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Investors can’t afford to ignore nature loss
Over 50% global economy reliant on healthily functioning ecosystems
Tom King 14 Jun 2024

Even though approximately US$133 billion is invested annually in nature-based solutions, including US$18 billion from private sector finance, nature loss is a topic that investors cannot afford to ignore as over 50% of the global economy is reliant on healthily functioning ecosystems, according to a recent report.

As well, fossil fuel-based energy sources still have a much bigger overall impact on the environment, especially when compared with solar and wind power, finds the Climate Meets Nature report, published by UBS Asset Management (UBS AM) and non-profit financial think-tank Planet Tracker.

However, the energy transition technology is also not free from impacts, the report points out; and, when poorly managed, the energy transition can cause unintended damage to natural capital and, in turn, to the climate.

The three main impacts on nature, the report shares, stem from:

  • Land use and site management
  • Habitat loss and damage from the extraction of raw materials
  • Managing the input and output of waste.

The three mitigation approaches for these impacts are:

  • Improving land management practices
  • Carrying out lifecycle analysis
  • Recycling and repairing to reduce waste production.

“Climate change, nature and biodiversity loss are inextricably linked,” says Lucy Thomas, UBS AM’s head of sustainable investing. “To manage natural capital risk properly, investors require an understanding of how these risks impact the business model of companies and assets to help determine the risk premium and impact on cash flows.”

Marat Zapparov
Marat Zapparov
chief executive officer
Pentagreen Capital
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Tugay Yilmaz
Tugay Yilmaz
senior investment officer - digital infrastructure & telecom, APAC
International Finance Corporation
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