Background Report: Biodiversity

Background Report: Biodiversity

SEPTEMBER 20, 2019

The policies of most companies in high-impact sectors fail to adequately manage biodiversity risks.

  • A weakening foundation of natural resources and biological inputs erodes the resilience of long-term investments. Depending on their industry, companies have different levels of exposure to and impacts on biodiversity-related risks, including access to natural resources, regulatory changes, and reputational and litigation risks.
  • Growing public awareness of global environmental issues has given rise to expectations for government action as well as for heightened due diligence by business and the financial sector. The consideration of business impact on biodiversity is an important aspect of sustainable finance.
  • Effective investor due diligence is aided by data on industry-specific risks and activities.

Biological diversity – diversity within and between species, and diversity of ecosystems – is a global asset of critical value to the continued existence of present and future generations. However, biodiversity is under threat. A United Nations (U.N.) study released in May 2019 concluded that life on Earth has suffered a considerable decline as a result of human activity, which has degraded to an unparalleled degree the biosphere upon which we depend.

For investors, association with companies and projects that contribute to dwindling biological diversity may result in negative reputational or material risks. As economic growth is premised upon the abundance and replenishment of biological resources, a weakening foundation of natural resources and biological inputs calls into question the resilience of long-term investments.

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