Biodiversity: Understanding a key new global investment trend

In Short

Tackling biodiversity loss in our natural world is a major challenge and urgent new focus for governments, businesses and society. The Investment, Market and Macro Research, and ESG Integration & Solutions teams at Generali Insurance Asset Management dive into what investors need to know about this increasingly important investment driver and how to distinguish biodiversity-related risks and opportunities.

HIGHLIGHTS

  • Biodiversity conservation is integral to the sustainable transition of the global economy and achieving decarbonisation goals.
  • A landmark UN biodiversity agreement seeks to significantly leverage private finance to achieve new global targets to protect 30% of land and 30% of costal and marine areas by 2030.
  • The biodiversity risk premium will increase, so integrating biodiversity criteria into investment processes is crucial.
  • As company reporting on biodiversity is inconsistent and sparse, ESG engagement is the best tool for asset managers to identify the future industry leaders in the sustainable transition, and help improve laggards.

 

Biodiversity set to be a major global investment trend by 2030

Biodiversity overwhelmingly affects all aspects of our lives and economics. Biodiversity is indicator of the health of an ecosystem; when biodiversity loss happens, ecosystems break down. To give an idea of its potential economic value, the World Economic Forum reported in 2020 that $44 trillion of value generation – over half the world’s total GDP – is moderately or highly dependent on nature and, as a result, exposed to material risks from nature loss.

In our view, we are just at the beginning of a major new long-term investment trend that needs to be better explored and defined.  

 

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Biodiversity: Understanding a key new global investment trend

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