Tropical storm over Florida, the Bahamas, Cuba and Haiti: The financial industry is uniquely positioned to help build an economy that works with, not against, nature.
| Photo: Imago Images/ZUMA Wire
The financial sector is in demand
In the past 30 years, our prosperity has increased exponentially: we have built more roads, buildings, and machines than ever before. More people are living longer, healthier lives, and accessing education has never been easier. Average per capita GDP has more than quintupled since 1820. More than 95 percent of newborns live to see their 15th birthday, compared to only a third in the 19th century (Our World in the Data, 10/14/ 2022).
However, these advances come at a high cost. People are getting better and nature is getting worse. Humans are decimating animal and plant species, destroying their habitats to feed the growing population. And for decades, humanity has been consuming more natural resources than the Earth can reproduce naturally in a year – and we are tapping into supplies that should be available for future generations.
This unsustainable relationship must end. This requires an in-depth understanding of the impacts of the biosphere on human well-being and its contribution to economic growth. Meanwhile, politicians regard protecting biodiversity as a priority as containing global warming. The UN’s COP15 biodiversity summit in Montreal in December, the largest in a decade, aims to agree groundbreaking nature conservation targets for 2030.
However, it is not only politics that is needed here, the financial sector must also play a more active role. As a global manager of capital, the financial industry is uniquely positioned to help build an economy that works with nature, not against it. It can facilitate a positive transition to nature by transforming the way it makes capital available to businesses and developing new models to price biodiversity risks and opportunities more accurately.
By redirecting finance to companies that develop advanced environmental technologies and services, the financial industry has already helped improve efficiency in everything from energy, agriculture, and trade to transportation. For example, thanks to the development of agricultural technology, the world can now produce nearly three times as much grain on a single plot of land as it could in 1961 (Our World in Data, 10/14/2022). The rate of improvement in average grain yields is now greater than the rate of population growth. However, the bulk of conventional investment goes to traditional economic activities that cause environmental and social harm, whether knowingly or unintentionally. So the financial industry must use its weight and influence and join the global effort to reduce harm and regenerate nature.
Pictet AM Founding Partner of Finance to Revive Biodiversity
All of which explains why Pictet Asset Management has become a founding partner in a new, four-year, global research program designed to help the financial industry develop strategies to protect natural capital and halt biodiversity loss.
Overseen by the Stockholm Center for Resilience at Stockholm University, the Finance for Biodiversity Recovery Program (FinBio) aims to develop valuable research to help the finance industry change current practices – which reward growth at the expense of biodiversity – in accurately transforming a new paradigm that captures positive quality. The nature of the company and gives it economic value.