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Why Fund Managers Started Worrying About Biodiversity

Aerial Views of the Brazilian Amazon
Photographer: Dado Galdieri/Bloomberg

The natural world is in crisis: Global wildlife populations have declined by an estimated two-thirds on average in the past 50 years, up to 1 million species are thought to face extinction and many of the earth’s ecosystems are badly damaged. The destruction of the planet’s biodiversity, the result of human activity from deforestation to pollution, isn’t only troubling for conservationists and wildlife lovers. It also poses huge economic risks. That realization is beginning to bring biodiversity the same kind of attention that has been building around climate change among so-called sustainable investors. It’s an effort, in the words of one fund manager, to “mainstream natural capital as an asset class.”

Biodiversity is the breadth and variety of life and ecosystems on earth, covering polar bears to plankton. And though humans rely on the natural world for crops for food, materials for building and medicine, as well as protection from extreme weather, homo sapiens have caused significant damage to it through deforestation, resource extraction, intensive agriculture, pollution and climate change.