How Does Biodiversity Loss Impact the Planet and Our Future?
Biodiversity is the key to our planet’s survival. Human welfare is closely dependent on the richness of biodiversity. With more than 1 million species at risk of extinction, we face an inevitable collapse of our ecosystems and irreversible losses in biodiversity without immediate corrective measures.
The global impact of biodiversity loss was studied and reported on recently by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) along with the World Wildlife Fund’s (WWF) Living Planet Report 2020. According to the studies, population sizes of birds, reptiles, amphibians, fish and mammals have declined 68% since 1970. This devastating biodiversity loss is exacerbating global warming, threatening the security of our food sources, and undermining the foundation of our ecosystems that support all life, including ours. The economic fallout of inaction could cause worldwide chaos.
On September 25, 2020, Karner Blue Capital, along with 25 other financial institutions from around the globe, signed on to the Finance for Biodiversity Pledge in a rally to address dire rates of global biodiversity loss. This pledge calls upon global leaders to commit to reversing the loss of nature and biodiversity. To spearhead this effort, the 26 financial institutions from around the world, with over $3.5 trillion in assets under management, are committed to collaborating, engaging, and assessing their own impacts on biodiversity and setting targets to report on biodiversity matters by 2024.
As a socially responsible investment firm focused on allocating capital to solutions that reverse or mitigate biodiversity loss, Karner Blue Capital is proud to collaborate with several international banks and fintech companies in an effort to develop science-based biodiversity metrics and indicators to help measure the impact of investments in private and public firms. Together with our Pledge partners, we are working to create widely applicable biodiversity metrics in an effort to empower investors to measure the biodiversity impacts of their portfolios.
As companies respond to our call for change and transition to nature-friendly business operations and supply chains, the following five major drivers of global biodiversity loss must be addressed:
Irresponsible land and ocean use. Animal and human habitats are being altered, destroyed, fragmented and degraded, leading to the loss of animal populations and sometimes entire species. Industries like agriculture, farming, transportation, real estate, construction, and mining contribute to these outcomes. For example, industrial agriculture has contributed to a 70% loss in amphibians, reptiles and fish since the 1970s. Specifically, the world has lost 200 species of frogs since the 1970s.
Exploitation and over-use of species. Some species reproduce slowly, making them especially vulnerable to over-use and extinction. Some human populations exploit animal species to survive, others for profit and some to eradicate “nuisance” animals. Industries that contribute to over-exploitation include agriculture, farming, travel and tourism, and mining. For example, travel and tourism to ecologically sensitive areas can lead to species and habitat loss. When vast numbers of tourists descend on delicate ecosystems, they can cause degradation of plant life through trampling and collecting.
Climate change. Climate change is affecting us all, but especially animals and species that rely upon a specific climate and geographic location for their survival. Rising oceans, melting ice caps, and increasing water temperatures are just a few of the significant environmental changes that are contributing to the loss of species biodiversity. Additionally, greenhouse gases are a major contributor to climate change and industries like lumber, paper products, food production, agriculture, transportation, and textiles and apparel all produce greenhouse gases. For example, the manufacture and waste of paper products is a major greenhouse gas producer. About 80% of paper products that are not recycled will find their way to a landfill, where they produce methane gas. According to the EPA, landfills are the third-largest methane gas producer in the U.S.
Pollution is a term that encompasses both air and water contamination. Pollution of the environment creates biodiversity loss through its toxic impact on animal and plant ecosystems. Pollution is widespread throughout the planet and industries that contribute the most to pollution include food production, agriculture, construction/real estate, mining, household and personal products, pharmaceuticals, chemicals, refuse and wastewater. Farm runoff is a major contributor to water pollution, and can cause algal blooms that choke off oxygen to both plants and aquatic animals. Add global warming into the equation, and algal blooms are becoming more frequent and can lead to dead zones that stretch for miles in our oceans.
Invasive and introduced species. We have seen the global travel and transportation industry inadvertently introduce non-native species into sensitive ecosystems, often with devastating results. One invasive species can wipe out entire populations and wreak havoc on interconnected flora and fauna as well. Industrial transportation and the leisure travel and tourism industry both contribute to this growing problem. Hawaii’s ecosystem was fairly stable for 70 million years, says Travel & Leisure magazine. But since it was colonized, more than 500 invasive species, like the coqui frog, have been introduced harming the state’s biodiversity ecosystems and economy.
In an effort to bring the power of the capital markets to bear on these issues, Karner Blue Capital has developed and manages an investment strategy grounded in the belief that innovative companies focused on problem-solving and best practices relating to environmental protection, climate change mitigation and animal welfare can better position their businesses for growth and success in today’s marketplace. Our goal is to provide sustainable and responsible investment products that seek to earn above benchmark returns while empowering investors who care about the treatment of animals, the degradation of their habitats, and the planetary risks posed by declining biodiversity to align their investments with their values.
Utilizing a rigorous proprietary research process, KBC evaluates publicly-traded companies in almost every sector of the economy to build an investable universe of forward-looking companies that integrate ecological protection, biodiversity preservation, and animal habitat conservation into their business operations and supply chains. Our investment team then applies bottom-up, fundamental financial analysis to assess companies in KBC’s investable universe on growth, profitability, valuation and balance sheet metrics to create a diversified portfolio of publicly-traded equities that are available to investors through our separately managed accounts and mutual fund.
To learn more about Karner Blue Capital’s biodiversity conservation, environmental stewardship, and animal welfare strategies, visit www.karnerbluecapital.com and www.biodiversityimpactfund.com.
DISCLOSURE: As of the date of this blog, Karner Blue Capital (“KBC”) held positions in Fortescue Metals Group, Ltd. on behalf of its clients. Securities issued by the companies identified or described in this blog do not represent all of the securities purchased, sold or recommended by KBC for its advisory clients, and readers should not assume that investments in the securities issued by the identified companies were or will be profitable. KBC and some of its partners may hold positions in certain securities issued by the companies identified in this blog in corporate and/or personal accounts. As fiduciaries, KBC prioritizes its clients’ interests above these corporate and personal accounts to avoid any conflict of interest in trading these commonly held securities.