Now it is time to invest in the health of nature

rethink sustainability

Now it is time to invest in the health of nature

Even as climate change is now most clearly in the public eye, other pressures on the environment are equally apparent.

The headline figures are frightening. There has been a 68% decline in animal populations over the past 46 years2. Insect species, including bees, have been some of the worst effectors. If bees do not pollinate, nearly $600bn of global crops could be at risk. At the same time, up to one third of our land is already degraded, loosing productivity, due to overuse and poor agricultural practices3. And plastic pollution has reached a crisis point, damaging the health of our ecosystems, including our oceans.

Read more on the how we must save bees to save our crops here

At the World Biodiversity Summit, the aim is clear - to hasten investment in solutions to the problems we face. Leaders from public and private sectors will gather - both virtually and in real life - for the third part of this series of events which started in New York in September. In short, it is all about channeling wealth into restoring the planet to a more stable operating state, a push which Lombard Odier is fully behind.

In short, it is all about channeling wealth into restoring the planet to a more stable operating state, a push which Lombard Odier is fully behind.

What is happening in Glasgow

The goals of COP26 are well established - working to secure net zero by 2050; working to adapt and protect communities and habitats; building finance and coming together to deliver change.

At the World Biodiversity Summit, there are similarly urgent aims - to stop the collapse of the species and ecosystems which allow the earth to function every day. Dubbed the 'The Most Important Global Meeting you'd probably never heard of'4, the organisers are pushing for it to be seen as more than a side event to the main COP26 discussions and instead are calling for more awareness for the threat to biodiversity, exacerbated by ongoing climate change.

The event aims to create targets and commitments as well as establishing collaborations to prevent the destruction of biodiversity. Speakers have said5 that it could mark a critical juncture in how the private sector can help in addressing the problem facing biodiversity.

Dubbed the 'The Most Important Global Meeting you'd probably never heard of', the organisers are pushing for it to be seen as more than a side event to the main COP26 discussions and instead are calling for more awareness for the threat to biodiversity, exacerbated by ongoing climate change

Read more on investing in nature at scale, here


A changing economy

It is not just climate change that is affecting biodiversity - poor farming practices, overfishing and pollution are all killing off species as well. At Lombard Odier, we recognise that the progress of humanity is dependant on nature's resources. As does the progress of our economy.

But our society extracts around 100 billion tons of natural resources from the earth every year, much of it ending up in the form of emissions and untraced forms of waste and pollution. This is unsustainable and needs to stop.

Our current economic model is WILD: Wasteful, Idle, Lopsided and Dirty and it is placing our Natural Capital at risk. Instead we need to invest in a system which is Circular, Lean, Inclusive and Clean: the CLIC™ economy. Such an economy generates valuable economic growth without depleting our precious natural resources.

At Lombard Odier, we recognise that the progress of humanity is dependant on nature's resources. As does the progress of our economy

Investing in Nature at Scale

Last week Lombard Odier hosted the latest in our 'Zero-Hour' Sessions which aim to explore the path to net zero. The event in Glasgow, which took place as COP26 continued, was hosted by His Royal Highness The Prince of Wales's Terra Carta Action Forum and focused on how more investment needs to be driven towards our natural capital.

Senior Managing Partner Hubert Keller said investors with direct stakes in our economy are starting to deploy capital in portfolios that are aligned with restoring nature - but we still need to do more so we do not breach our planetary boundaries, of which the most widely known is that of limiting global warming to below 1.5 °C.

“As an investor, I particularly appreciate His Royal Highness's Davos declaration about the role of finance in solving this challenge, and agree with his sentiment that the problem is not a lack of capital, but how we as an industry are deploying it," said Mr Keller.

The growth of the carbon market makes an outstanding case for investing in natural capital, he said, with expectations that by 2030 it could be worth $200bn.

The growth of the carbon market makes an outstanding case for investing in natural capital, he said, with expectations that by 2030 it could be worth $200bn

Where are the solutions?

Where there are problems, there are companies stepping up with solutions.

In our forests, soils and oceans can act as natural CO2 sinks. The importance of these natural assets cannot be overstated. These ecosystems provide crucial habitats that foster biodiversity, while the captured CO2 plays an important role in avoiding the irreversible, cataclysmic effects of climate change. Companies that are helping to sustain this include TetraTech, a California-based engineering consultancy which aims for sustainable solutions to problems and was this year voted as one of America's most responsible companies6 through its work in international development, water and the environment. Stora Enso meanwhile is one of the largest private forest owners in the world and is a leading provider of renewable solutions in packaging, biomaterials, wooden construction and paper.

Read more here on five ways to buy time for net zero here

In our forests, soils and oceans can act as natural CO2 sinks. The importance of these natural assets cannot be overstated
  1. The bio-economy has proved to be a fertile ground for firms looking to develop nature-based solutions to issues such as food supply chains and diets; tackling waste on sea and land and boosting the biodiversity of natural habitats. Smurfit Kappa in 2019 announced a new range of 100% recyclable packaging which eliminated the need for single-use plastic and is renewable and biodegradable. The UK's high street grocery player M&S has created its own 'Plant Kitchen' range of dishes which aim to equal the taste of meat and dairy. And the American agricultural machinery company AGCO has become a leading proponent of open and smart farming solutions in order to maximise yields and productivity.
     
  2. Non-profits are active in the area also, one notable example being Project Canopy, based in the Congo Basin, which is working to give environmental bodies the data and analytics they need to help save the conservation area. The rainforest is the world's last tropical carbon sink spanning 2,500,000 km2 over six countries7. It is home to 1,000 threatened species but efforts to end biodiversity loss have failed over the last two decades and campaigners say this is down to poor data which has led to contradictory policies. Project Canopy describes itself as the independent, impartial source of data on the region and aims for their information to help conservation outcomes.


A very real problem

The first World Biodiversity Summit will bring into focus the significance of biodiversity to the world around us. It is here where the effects of climate change and the mistakes of man are being felt.

At Lombard Odier, we have a very clear view that nature is the true engine of our economy, and that preserving and harnessing natural capital helps us maintain this vital, productive asset

At Lombard Odier, we have a very clear view that nature is the true engine of our economy, and that preserving and harnessing natural capital helps us maintain this vital, productive asset. If our WILD economy is also what is threatening our natural capital, then the only way we can realise those benefits is by transitioning to an entirely new economic model.

1 https://www.worldbiodiversitysummit.org/
2 https://ec.europa.eu/jrc/en/science-update/wwf-living-planet-report-2020-reveals-68-drop-wildlife-populations
3 https://www.lombardodier.com/home/rethink-sustainability/investing-in-our-natural-capital.html
4 https://www.nytimes.com/2021/10/14/climate/un-biodiversity-conference-climate-change.html
5 http://www.fruitnet.com/americafruit/article/186527/del-monte-to-speak-at-world-biodiversity-summit
6 https://www.tetratech.com/en/articles/newsweek-names-tetra-tech-one-of-americas-most-responsible-companies-2021
7 https://www.projectcanopy.org/

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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