5 Factors Protecting Biodiversity in Emerging Markets

December 9, 2020 | Jim Ottewill

Latin America is one of the world’s biggest sources of biodiversity. 

With more than 35 percent of the world’s species and three of the top five countries (Brazil, Colombia, and Mexico) featuring some of the largest populations of bird, amphibian, mammal, reptile, fish, and plant life, protecting these areas is crucial for securing the world’s environment. 

Add the Carribean to Latin America and figures from the United Nations Environment Program (UNEP) show these combined regions host around sixty percent of global terrestrial life. 

We already know the importance of biodiversity as a contributor to the world’s GDP. According to the World Economic Forum’s recent Nature Risk Rising Report, more than half of the world’s GDP ($44 trillion) is highly or moderately dependent on nature. 

While the threat of climate change means biodiversity is at high risk, biodiversity itself also offers an opportunity to reduce its impact. Redsand Ventures’ Colleen Becker caught up with Daniel Perdomo-Rodriguez from the Carbon Trust to find out more on how biodiversity can be protected in emerging markets.

Follow the money

How to stop biodiversity loss? You need to follow the money to understand capital flows and what needs to be done to ensure any goods or materials are used in more environmentally-friendly ways. Doing this will also enable you to understand how sustainable finance mechanisms and instruments can accelerate the shift of widespread adoption of sustainable practices. This is important for future-proofing economies to prevent further biodiversity loss and land degradation to assure that our economy model fits within the environmental boundaries of our planet.

ESG will dominate the conversation around biodiversity loss

There are seven main strategies ranging from impact investment to positive or best in class screening to stop biodiversity loss. Two of the most common are negative or exclusionary screening and ESG. 

We anticipate that ESG will dominate the market in the future because it provides a common language and framework for investors to discuss and create the tools needed to shift the capital and financial flows towards sustainable practices, and the EU Action Plan on Sustainable Finance has the potential to boost the adoption of ESG standards on a global scale

Protecting biodiversity must include the whole supply chain

In Jamaica, large areas of the country feature mangroves. These areas of forest demonstrate the relationship between climate change and biodiversity. Not only do they absorb large amounts of carbon dioxide but they also protect populations from heavy rain and hurricanes. 

Ensuring these are protected by adopting sustainable  practices will have a positive impact on securing the future of these forests and protecting the environment. This must be applied not just by investors but everyone across a supply chain – from growers and producers to traders and sellers too. The ESG standards are applicable to all the stakeholders across the supply chain aming to have comparable metrics. 

Data is an essential tool 

The Latin American market is in a nascent stage, but growing fast, adopting business models that combine fintech and sustainable finance trends. And just like in the West, data is driving the uptake of these innovations. Without a good perspective on data, banks, investors, clients and regulators cannot make smart decisions or think sustainably.

This trend has transferred as new market players go global and offer B2B and B2C solutions to shift capital flows to sustainable projects.

Initiatives are moving to protect soft commodities

On a global level, the most relevant initiative is led by the UN in their Sustainable Development Goals 15 – life on land steering the direction to protect biodiversity. From a financial angle, the Soft Commodities Compact initiative, jointly launched by the Banking Environment Initiative and the Consumers Good Product, focuses on Soft Commodities (soy, palm oil, beef, paper, pulp and timber) that have a significant impact upon deforestation and biodiversity, aiming to achieve zero net deforestation. 

Watch the video interview with Daniel Perdomo-Rodriguez below:

Further reading: 

5 Things You Must Know about Biodiversity as an Asset Class

5 Reasons Why We Must Value our Oceans as a Blue Biodiversity Asset Class


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