Feature: Why we need to act now to reverse biodiversity loss

Professor David Hill CBE, chairman of The Environment Bank explains why we need to act now to reverse biodiversity loss. 

Since the industrial revolution over 75% of the world’s land surface has been significantly altered by humans, two-thirds of the world’s oceans have been polluted, and over 85% of wetlands have been destroyed.

Tropical forests, critical to maintaining climate stability, continue to be logged on a massive scale and the species for which they provide habitat, decimated.

More than one million plant and animal species are currently threatened by extinction – the species extinction rate is about 1,000 times greater than before humans dominated the planet; the sixth mass extinction in geological history has already begun.

In the UK 97% of species-rich grasslands have been destroyed and once common bird species such as Turtle Dove, Grey Partridge, Tree Sparrow and Corn Bunting have declined by over 90% in just five decades as a result of the intensification of farming. We have sacrificed our natural capital for economic capital.

Fully functioning ecosystems, comprising the full complement of species, are of ultimate importance in providing resilience to our food supplies, nutrition, the quality of our landscapes, protection from flooding, crop pest control, air and water quality, pharmaceutical products and medicines, health and well-being.

Without biodiversity, we humans would cease to exist. Indeed, biodiversity loss represents an impending existential threat to us.

Changes to the climate are reversible, even if that takes centuries or millennia. But once species become extinct, particularly those unknown to science, their contribution to ecosystem function is lost forever.

Successive governments over the past 50 years have simply failed to appreciate the significance of biodiversity; policies and plans have always seen a quality environment as a ‘nice to have’, ignoring the underlying critical importance of nature in products, commodities, markets and our very existence.

There is some hope, however, at least in the UK, that things are about to change and biodiversity valued at last.

The evidence of the critical role that biodiversity plays in global economics has been building eg the work of TEEB (The Economics of the Environment and Biodiversity) and more recently the Natural Capital Committee and Dasgupta review.

There is unequivocal agreement that immediate action is needed to avert biodiversity meltdown and a collapse in the ecological systems that support us.

The UK Government has responded with the 25-year Environment Plan which is to be delivered by the impending enactment of the Environment Bill, with policies for all future development (including infrastructure) to be required to produce a minimum 10% gain in biodiversity, arguably the single most important conservation policy initiative in the past three decades.

Further, land management for nature recovery is to be incentivised through a new payments regime with the previous basic payment scheme (subsidies) to farmers being scrapped. Since 77% of the land in the UK is farmed, and industrial farming has had the biggest impacts on biodiversity loss, it makes sense to concentrate biodiversity recovery in that sector.

The transformations we need to implement in the farming sector include a rapid move towards agroecological approaches to food production, a removal of artificial fertiliser, insecticide, fungicide and herbicide use, zero-tillage to rebuild soil structure, carbon and soil health, cover cropping and undersowing with legumes, reinstatement of hedgerows and woods, land cover and crop diversification, and a general reduction in meat in the diet.

Given the poor state of farming economics, many farmers are considering giving up farming traditional crops altogether or moving to either regenerative agriculture or combining with the ‘farming’ of other assets such as carbon sequestration, flood risk mitigation, improved water quality, nature-based tourism, biodiversity net gain and nutrient offsets.

In addition, a number of major philanthropic initiatives to restore nature at scale through what is termed ‘rewilding’ have been established and these are creating some spectacular examples of nature recovery.

However, all corporates, not just in the farming and development sectors, have impacts on natural capital. Measures to require them to account for these impacts are gaining pace and the pressure is coming from investors and fund managers.

Since 2007 the World Economic Forum has evaluated the top five global risks to the world-wide economy. In 2020 biodiversity loss featured alongside climate action failure within this top five in terms of both likelihood and impact; green risks now dwarf those from the more familiar macroeconomic, geopolitical, societal and technological categories.

Recent analysis of our economic dependence on natural capital explains this trend. Some 55% of global GDP (even though GDP is seen as a poor measure of progress) relies on what nature provides. Company CEO’s are beginning to recognise that potentially they have a 55% undefined and unexplained risk of business failure as a result of their dependence on natural capital. Biodiversity is becoming as big a concern to companies as greenhouse gas emissions and climate change.

Many corporates are likely to go out of business in the future because they have not accounted or compensated for natural capital use through their supply chains; loss of biodiversity, a major component of natural capital, is a high risk to global business.

The UK’s largest fund management group, Legal & General Investment Management (LGIM), revealed in its recently released annual corporate governance report, that it pulled millions of pounds from eight companies and voted against their chairmen for breaching its climate policies last year. The asset manager divested from a string of companies originally included in its Future Worlds Funds, which are covered by LGIM’s climate change pledge.

They were excluded for issues including poor governance and climate disclosures, as well as for lobbying politicians on policies that risk accelerating climate change. Now the biodiversity crisis is similarly the focus of investor attention.

As investors press for transparent disclosure of impacts on natural capital (a global Taskforce for Nature-Related Financial Disclosure has recently been set up), a company will only achieve its investment potential if it can demonstrate net-zero or a gain in natural capital (known as being Nature Positive) as part of its normal operations. This is beginning to drive a demand for natural capital or environmental credits generated on land.

It is pretty much a certainty, given the current economic climate, that the public purse will not be able to fund the scale of interventions required to tackle the problems and make the transformational changes necessary. Which means that only by leveraging private investment into private land will we be able to achieve our ambitions to restore

nature, making our lives, our economy, our food and our ecosystems more resilient in the future. Government now needs to set corporates a mandatory financial reporting framework to give certainty to investors and critically to ensure that it doesn’t interfere in those markets.

At the Environment Bank we have seen a major increase in interest in this whole area, from both corporates wishing to improve their investment potential and their attractiveness to fund managers, and landowners and farmers wishing to bring forward sites for investment. Recognising the critical importance of biodiversity to our future is a start. But the time for just talking is over.