In addition to a looming climate crisis, we are facing a nature crisis. The two are inextricably linked as we cannot address global warming, deforestation, and biodiversity loss in isolation.
A changing climate threatens natural ecosystems, while nature loss exacerbates climate change by reducing the ability of ecosystems to store carbon.
"What's more, nature is critical to the global economy," says Catherine Ogden, Manager, Sustainability and Responsible Investment at LGIM. "More than half of the world's GDP is moderately or highly dependent on nature."
The World Bank estimates that a partial ecosystem collapse could cost 2.3% of global GDP.
"We know that investment in climate and nature-based solutions is key to mitigating these risks," says Ogden. "Investors and the companies in which they invest should look to take steps to integrate - where relevant - nature considerations into climate commitments, strategies and transition plans."
Analysing and addressing systemic issues such as deforestation risks within portfolios, company operations and supply chains is an important first step, she adds.
Tacking these complex issues entails challenges like insufficient reporting and data; but while assessing the severity of risks and the related opportunities is complex for companies and investors, this is no excuse for inaction, says Ogden.
For more on the risks posed to biodiversity, and LGIM's approach to combatting them, read the firm's exclusive Spotlight guide by completing your details in the form below
