rethink sustainability
Nature. The world’s most valuable industry
Harnessing nature will change industries and the way we organise our economy
It is our most precious resource but we do not treat it as such. Nature is at the centre of everything - our soil, land, sky and vegetation - with over half of the world’s global GDP is dependent on it.
Yet despite the importance of nature, we both overexploit and underutilise it at the same time. We overexploit it through our excess reliance on non-renewable resources and the increasing damage on our environment, while we underutilise it by failing to recognise the more sustainable and circular ways that nature can support our economy.
But a shift is starting to happen and already industries are moving towards a Circular, Lean, Inclusive and Clean (CLIC™) economic model. Cars are being made lighter by using wood in their structure; polyester in fashion is being edged out in favour of more sustainable materials and buildings are being constructed more efficiently, with a focus on reducing emissions.
Our recent Lombard Odier webinar entitled ‘Nature - The World’s Most Valuable Industry’ explored these themes and heard how market forces, policy and shifting consumer behaviour are driving change towards sustainable and cleaner solutions becoming more efficient and cheaper.
Driving change
Over the last century, we have come to rely on an economy based around fossil fuels. Our planet has had to pay the price for that. Today with over eight billion people on the planet, our economic model is no longer sustainable. We are taking natural resources and transforming them into goods that will remain mostly idle or waste away without the potential for recycling.
The statistics are startling. Some 92 billion tonnes1 of materials are extracted every year, with the majority of this wasted in the form of emissions, pollution and landfill. Our Managing Partner, Hubert Keller, calls this the ‘take-make-waste’ model, where we take materials we cannot sustain, make products we do not use, and waste goods that could still be used or recycled. It is a linear (as opposed to circular) model that is no longer suited to our planet and is pushing our planetary boundaries to their absolute limit, with worsening impact on our climate, the rapid loss of biodiversity, and the loss of fertile soils.
This model is a threat to investors because our most valuable asset - our planet - is being pushed beyond its boundaries. But there is good news - market forces, policymaking and regulation and are all pushing for change.
And it is becoming clearer every day that more sustainable solutions are becoming more efficient and cheaper - which in turn is creating value for investors. Central to this shift is the move towards a net zero economy, a nature-positive economy and ultimately, a bio-circular economy. At Lombard Odier, our duty and vision is to create investment solutions that will generate returns as we transition towards a sustainable economy and beyond.
We have already begun to offer an investment landscape of sustainable solutions with our Climate Transition, Natural Capital and Target Net Zero strategies. In order for society to embrace the concept of a more nature-positive economy, we also need to transition our business models towards the bio-circular economy as well as leaner, more efficient forms of industry. By both harnessing and preserving nature, we will be able to leverage the immense benefits and power that it brings.
Cleaner solutions
Some industries are already moving in this direction, towards a more nature-positive way of operating. Marc Palahí, the Director of the European Forest Institute, points out that the very future of many industries is under question unless we move towards a circular, bio-based economy.
Innovative ideas based on forest materials are now gripping many industries. Wood may in fact be one of the world’s most versatile resources. In Japan, for instance, a car was made using cellulose nanofibres - said to be one-fifth the weight of steel and five times as strong. These fibres were extracted from chipped wood and plants.
And in fashion, long regarded as one of the worst offenders in terms of damage to the environment, sustainable wood-based textiles are being used that are less polluting than polyester and cotton.
At the same time, the use of wood in the construction industry is also on the rise in order to cut down on carbon emissions.
Products using wood at their core is just one of the areas that requires investment. With their potential to change entire industries, they offer a way out of the lethargic and damaging economic system that we are in at present and into one that is progressive and better aligned to the environment that sustains it.
Investing in nature as our true engine of our economy.
The innovations around wood-based materials are just one of many examples of the opportunities provided by nature-based materials and solutions inspired or directly derived from nature. Other opportunities abound, ranging from material and chemical industries, to power, agriculture and manufacturing sectors. As we leverage nature, this, rather than fossil fuels, will become the true engine of our economy.
1 Source : LOIM analysis
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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