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Nature needs a place at the table in decision-making and investment

Nature needs a place at the table in decision-making and investment

From the Making Biodiversity Count Series

Nature needs a place at the table in decision-making and investment

From the Making Biodiversity Count Series

Quantifying the economic value of nature and integrating ESG factors into investment decisions could help protect biodiversity.

One of the main barriers to biodiversity action is the lack of integrated economic and ecological decision-making. According to Cambridge Conservation Initiative, nature rarely has a place at the table when it comes to decision-making as the economy typically takes precedence. Quantifying the economic value of nature and integrating ESG (environmental, social and governance) factors into investment decisions could help protect and regenerate biodiversity and contribute to more sustainable communities everywhere.

Economic Value of Nature

Person hold carrots covered in soil
Photo by Julian Hochgesang from Unsplash

Identifying and quantifying the economic value of nature can help increase the visibility of nature and contributions of ecosystem services. Referred to as ‘natural capital’, BirdLife International describes this approach as essentially taking stock of “renewable and non-renewable natural resources, (e.g. biodiversity, air, water, soils, minerals, etc.) that combine to yield a flow of benefits to people.”  These benefits, including clean air and water, food, nourishing soil, building materials and energy, are called ecosystem services and their sustainability is essential to human health and well-being.

Below are three examples of the economic value assigned to natural systems:

1. Dung beetles provide a valuable service to farmers. They clean up the massive amount of dung produced by cows and sheep by breaking it up and tunnelling it deep underground. The nutrients from the dung are then released into the soil which benefits plant roots. According to this TED-Ed video, the ecosystem services dung beetles carry out have a monetary value of $380 million US and £367 million a year.

2. Coastal ecosystems can hold three to five times more carbon than forests. This ‘blue carbon’ can stay locked up in coastal ecosystems for thousands of years. It’s estimated that “carbon stored in tidal salt marshes in the Bay of Fundy could have an estimated value of $202 million.” In 2022, this will be equivalent to $1 billion in blue carbon stored in ocean-bound plants and thick layers of silt and clay mud.

3. Wetlands are one of Earth’s more productive ecosystems and provide numerous benefits to humans and wildlife alike. In Southern Alberta, the Town of Okotoks added up the natural assets of local wetlands including their contribution to carbon sequestration and air quality. According to their calculations, wetlands in the area have a value of $3.2 million.

ESG Investing (Environmental, Social, and Governance)

Natural capital assessments are an important element in ESG investing. This term describes the increasing consideration of “non-financial factors as part of the analysis process [investors take] to identify material risks and growth opportunities,” according to the CFA Institute.

Environmental factors represent the “conservation of the natural world” including biodiversity, climate change, carbon emissions, waste management, deforestation, pollution and more.

Social factors consider “people and relationships”, including gender, diversity, human rights and labour standards.

Governance factors represent “the standards for running a company”, including lobbying, board composition, political contributions and more.

Although calculating the monetary value of environmental, social and governance factors can be challenging, it can catch the eyes of investors and change the conservation. In particular, assessing environmental factors and determining the value of natural capital can help investors realize the importance of intact ecosystems in sustaining our economy. It encourages investors to look beyond solely economic gains, engage in forward-thinking and consider whether an investment aligns with their values and visions for the future.

Owl on tree stump in grassland
Photo by Pete Nuij from Unsplash

Natural capital assessments not only give nature a seat at the table in decision-making but also prioritizes sustainable, socially conscious and ethical investments. After all, the health of the economy, as well as society is inseparable from the health of the environment.

How can you make biodiversity count?

1. Cambridge Conservation Initiative and Natural Capital Coalition released the Natural Capital Protocol guide “for businesses looking to better understand and manage their relationships with the environment using a natural capital framework,” according to this resource.

2. Learn more about blue carbon and kelp forests.

3. Ask companies to appoint more environmental and sustainability experts on their Board of Directors.

Biodiversity Action Agenda Item 1.4

INTEGRATE NATURAL CAPITAL ASSESSMENTS INTO INVESTMENT, LENDING AND INSURANCE DECISIONS: Working in partnership with industry associations and opinion leaders in ESG (environmental, social and governance performance of public companies), inform the financial sector that, in their ESG analysis, there are significant benefits to integrating natural capital assessments into investment, lending and insurance decisions.

About Making Biodiversity Count Series

In February 2019, the Biodiversity Action Agenda, authored by Women for Nature was published. It asks all Canadians to take immediate action on biodiversity loss as there is no recovery from extinction. As a 24-point action agenda, it offers a combination of actions, including low-hanging fruit as well as long-term systemic changes. Follow our blog for regular posts exploring each action.