quantified … ask yourself, “How am I incorporating biodiversity in my investment decisions?”
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