As Covid-19 sweeps across the globe, one thing is becoming clearer than ever – the mismanagement of our environment is having a devastating effect on both global health and the wider economy.
From Ebola, MERS and SARS to bird flu and Zika virus, the increasing trend of novel disease outbreaks, topped off with the Covid-19 outbreak is not a chance happening, rather, it is an externality of how we currently do business across the world. Our globalised network of travel and trade is dramatically changing the way we use land. We live in a world where as much as half of the world’s tropical forest has become agriculture and human settlements. And this process is accelerating.
The increasing human activity of unchecked land-use change and the overexploitation of natural assets is often referred to as the Anthropocene, a term which covers the irrevocable altering of our planet’s landscapes, oceans and atmosphere by humans.
What does the Anthropocene mean for human health?
Since 1940, land-use change has been the leading driver of zoonotic diseases. As human encroachment on nature continues to drive the decline of species and ecosystems, opportunities for pathogens to spread between wildlife, livestock and humans become increasingly abundant, causing a continuous cycle of viral spill-over and spread. Covid-19 is just the latest global example of when viruses of two different strains interact. As our global economy accelerates the rate of unchecked land-use change, so too does the pace of pandemic emergence. If we fail to change, we will soon reach a new pandemic era, indeed, some might say, it has already arrived.
Our current approach is to wait for outbreaks to start, and then design drugs or vaccines to control them, but we have seen inexorably with Covid-19, that this approach is not fit for purpose. As we currently wait for a vaccine, the pandemic has already devastated the global economy and hundreds of thousands of people have died.
Equally, our chances of finding solutions to ever more prevalent disease outbreaks reside in the preservation of our natural capital. Approximately 25% of all drugs used today are derived from rainforest plants. And yet, we are far from capitalising on the full potential of nature-based solutions, having only catalogued less than 15% of species now alive. So, as we further drive deforestation and species extinction, we in turn, destroy our most precious library of innovation. Could it be that we have already wiped out the best vaccine for covid-19?
The role of investment
While the understanding of climate change as a systemic risk to portfolios is becoming more established, the identification of biodiversity-related risks is still limited. In fact, despite the risks, the vast majority of the world’s biggest investors are paying very little attention to the impacts of their investments on biodiversity.
ShareAction’s recent analysis finds that not one of the world’s largest asset managers has published a dedicated policy on specific biodiversity risks and impacts, and only 11% reference a need to mitigate the negative impacts on the natural environment in their investment policies. Shockingly, 86% of asset managers still make no reference to ecosystem protection, natural capital or biodiversity in their policies (see below).
To make matters worse, less than half of the assessed firms engage with portfolio companies on corporate strategy on biodiversity and even fewer ask for better disclosure of the impacts of company supply chains on natural ecosystems. This is in spite of the fact that many of these companies are engaging in activities that are harming natural habitats through land-use change, overexploitation of resources, and pollution.
Investing in a healthy future
With the spectre of increasing disease outbreaks looming and the ever-rising economic cost of Covid-19, we cannot afford this biodiversity oversight in asset management. The financial industry has a critical role to play as investors have the power to block each step in the chain of disease emergence. Through the ownership and financing of companies worldwide, investors have the power to influence behaviour and drive change.
We must address the unchecked deforestation and wildlife exploitation that has become a feature of everyday business. By valuing things like natural capital in investment decisions, we can put pressure on industries that harvest tropical timber and wildlife products, reduce our risk of a pandemic epoch and safeguard the medicine of the future. This means raising the material profile of natural capital in investment decisions. Organizations like Global Canopy are doing good work in this area, but we must do more.
If we do not act, our current trajectory could see the cost of future pandemics rocket into the tens of trillions. Indeed, The world’s leading biodiversity experts have warned that the current coronavirus pandemic is likely to be followed by even more deadly and destructive disease outbreaks – unless we halt on the destruction of the natural world. As we enter a critical decade for biodiversity, the ongoing Covid-19 crisis must motivate asset managers, pension funds, and insurers, to bring biodiversity into the heart of financial markets. The transformative change that we need to avoid future pandemics and other catastrophic consequences of environmental decline will simply not happen without the financial sector stepping up to the challenge.