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Five reasons species extinction matters to business

The sixth period of mass species extinction is underway, and we must act fast. Biodiversity experts explain how businesses and the finance sector can help prevent catastrophic ecosystem collapse.

 

The humble bumblebee is a perfect example of how the wellbeing of a single species is fundamentally important to society. These unsung heroes of agriculture are thought to be responsible for directly or indirectly pollinating a third of the plants and plant products that we consume.

Sadly, bee populations are dramatically declining worldwide due to pesticide use, habitat degradation, global warming, mono-agriculture and a lack of floral biodiversity. In the EU alone, 15% of 1,101 bee species are threatened or near-threatened with extinction. Roughly 96% of four wild bumblebee species in North America have been lost over the past 20 years.

But what’s all the buzz about bees? And why should businesses and the finance sector care? The simple answer is that organisations themselves are also at risk of extinction when animal and plant populations die out.

As we’ll explore in more detail below, the loss of species negatively affects value creation and threatens supply chains, production processes and profits. The knock-on effect on a company’s value and liquidity represents a material financial risk, not only to the business itself but also banks and investors.

As an example, the Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) estimated the global value of agricultural crop production at $2.6 trillion in 2016. Up to $577 billion of this annual output is at risk due to pollinator losses, providing a real sting in the tail for workers, businesses and the finance industry.

The looming threat of species extinction

Last year, the United Nations declared that 20 May will be known as World Bee Day to highlight the necessity of preserving the future of these essential contributors to the global economy. And bees are just one insect.

IPBES recently estimated that one million animal and plant species are at risk of extinction. The resulting impact of widespread species extinction will be catastrophic for ecosystems, businesses and financial markets.

Dr Jill Atkins, chair in financial management at Sheffield University Management School at the University of Sheffield, addresses these themes in Around the World in 80 Species: Exploring the Business Case of Extinction. Dr Atkins, who co-edited the book, delivers chilling insights into the key challenges that nature faces as it undergoes its sixth period of mass species extinction.

Solving these problems requires the world’s best and brightest minds. So, Investec UK recently hosted the ‘Natural Capital, Species Extinction and Sustainable Capital Markets’ seminar. The event comprised a series of presentations, panel discussions and Q&As, bringing together some of the foremost experts from across academia and industry.

Is the situation as bad as it seems? Why should species extinction matter to businesses and the finance industry in particular? And what are the best ways to solve these problems?

Read the full article to get five key insights from the day that answer these pressing questions and show why urgent action is needed before it’s too late. Or jump to the points that interest you below.

1.  The good, the bad and the ugly: any species can affect business

Bees may be the poster insect of biodiversity efforts, but not every species enjoys the same level of media attention. Many flora and fauna are often overlooked in conservation discussions, with some holding pivotal keystone status within ecosystems.

Find out how the Malayan flying fox’s impact on durian fruit production will impact the Malayan tiger.

2. The situation is worse than most of us realise

Species are disappearing at rates unprecedented in our history, and humans have a lot to answer for. That was the stark message from the IPBES report, which estimated 25% of plant and animal groups across terrestrial, freshwater and marine environments are at risk.

Read about the threat to freshwater systems and tourism.

3. Species extinction will cause financial systems to collapse

American biologist E. O. Wilson once said humanity wouldn’t last more than a few months if insects and other land-dwelling arthropods were to disappear because they are so important to the survival of our ecosystems. The spirit of these words is echoed in Around the World in 80 Species.

Learn how species extinction can lead to a market collapse.

4. The investment sector should play a key role in protecting species

There are many challenges ahead due to species extinction, but there are also opportunities for businesses and investors that prioritise biodiversity issues. Some organisations are already thinking outside of the box.

Read about the rise of green bonds and social impact bonds.

5. There is still time to act. Here’s what you can do

Businesses, governments, NGOs, investors, regulators and other stakeholders must all work together to drive the changes that need to occur. Every expert who spoke at the seminar emphasised the importance of collaboration and communication at a local, national and international level.

Here are practical steps companies, banks, institutional investors and pension fund managers can take. BM

 

 

The original article appeared on Investec’s Focus.

 

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