It’s time to be invested in animals: Why we should be investing in biodiversity and natural capital.

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Biodiversity is defined by the Cambridge University Dictionary as “the number and types of plants and animals that exist in a particular area or in the World”[1] and natural capital is defined by the Natural Capital Forum as the “World’s stocks of natural assets, including […] all living things”. Natural capital, therefore, includes the land we grow food on, the water we drink and the animals, like elephants, that we depend on to disperse seeds for pollination. Natural capital provides humans with “ecosystem services”, for example the bees pollinating plants which produce food, that we do not pay for, but often simply take for granted.

Why are biodiversity and natural capital something we need to be thinking about now? Well, much like financial capital, if we utilise too much we sink into a cycle of debt, over extending our use of the planet and the natural capital it provides us also causes a debt, one with potentially extreme consequences, like trophic collapse and species extinction either through direct or indirect overuse.

Putting the cost into context:

Firstly, it is necessary to have some context before we consider what the value of animals for us is as individuals, but also us as a society dependent on ecosystem services and natural capital.

The G7 report, Biodiversity: Finance and the economic and business case for action (2019)(the “G7 Report”): clarifies that biodiversity loss is among the top global risks to society and that we are about to face the sixth mass extinction of biodiversity[2]. This was also reflected in the Global Risks Report by the World Economic Forum, which identified biodiversity loss as a top five risk for the first time in 2020.[3] According to WWF, each hour 3 species of animals and plants go extinct, some we know of and some which remained undiscovered. We have lost 1/3 of all mangrove forests and 1/5 of all global coral reefs and the collapse of these ecosystems take with them the biodiversity living within them[4]; this is reiterated by the G7 Report which explains that between 2010-2015, natural forests declined by 6.5 million hectares per year, a space larger than the UK.

WWF’s Living Planet report, a biennial report takes account of the state of the planet and the Living Planet Report 2020 posed for a bleak and shocking read. From 1970 to 2016, there was an average 68% decline in the Living Planet Index (data which monitors living vertebrate species), meaning that mammals, birds, reptiles and fish have dropped by more than two thirds in just over 45 years. What were the main threats… habitat loss, environmental degradation and over-exploitation of natural capital and ecosystem services.[5] The result is that we are drawing down 50% or more of nature’s natural capital than can be replenished[6]. CIMA, in their report, “Accounting for natural capital: the Elephant in the boardroom”, noted that by 2030 we will need the natural capital equivalent of two planets to sustain ourselves and the only way to do so will be through drawing down the reserves, rather than living off of the “income” of the Earth, which would be living within a sustainable remit[7].

The G7 report explains that ecosystem services are worth an estimated USD 125-140 trillion per year, more than 1.5x the size of global gross domestic produce and the cost of allowing biodiversity to collapse is equally eye-watering with an estimated loss of USD 4-20 trillion per year between 1997-2011 in ecosystem services due to land-use change and a further USD 6-11 trillion in land degradation. As the UN PRI Investor Action on Biodiversity: Discussion Paper makes clear, biodiversity is vital for stable ecosystem service provision [and] biodiversity loss and degradation can reduce the quantity, quality and resilience of those ecosystem services.

What are animals worth?

From one of the largest animals on the planet to one of the smallest insects, below I look at the financial value of both elephants and bees and their impact on natural capital and ecosystem services.

Elephants:

African forest elephants are now recognised by the Convention on the International Trade in Endangered Species of Fauna and Flora (CITES) and are regarded as critically endangered due to habitat loss and poaching for their ivory. However, the article by Ralph Chami, connel Fullenkamp, Thomas Cosimano and Fabio Berzaghi, The Secret Work of Elephants, which looks at how the African forest elephant is of paramount importance to sustaining the African forest habitats, suggests that the protection of African forest elephants might increase when people realise the value they hold with regards to fighting climate change.

This is because African forest elephants help to facilitate carbon sequestration by thinning younger trees, which compete for space, light and water, leaving those left behind to have an increased chance of reaching maturity. The “late succession” trees then store a greater amount of carbon in their tissue and the article highlights that if African forest elephants were returned to their previous range and size across the African continent, that this could increase carbon capture: “Since the former range of African forest elephants was 2.2 million square kilometres, each of which comprises 100 hectares, and forest elephants are now at about 9 percent of their pre-poaching population, carbon capture from a recovery of these elephants could be equivalent to more than 6,000 metric tons of carbon dioxide per square kilometre.” The report then considers the average market price of the carbon dioxide captured by the 2.2 million square kilometres that could be covered by African forest elephants and found a “present value of over $150 billion” for the carbon sequestration services of the African forest elephant, meaning each elephant is worth $1.75 million alive.[8]

However, African forest elephants are regarded as critically endangered on the ICUN Red List as of March 2021[9] and fall under Appendix I CITES due to their population declining by more than 86% over 31 years. One of the main causing is due to poaching for the commercial trade of their ivory, an activity which is illegal under Appendix I of CITES. The authors of The Secret Work of Elephants explain that the ivory poached from African forest elephants often fetches in the region of USD 40,000 or a pound of ivory fetching USD 1,500 on the illegal market. The value of an elephant alive is almost 45 time greater than the cost of an elephant dead for its ivory.

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Bees:

12 species of bee are currently endangered under the IUCN Red List and the European Red List of Bees report, which considers the IUCN Red List on the status of European species found that 9.2% of the bees (1,965 species in Europe) are threatened in Europe and within the EU 27, 9.1% are threatened with extinction.[10] Honey bees declined by around 60% in the US between 1947-2008.[11]

Bees provide us with roughly USD 600 billion worth of global crops per year. The article: Tiny and Vital-how we must preserve bees to save our crops, explains that bees are essential for pollination and that of the 75% of agricultural crops which depend on pollination, most of this work is done by the humble bee.

Honey bees are one of the key pollinating bee species, particularly for almonds which can only be pollinated by honey-bees, as well as blueberries and watermelon. According to the USDA, one colony of bees is worth 100 times more to the community than to a beekeeper. Honey is also a by-product of pollination, but has its own market worth over USD 300 million in 2013.[12]

The European Red List of Bees explains that bee pollination has benefits for humans, including better production of crops, better crop quality and prolonged shelf-life, improved yield stability and often higher commercial value for farmers and that some crops can only be pollinated by certain species of bee. The loss of bees then could lead to the loss of certain plant species, which could lead to a reduced selection of produce for humankind. The loss of bees will also result in fewer fruit and vegetable, leading to increased levels of malnutrition and increased levels of disease, which will create a knock-on impact on already strained health-care services and have incredible financial toll.

Again, it is clear that the value of bees alive greatly outweighs the value of a world without bees and the services they provide to us for free.

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The laws which will encourage investing in animals and their futures:

We have seen many laws, such as the Paris Agreement, the Kyoto Protocol, the Taskforce on Climate-Related Financial Disclosures (TCFD) etc. which have encouraged investors to invest in climate change mitigation, but now we should be looking to the future and how to prevent large scale extinction caused by direct and indirect overuse of natural capital resulting in biodiversity depletion. It is time to start realising that there is value, both financial and non-financial in investing in the protection of animals.

The new Taskforce on Nature-related Financial Disclosures (TNFD), which is a new global market-led initiative aiming to provide financial institutions and corporates with a complete picture of their environmental risks and opportunities[13], following in the footsteps of the TCFD. The TNFD is only in its early stages, but in June 2021, it received backing from the G7 finance ministers, who support reporting on nature-related financial disclosures and encouraging corporates to be more transparent on their environmental impact, which of course links to their impact on biodiversity. The TNFD – Nature in Scope report states that the purpose of the TNFD is: “The goal of the TNFD is to provide a framework for organisations to report and act on evolving nature-related risks, in order to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.”

A coalition of financial institutions present at the Convention on Biological Diversity, the first part of which took part in October 2021, with assets of EUR 12 trillion have committed to protect and restore biodiversity. President Macron, a Party at the Convention, noted the need to commit 30% of France’s climate related funds to restore biodiversity and the British government also pledged a similar commitment. While it will remain to be seen if these funds are in fact committed and committed effectively and efficiently, it is still a good place to start attributing a value to our natural capital from a positive perspective.

Not only can governments align their nation’s commitments to improving the situation for biodiversity, PETA has written about how even individuals can be involved in ensuring that their investments align with their values[14] and FAIRR also is the largest growing investor network focusing on ESG risks in the global food sector and how investors are moving away from investing in concentrated animal agriculture[15].

Conclusion:

While investing in biodiversity and investing in a way that encourages positive change and the sustainable prosperity of natural capital is a relatively new concept, it is clear that it is gaining traction and is only likely to increase in momentum with new legislative mechanisms such as the TNFD and the Framework on Biological Diversity stemming from the Convention on Biological Diversity.

What is clear though is that animals have so much more than just a financial value, they are part of the fabric of life on Earth and they deserve protection for their own sake, rather than just the financial value they can provide humans and we should recognise this while also working towards financial and investing systems which benefit animals and financial growth. However, money makes the modern world go around and if attributing financial value to our priceless natural world is a step towards protecting it, we cannot look upon the first commitments to do so with scepticism.

[1]https://dictionary.cambridge.org/dictionary/english/biodiversity [2]https://www.oecd.org/environment/resources/biodiversity/G7-report-Biodiversity-Finance-and-the-Economic-and-Business-Case-for-Action.pdf [3]https://www.weforum.org/reports/the-global-risks-report-2020 [4]https://www.worldwildlife.org/projects/the-natural-capital-project [5]https://www.zsl.org/sites/default/files/LPR%202020%20Full%20report.pdf [6]https://www.cimaglobal.com/Documents/Thought_leadership_docs/Sustainability%20and%20Climate%20Change/CIMA-accounting-for-natural-capital.pdf [7]https://www.cimaglobal.com/Research--Insight/Accounting-for-natural-capital-the-elephant-in-the-boardroom/ [8]https://www.imf.org/external/pubs/ft/fandd/2020/09/how-african-elephants-fight-climate-change-ralph-chami.htm [9]https://www.iucn.org/news/species/202103/african-elephant-species-now-endangered-and-critically-endangered-iucn-red-list [10]https://ec.europa.eu/environment/nature/conservation/species/redlist/downloads/European_bees.pdf [11]1 https://www.greenpeace.org/usa/sustainable-agriculture/save-the-bees/ [12]https://www.forbes.com/sites/bayer/2019/10/14/the-value-of-pollinators-to-the-ecosystem-and-our-economy/?sh=c5e6ae27a1d6 [13]https://tnfd.info/news/g7-backs-new-taskforce-on-nature-related-financial-disclosures/ [14]https://www.peta.org/issues/animals-used-for-experimentation/cruelty-free-investments/ [15]https://www.fairr.org/