We all rely on our planet’s complex ecosystems to live. Natural ecosystems support our water supply, provide the food we eat, filter the air we breathe and store the carbon we generate.

The goods and services that nature provides us have been estimated to be worth more than US$150 trillion annually – about twice the world’s GDP.

Sadly, our planet’s biodiversity has been in crisis for years. Of today’s animals and plant species, one in four could face extinction. Three-quarters of land-based ecosystems and two-thirds of our oceans have been negatively affect- ed by human activities, according to the United Nations.

And the destruction of natural habitats, depletion of natural resources, pollution, climate change and the introduction of invasive species are all fuelling biodiversity loss.
From an Australian perspective, this biodiversity loss is predicted to wipe out up to US$20 billion annually from Australia’s economy by 2050.

That’s why 190 governments reached a landmark agree- ment in December 2022 at the United Nations biodiversity conference (COP15) to preserve nature and reverse habitat loss by influencing the priorities and disclosures of companies and investors.

Importantly, a focus on biodiversity doesn’t mean neglecting climate change – the two are closely related. One of the solutions to reducing climate change is storing carbon. And one of the best ways to store carbon is by preventing deforestation and habitat destruction, and by restoring ecosystems.

The COP15 agreement includes concrete measures to halt and reverse nature loss and protect the rights of indigenous peoples, setting 23 targets for 2030, including:

• Requiring multinational companies and financial institutions to monitor, assess and transparently disclose risks and impacts on biodiversity from their operations, portfolios, supply and value chains.
  
• Mobilising at least US$200 billion per year from public and private sources for biodiversity-related funding.
• Phasing out government subsidies that harm biodiversity. At the same time, ramping up positive incentives for biodiversity conservation and sustainable use.
• Conservation and management of at least 30% of the world’s land, coastal areas and oceans. Currently, only 17% of land and 8% of ocean areas are protected.
• Restoring 30% of land and ocean ecosystems.
• Reducing to near zero the loss of areas of high biodiversity importance and high ecological integrity.
• Cutting global food waste by half.

As governments work to translate the 23 targets into national strategies and action plans, the focus of professional investors on biodiversity is growing. Companies and financial institutions are already starting to assess their impact on biodiversity and formulate initiatives to combat biodiversity loss.

The companies and technologies that are part of the solution stand to benefit. So when your fund manager invests in these areas, your money is making a positive difference to biodiversity while also contributing to your long-term performance goals.

These businesses and technologies may include:

• Products and services that provide a nature-friendly alternative to the status quo, for example, sustainable packaging that doesn’t pollute waterways or go to landfill
• Technologies that better preserve and support ecosystems, for example, precision agriculture technologies that use tools such as data analysis and soil sensors to deploy water and fertilisers more efficiently and regenerate soil fertility
• Reengineered business processes and products that minimise negative impacts. Incremental improvements in production systems can contribute big gains in biodiversity conservation. One example is mining technologies that prevent toxic run-off into water systems

We expect to see an uptick in innovation and potential investment opportunities as companies start reporting their activities through a biodiversity lens.

We’ll also see more investors looking for red flags in company reporting. These include the lack of a sustainability strategy or failure to mention biodiversity, conservation, ecology or nature in the company strategy. Organisations that fail to note their impacts on biodiversity, either in their supply chain or downstream in their value chain, may find it difficult to attract capital.