Given nature’s critical role in underpinning our health and prosperity, there is no time to waste in reversing its destruction. Here, we explain how we can begin to tackle the biodiversity crisis and the important part that investors can play.

Key points

  • Failure to address biodiversity loss carries enormous risks to human health and prosperity, given our dependence on nature
  • Addressing the crisis is especially challenging, given its complexity, diverse drivers and our limited understanding of natural processes
  • We can learn valuable lessons from confronting other environmental issues, including climate change
  • To respond effectively, we need to break biodiversity loss down into a set of specific sub-issues (or ‘Biodiversity Imperatives’) and address them using tailored solutions based on a ‘multi-local’ approach
  • Investors can not only contribute significantly to these efforts but also benefit from new business opportunities linked to the sustainable management of biodiversity

The destruction of our habitat

We are losing biodiversity at unprecedented rates, in real time. Humanity — which constitutes 0.01% of all living things by weight — has caused the loss of 83% of wild mammals and half of all plants. Species of animals and plants are being lost at between 1,000 to 10,000 times the natural rate of extinction, according to the World Wide Fund for Nature.

Moreover, US$44 trillion in economic value generation – more than half of global GDP – depends significantly on nature.1 We depend on nature for our food (crop pollination hinges on vulnerable insect, birds and other species), our livelihoods (billions of people earn their livings from forests, oceans and agriculture) and our protection (the world’s remaining mangroves protect millions of people from flooding). But the connections between our welfare and nature are frequently hidden: for example, how many of us know that 60% of all medicines are based on natural organisms?2

Our destruction of biodiversity is an act of self-harm. Just three crops, for example, provide almost 60% of all plant-based calories in human diets, and the diversity within those crops has declined dramatically. Reducing genetic variation reduces the resilience of species as environmental conditions change and increases extinction risks, particularly as the effects of climate change amplify.

The current rate of biodiversity loss is unsustainable and nothing less than a global emergency. To quote the Dasgupta Review, the central barrier to action is that “many of the processes that shape the natural world are silent and invisible,” resulting in a lack of accountability and a lack of agency in how our actions can improve it. To address these problems, we need collaboration and innovation in finding and scaling up solutions. Urgently.

US$44 trillion in economic value generation – more than half of global GDP – depends significantly on nature

Source: World Economic Forum, 2020

Those responsible for allocating private sector capital have a significant role to play. A high proportion of investments in physical assets is already constrained to some degree by environmental considerations, for example through environmental impact assessments. However, current practice often takes little or no account of ‘system-wide’ effects, such as the potential consequence for the health of wider ecosystems of the damage to a single site. Meanwhile, investors seeking to avoid harming biodiversity typically lack both the information and the tools for effective risk analysis. And the absence of economic tools to support the restoration of individual habitats (such as market mechanisms or valuation methods) is holding back the creation or expansion of significant investment opportunities in nature-positive solutions.

Confronting the issue: Some lessons from environmental action

Biodiversity loss is intrinsically hard to tackle, not least because we simply don’t understand nature well enough. We don’t even have a credible estimate of how many species exist on earth. In 2021, for instance, almost 300 new species of copepods – a waterborne group of small, shrimp-like crustaceans – were identified. These tiny creatures, which comprise most of the zooplankton that fish populations rely on, are critical to marine ecosystems, yet until last year we didn’t know they existed.3

It is hard to protect what we don’t understand, especially when biodiversity loss has so many drivers. These include changes in land and water use, the direct exploitation of nature, climate change, pollution and invasive species. This makes it difficult to attribute the causes of damage, or to identify actions to mitigate losses.

Addressing the issue is also complicated by the absence of clear, common definitions surrounding what constitutes biodiversity loss, and by the lack of metrics. Unlike climate change, for which greenhouse gas concentrations in the atmosphere are a measurable indicator of progress, biodiversity has no simple global measure and its losses are typically local and habitat dependent.

Despite this, some of the lessons learned from our experience of environmental management over the decades may serve as a guide to build upon in confronting the biodiversity crisis in five main areas:

  • Joint international action. Successful efforts to tackle environmental challenges have often involved multiple government stakeholders pooling their knowledge and resources, and agreeing collective action. One example is management of the River Rhine in western Europe, where neighbouring countries have collaborated to reduce river pollution. Through the International Commission for the Protection of the Rhine, agreements have cut levels of chemicals and metals in the river and led to a recovery in populations of fish and other wildlife.4
  • Effective market-based approaches. Many environmental problems reflect market failure, which can only be addressed by regulation or other government action. In other words, companies and/or investors acting without government policy support are highly unlikely to protect the environment. Thanks to the creation of markets shaped by effective environmental policy, private sector capital has backed the delivery of sustainable infrastructure and services in multiple sectors, including electric power, water and transportation. The policy of taxing environmentally harmful activities is well-established, from levies on motor fuel to plastic bags. For example, landfill waste in the UK fell by almost 80% in the two decades after a tax was introduced in 1996.5 The principle that those causing damage should pay to reverse or adapt to it could be applied to biodiversity loss, as it has to greenhouse gas emissions in the EU.
  • Useful metrics. Metrics are vital to tackling environmental issues. Only by tracking levels of pollutants in our air and water have we been able to inform and enforce policy solutions, such as the US Clean Air Act which has addressed certain hazardous emissions for five decades. Impax is part of emerging efforts, including the Task Force for Nature-Related Financial Disclosure, to create useful, verifiable metrics for measuring biodiversity impacts.
  • Impact assessments. We have much to learn from the well-established practice of environmental impact assessments (EIA), where the proposals to create or extend physical infrastructure and other assets are subjected to a review of their potential to damage ecosystems or cause pollution. Tools and techniques used for EIA could be readily extended to encompass a broader array of biodiversity challenges.
  • Blueprints for action. Finally, lessons can be applied from the success of policy roadmaps that have guided long-term changes in corporate behaviour and investment linked to environmental goals. For instance, in many countries the transition towards renewable power generation has been galvanised by national targets, supportive policies, tax incentives and tighter regulations on polluting alternatives.

Charting a course forward

We are late in waking up to the risks of biodiversity loss, even relative to our response to climate change. Scientists have already concluded that four of nine planetary boundaries, within which humanity can continue to thrive, have now been crossed due to human activity, with biodiversity loss and extinction at the highest risk of all.6

Although the search for answers to this challenge is at an early stage, we should seize the opportunity offered by discussions on the proposed Global Biodiversity Framework at the UN Convention on Biological Diversity’s COP15 in China later this year. We believe there are some fundamental principles that could lay the foundation for progress in stemming biodiversity losses:

  • Breaking down the challenge. To confront biodiversity loss effectively, we need to disaggregate the umbrella topic into a set of specific ‘Biodiversity Imperatives’ for analysis. The understanding of each sub-issue should inform the selection of policy priorities as well as the design of programmes. To conserve species threatened by extinction, the US Endangered Species Act (ESA) of 1973 obliges federal, state and local agencies to define and implement protection plans specific to individual habitats and species. Through effective coordination across jurisdictions, the ESA can be credited with stemming biodiversity losses: by 2020, 91 species listed as threatened and endangered have recovered well enough to be removed from the list.7
  • Taking a ‘multi-local’ approach. Many parts of the world have local biodiversity or ecosystem issues in common, and hence a ‘multi-local’ approach, in which multiple policymakers coordinate their actions, can be effective. A multilateral partnership to address the loss of coral reefs, which support one-quarter of marine life and add an estimated US$2.7 trillion annually in ecosystem services, is one example of this. Through the International Coral Reef Initiative, 44 countries that are home to three-quarters of the world’s coral reefs have adopted a clear set of indicators that measure their health, integrity and function, with a monitoring network to report on their condition.8
  • Creating a shared vision. Just as scenario analysis of what a low-carbon economy could look like has helped direct climate policy, we now need a realistic ambition for a global society that does not destroy its natural environment. Such a vision should help us identify nature-positive solutions, for example new markets linked to ecosystem services. Where developing economies are important custodians of natural capital, they must be at the heart of solutions. Key to this will be a shared vision of the economic and financial opportunities that can be generated by addressing biodiversity loss. Initiatives like the Natural Capital Investment Alliance, of which Impax is a member, can help catalyse and scale-up nature-based opportunities.
  • An effective role for investors. To reduce and potentially reverse biodiversity loss will require effective collaboration between the public and private sectors, so those responsible for financial institutions have a vital role to play in supporting the development of solutions. In parallel, investors should seek to analyse and manage biodiversity-related risks and consider opportunities. They should also target progress through engagement activities and proxy voting. Alongside the international commitment signed by over 140 nations to halt and reverse forest loss by 20309, a significant investor-led initiative was launched to tackle commodity-driven deforestation.10 More than 30 financial institutions, including Impax, have committed to use their best efforts to eliminate agricultural commodity-driven deforestation activities at the companies they invest in or lend to by 2025.

We are only in the foothills of developing the policy frameworks that adequately addresses the challenge of biodiversity loss but the window for taking effective action is closing. As we approach the COP15 biodiversity summit, we’ll be exploring the risks this global issue poses to investors as well as the role that policymakers, companies and financial institutions can play in addressing this grave threat to our prosperity and wellbeing.


About our image

The forest owlet is endemic to the forests of central India and faces the threat of habitat loss through deforestation. It has been listed as Endangered on the International Union for Conservation of Nature Red List since 2018, as the population is estimated at less than 1,000 mature animals.


1 World Economic Forum, 2020. WEF_The_Future_Of_Nature_And_Business_2020.pdf (weforum.org)

2 Sunil Mathur and Clare Hoskins, 2017. Drug development: Lessons from nature (Review) (spandidos-publications.com)

3 Natural History Museum, 2021. Dinosaurs and meteorites: Museum scientists described 552 new species in 2021 | Natural History Museum (nhm.ac.uk)

4 UNESCO Institute for Water Education, 2010. International Cooperation on the River Rhine

5 Office for National Statistics, 2018. Five facts about environmental taxes – Office for National Statistics (ons.gov.uk)

6 UN Framework Convention on Climate Change, 2015. Scientists Say Planetary Boundaries Crossed | UNFCCC

7 Congressional Research Service, March 2021. The Endangered Species Act: Overview and Implementation

8 World Economic Forum, 2020. How the world is coming together to save coral reefs | World Economic Forum (weforum.org)

9 The Glasgow Leaders’ Declaration on Forests and Land Use, 2 November 2021

10 Commitment on Eliminating Agricultural Commodity-Driven Deforestation, 2 November 2021

IMPX-20220407-1039

Ian Simm

Founder & CEO

Ian Simm is the Founder and Chief Executive of Impax Asset Management Group plc, one of the world’s leading investment managers dedicated to investing in the transition to a more sustainable economy. Prior to Impax, Ian was an engagement manager at McKinsey & Company advising clients on environmental strategy.

Outside Impax, Ian is a member of the UK government’s Net Zero Innovation Board, which provides strategic oversight of public sector funding of energy innovation programmes, and is a board member of the Institutional Investors Group on Climate Change, the European membership body for investor collaboration on addressing climate change. He is also a commissioner with the Energy Transitions Commission, a global coalition of leaders developing transition roadmaps to achieve net-zero emissions. Between 2013 and 2018, he was a board member of the Natural Environment Research Council (NERC), the UK’s leading funding agency for environmental science. He supports charities in the clean energy, healthcare and a range of scientific and environmental sectors. 

Ian has a first-class honours degree in physics from Cambridge University and a Master’s in Public Administration from Harvard University. In the last century he initiated and led an expedition to complete the first summer crossing of the Sahara Desert by tandem bicycle.

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Julie Gorte, Ph.D.

Senior Vice President for Sustainable Investing

Julie Gorte is Senior Vice President for Sustainable Investing at Impax Asset Management LLC, the North American division of Impax Asset Management Group and investment adviser to Pax World Funds.

She oversees environmental, social and governance-related research on prospective and current investments as well as the firm’s shareholder engagement and public policy advocacy. Julie is also a member of the Impax Gender Analytics team.

Prior to joining the firm, Julie served as Vice President and Chief Social Investment Strategist at Calvert. Her experience before she joined the investment world in 1999 includes a various number of roles. Julie spent nearly 14 years as Senior Associate and Project Director at the Congressional Office of Technology Assessment. Additionally, she has held the roles of Vice President for Economic and Environmental Research at The Wilderness Society, and Program Manager for Technology Programs in the Environmental Protection Agency’s policy office and Senior Associate at the Northeast-Midwest Institute.

Julie serves on the boards of the Endangered Species Coalition, E4theFuture, Clean Production Action and is the board chair of the Sustainable Investments Institute.

Julie received a Ph.D. and Master of Science in resource economics from Michigan State University and a Bachelor of Science in forest management at Northern Arizona University.

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Chris Dodwell

Head of Policy and Advocacy

Chris is a climate change and environmental policy expert with over 25 years’ public and private sector experience. He is responsible for managing Impax’s engagement in the development of policy issues and providing insights on policy to the firm’s investment teams.

Before joining Impax in 2019 Chris worked at Ricardo Energy & Environment for eight years as Director of Climate Change, Clean Growth and Strategic Partnerships. Here he was responsible for overseeing key projects in the aforementioned areas as well as building relationships with clients in the public and financial services sectors. Prior to this he worked for 10 years at the heart of the UK Government’s work on climate change, including leading the UK’s implementation of the EU Emissions Trading System and heading the UK Delegation to the United Nations Framework Convention on Climate Change (UNFCCC). Chris began his career as a solicitor at Freshfields Bruckhaus Deringer where he worked on a variety of civil, criminal and public law litigation relating to the impact of pollution on the environment and human health.

Chris graduated with a BA Hons in Classics from the University of Cambridge in 1990 and later went on to achieve a Master of Laws in Environmental Law from University College London in 2002.

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