It’s Not Just About The Trees: Why Biodiversity Is Equally Important
In November 2021, ASN, a Dutch bank, created the ASN Biodiversity Fund for impact investment and began looking at over 43,000 listed companies worldwide and stumbled onto something shocking, only three of those listed companies do not harm biodiversity in any way.
That’s 0.01% of listed companies.
Since the establishment, and the call for more biodiversity, the fund has grown significantly. It has around 28 million Euros between six funds and bonds in Europe, Latin America, and the US. It consists of over 70 majority privately-held firms that are net-zero on biodiversity or improving biodiversity through their business practices. But even so there isn’t much representation, as these companies are small businesses that have only started in the last five to ten years.
Why ASN is looking into biodiversity is simple: there are plenty of great opportunities to invest in biodiversity. The tricky part is these companies are small, unlisted, and aren’t easily accessible.
But What About Companies That Are Planting Trees?
In ASN’s search, they did find several companies that have greener initiatives. However, it’s worth looking at their main focus. In the case of Euronext-listed fund companies, the focus is mostly on sustainable forestry, agroforestry, sustainable seas and fisheries, and ecotourism.
And while those focuses are important, biodiversity is something more profound. Biodiversity is about the food that we eat, the shelter we have, our clothes and other materials. Our economy depends on biodiversity as it provides renewable sources that fuel our needs, the ecosystem, medicine and science. It is invaluable for its cultural and aesthetic value as well.
Another way to look at it is if the soil isn’t fertile enough for trees to grow, there is no sense in protecting or planting more trees. If a change to the climate in a biome results in the extinction of a species, then we’re losing out on a valuable resource.
Because biodiversity is the backbone that we existentially rely on, harming biodiversity will only harm humanity long-term. And no amount of tree planting or protecting the seas will do any good.
How Can Companies Make An Impact?
First of all, if any business owner knows of a company that doesn’t harm biodiversity, contacting ASN impact investors would be an effective first impact step. Beyond that, companies can take the same idea as ASN has stated before: biodiversity improvements are something that not many companies have tried to pursue.
The tricky part is how to measure biodiversity in a meaningful way. The reason being is that measuring a company’s impact on biodiversity loss or gain is a hot topic amongst investors. There are multiple variables involved. Fortunately, ASN Impact Investors has been open about the development of their metrics.
They have been working with PRé Sustainability and CREM, Dutch-based consultancy agencies, in order to develop this metric. Through their efforts, ASN has a large, open-source database of scientific data which produces an estimate of biodiversity loss in hectares.
While the tool isn’t perfect and is still in development, from testing ASN knows that most listed companies are harming biodiversity rather than sustaining or regenerating it.
What Can Investors Do To Make An Impact?
The ASN Biodiversity Fund is the only one of its kind on the market right now and investors know that investing in this fund will guarantee their investments are going towards companies that aren’t harming biodiversity in their daily business practices.
Aside from that, investors can look to support these companies directly. As mentioned, many of these companies are quite small, but out of the three mentioned earlier, one has been disclosed thus far. It’s an Australian-listed firm called Wide Open Agriculture. The goal of the company is to restore degraded agricultural land through regenerative farming tactics. These tactics allow the soil to absorb more carbon, leverage scarce water resources efficiently, and increase overall soil fertility over the long-term.
Beyond that, the company produces oat milk and plant-based protein made from lupins, along with other products which investors can support directly through purchasing. Efforts as simple as ‘being a customer’ or investing directly in these companies are the best option for investors at this moment.
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