Biodiversity: the environmental and economic impact

During a recent holiday in Sri Lanka, I was struck by the island’s wild beauty. From snorkelling through coral reefs and exploring spice plantations to hiking through forests and going on safaris, each experience revealed the incredible variety of life that exists in nature. Even the leeches we encountered (initially very unwelcome) turned out to be a reminder of nature’s complexity. I later learned they’re used in medicine to aid wound healing and improve circulation. It was a small but powerful example of how even the most overlooked species can have real-world value.

This got me thinking more deeply about biodiversity, not just as a concept, but as a force that underpins both our environment and our economy. From towering trees and colourful birds to the microorganisms beneath our feet, biodiversity is the foundation of ecosystems that support industries, supply chains, and ultimately, financial markets. The more I explored, the clearer it became that biodiversity isn’t just an environmental concern, it’s an economic one.

Over half of global GDP is directly dependent on nature and the services it provides. Consider food production – one-third of global crops rely on pollinators like bees and butterflies. Without them, yields would fall, affecting not only farmers but also food manufacturers and retailers. Similarly, natural pest control from insects like ladybirds reduces the need for chemical pesticides, supporting more sustainable agricultural practices and lowering input costs for agribusinesses.

Biodiversity also plays a critical role in public health. Around 70% of infectious diseases, including Ebola and COVID-19, are zoonotic, meaning they can be transmitted between animals and humans. As natural habitats shrink due to deforestation and urbanisation, the risk of disease transmission increases. This has direct implications for the pharmaceutical industry, which must respond to emerging health threats while also relying on nature for innovation. In fact, 25% of modern medicines are derived from rainforest plants, and 70% of cancer treatments are inspired by natural compounds. Protecting biodiversity, therefore, isn’t just about conservation, it’s about safeguarding the pipeline of future medical breakthroughs.

Despite its importance, biodiversity is under threat. Human activity, through habitat destruction, pollution, overexploitation, and climate change, is accelerating specie loss at an alarming rate. One million species are at risk of extinction in the coming decades. This isn’t just a crisis for conservationists, it’s also a risk for investors. Disrupted ecosystems can lead to supply chain breakdowns, increased regulatory costs, and reduced resilience in sectors from agriculture to healthcare.

The role of sustainable investing in protecting biodiversity

This is where sustainable investing comes in. By integrating biodiversity considerations into investment decisions, we can help protect the natural systems that underpin long-term economic stability. Companies that depend on natural resources, whether they’re in food production, pharmaceuticals, or consumer goods, are increasingly being evaluated on how they manage biodiversity-related risks and opportunities.

Our sustainable investment portfolios are aligned with the United Nations Sustainable Development Goals (UN SDGs), including those focused on life on land and below water. These goals recognise that biodiversity is essential to solving interconnected global challenges, from food security to climate resilience.

Just as those leeches in Sri Lanka reminded me that every organism has a role to play, sustainable investing reminds us that environmental and economic health are deeply intertwined. Investing with biodiversity in mind isn’t about sacrificing returns, it’s about recognising the true value of nature in building resilient, future-ready portfolios.

Sources:

Five Reasons to Protect Biodiversity – Legacy Landscapes Fund

What is Biodiversity and Why Does It Matter For You? – Tualatin Soil and Water Conservation District

Biodiversity loss: what is causing it and why is it a concern? | Topics | European Parliament

SDG15: The essential links between biodiversity and sustainable development | For Researchers | Springer Nature