Marketing communication
Biodiversity refers to forests, oceans, and other ecosystems, as well as efforts to protect them. It’s vital because processes such as the nitrogen and carbon cycle are impossible without a variety of organisms existing and being involved at every stage, while ecosystem services such as pollination and flood prevention are inextricably linked with life on our planet.
Timo H. Paul, Managing Director, Head of German-speaking Switzerland of Natixis Investment Managers, in conversation with Manuel Coeslier, Lead Expert, Climate and Environment of Mirova and Hadrien Gaudin-Hamama, ESG Analyst of Mirova, an affiliate of Natixis Investment Managers.
Investing in biodiversity involves mobilizing sustainable finance for the conservation and restoration of natural habitats, as well as promoting sustainable practices.
The landmark deal struck at COP15 in December 2022 has paved the way for new regulations and increased investor demand. Yet estimates of biodiversity funding needs by 2030 point to a shortfall of $598 to 824 billion every year.
The good news for investors that want to have a positive impact on our forests, oceans, and other ecosystems that make our planet thrive, is that there are several ways to invest in biodiversity.
Natural Capital, Equities, or Green Bonds?
For example, there are nature-based solutions – also called «natural capital» investments – which include investments in sustainable land use, like land restoration/rehabilitation activities, and those that focus on sustainable supply chains. They also cover environmental assets, like payments for ecosystem services, the conservation of biodiversity-rich areas, and carbon credits.
In this space, investment opportunities are also found in the blue economy, which includes sustainable seafood supply chains, the circular economy, and the conservation of marine and aquatic environments.
There are also a number of companies that can have a positive contribution to biodiversity. For instance, there are companies that evidence a positive impact on biodiversity as measured by the Science-Based Targets for Nature (SBTN) typology of positive impact.
The focus could also be on companies that either contribute to energy efficiency and renewable electricity production or that support acceleration in land use contribution to net carbon removal. This includes increased carbon sinks, reduced emissions of methane, and reduced emissions of nitrogen oxide which have strong global warming potential.
Energy Transition Through Green Bonds
There are also fixed-income solutions that can also have a positive impact on biodiversity, primarily by ring-fenced investments in corporate green bonds. Green bonds are comparable to conventional market bonds in that an issuer of a green bond pays the principal and interest (coupon) back to the lender over a designated period of time.
The difference is that the proceeds of the green bond issuance go towards financing projects that contribute positively to the environmental and energy transition.
In short, there are a number of compelling investment opportunities in the biodiversity space. And we’re already making progress: recent findings of analysts at Bank of America estimated that global assets in biodiversity-related investments may rise 20-fold to more than $400 billion by 2030.
Manuel Coeslier
Lead Expert, Climate & Environment, Mirova
Hadrien Gaudin-Hamama
ESG Analyst, Mirova
This material is provided for informational purposes only and should not be construed as investment advice. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article. All investing involves risk, including the risk of capital loss. This material is provided for informational purposes only and should not be construed as investment advice, or a recommendation or an offer to buy or to sell any security, or an offer of services. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. The views and opinions expressed are as of the date indicated and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. In Switzerland: This material is provided by Natixis Investment Managers, Switzerland Sàrl, Rue du Vieux Collège 10, 1204 Geneva, Switzerland or its representative office in Zurich, Schweizergasse 6, 8001 Zürich.
