The tie between climate change and biodiversity
Climate change and the loss in biodiversity are interrelated. Both threaten nature, human health and well-being, and result from human activity. Both present risks for the financial sector. Action to prevent biodiversity loss also may help to achieve global climate goals, and vice versa.
- What COP26 may mean for institutional investors
- How renewable energy is stranding coal
- Coal consumption is on track to rise in 2021
- Why banks are critical to reaching global climate goals
- The latest emissions gap report shows the need for bold action
- Investors may need all the tools at their disposal
- Why net-zero matters for investors
- The focus on net-zero is intensifying
- How investors can drive the transition to net-zero
- How net-zero differs from zero carbon emissions
- Estimated costs and opportunities of climate change
- The tie between climate change and biodiversity
Climate change and biodiversity
Climate change and biodiversity loss are interconnected. Human destruction of natural ecosystems can contribute to climate change by eliminating forests, wetlands and grasslands that absorb and store greenhouse gas emissions. The changing climate itself can do the same through desertification and the melting of Artic tundra. Actions take to protect biodiversity may also have the advantage of easing climate change.
Investors are increasingly adapting approaches established for measuring and managing climate risk to address biodiversity loss. Policymakers and other stakeholders from across the world plan gathered in Kunming, China over five days in October for the first of a two-part series of meetings that aim to counter the loss of biodiversity. Delegates adopted the Kunming Declaration, which commits nations to negotiate an effective framework to reverse biodiversity loss. The declaration recognizes that the causes of such loss include climate change.
Case study: Unpacking the soy value chain
How different countries, traders and consumers are exposed to deforestation
Unsustainably harvested soy is one of the most prominent drivers of deforestation. MSCI has identified the major soy producer and consumer countries as well as corporate processors, traders and users, and examined their efforts to eliminate deforestation across the soy value chain. The analysis focuses on the food products industry because more than 70% of soy production goes into animal feed, with the remainder split between other types of food production and biofuel.The size of segment below is relative to the contribution of countries or companies to the production, export or consumption of soy. Click on each slice to see further details on the level of forest loss for major soybean producing countries, and how corporate processors, traders and users of soy address concerns of deforestation across the value chain.
Producers, processors & traders
Consumers & users
Source: MSCI ESG Research, as of Nov. 30, 2020
For producers, processors and traders chart (left chart):
Inner circle is made up of producer countries: country contribution in % of global soybean production (2019/2020). Source: Statista.
Outer circle is made up of corporate processors and traders: company’s processed and traded soy volume in % of total soy exports (2017). Source: Global Market Report: Soybeans, International Institute for Sustainable Development, October 2020.
For consumers and users chart (right chart):
Inner circle is made up of consumer countries: country contribution in % of global soybean import (2019/2020). Source: Statista.
Outer circle is made up of corporate users: company contribution in % of total revenues (FY2019) reliant on soy* from MSCI ACWI Index food products constituents, as of November 24, 2020. Source: MSCI ESG Research.
*Refers to both direct use (soy as a product or ingredient in the food product; e.g., soy milk, soy sauce) and embedded/indirect use (soy used in feed mix for animal food products and ingredients; e.g., dairy, meat, eggs or farmed fish).
Biodiversity and Climate Change. This June 2021 report from the IPCC and the Intergovernmental Platform on Biodiversity and Ecosystem Services details why addressing the synergies between mitigating biodiversity loss and climate change offers the opportunity to address global development goals.
The Taskforce on Nature-related Financial Disclosures. An initiative founded by the UN Development Programme, the UN Environment Programme Finance Initiative and the World Wide Fund for Nature is developing a framework for financial reporting on nature-related risks.
Mining’s Impact on Biodiversity: A Rising Risk? How an increased focus by regulators across the world on biodiversity loss may heighten risks for investors in metal-mining companies.