Nature's decline threatens $10 trillion global GDP by 2050

There is a critical impact of biodiversity loss on the economy and the opportunities in sustainable investing.

Half of the world's GDP is moderately or highly dependent on nature. If nothing changes, biodiversity lost at the current pace can drain approximately $10 trillion from a global economy by 2050, Tina Chang, Associate Director of Sustainable Investing at Fidelity International, said. 

Chang emphasised the intrinsic link between the health of the natural world and the stability of financial markets. "The bottom line is nature is the bedrock to our economies, and nature loss impacts cannot be overestimated," Chang stated. This statement underlines the urgent need for the global economy to address the risks associated with the degradation of nature.

She pointed out that all scenarios leading to net zero emissions by 2050 rely on nature for reducing emissions and providing carbon sinks necessary to offset residual emissions. This underscores the role of nature not just in ecological balance but as a cornerstone in achieving climate change goals.

Chang argued that beyond mitigating risks, there exists a plethora of investable solutions aimed at tackling the drivers of climate change and natural loss. These opportunities range from renewable energy and electrifying transportation to waste solutions and sustainable fish farming. 

"We do expect more innovative solutions will come online as investors seek investment opportunities," Chang noted, pointing towards a future where sustainable investments play a pivotal role in shaping a resilient economy.

She highlighted the increasing regulatory risks, particularly from the European Union's impending ban on forest risk commodities linked to deforestation. 

“Forest risk commodities linked to deforestation will be banned starting from the end of December this year. And that will certainly put another layer of considerations into the investment decision making process,” she explained.

Despite an improving trend in deforestation within Asia, the region's consumption markets have a high risk of driving deforestation in other parts of the world, such as through soy imports into China and India potentially leading to deforestation in Brazil.