The nexus between climate change and biodiversity

Projections indicate that unless emissions are rapidly reduced, up to 50% of species¹ are forecast to lose most of their suitable climate conditions by 2100 under the highest greenhouse gas emissions scenario². With the COVID-19 virus “spilling” from animals to humans, the pandemic has underlined the connection between people, companies, wildlife and biodiversity.

As humans diminish biodiversity by cutting down forests and building more infrastructure, we increase the risk of disease pandemics such as COVID-19. Many ecologists have long suspected this, but as academic studies including from University College London³ are revealing, while some species are going extinct, those that tend to survive and thrive — rats and bats, for instance — are more likely to host potentially dangerous pathogens that can make the jump to humans.

Analysis of around 6,800 ecological communities on six continents adds to a growing body of evidence that connects trends in human development and biodiversity loss to disease outbreaks.⁴ 

This phenomenon is likely to be the direct result of increased contact between humans, wildlife and livestock, as people move into undeveloped areas. These interactions happen more frequently on the frontier of human expansion because of changes to the natural landscape and increased encounters with animals. Whilst biodiversity conservation may not be considered critical to a company’s SLO right now, we anticipate that it will increasingly be on the agenda, as we emerge from and reflect on the pandemic. 

As responsible investors with a long-term focus, it is important for us to understand the impact of biodiversity loss on the companies that we invest in and their contributions to the problem. At First Sentier Investors we consider that we have an important role to play in the implementation of SDG Target 12.6 to encourage companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle. Additionally, through our current work on biodiversity we also hope to contribute to SDG Target 14.1 to prevent and significantly reduce marine pollution of all kinds.

One practical way we are addressing this issue is through an investor collaboration on microplastics. In collaboration with the UK’s Marine Conservation Society, we are leading a programme to engage with the manufacturers of domestic and commercial washing machines to fit filters to their products, as a standard feature, that prevent plastic microfibres entering the world’s marine ecosystems. This technology is available today, but only used by a handful of companies.

Globally more than 840 million domestic washing machines are in use, with one kilogram of washing able to release up to 1.5 million fibres⁵. Across the UK, for example, 9.4 trillion fibres could be released in one week alone⁶. With the advent of technological solutions to fit filters in washing machines, there are now solutions to prevent this serious pollution risk. However, adoption is slow, and we have identified a need to apply group pressure to manufacturers in order to encourage adoption.