51 years on, nature’s collapse continues

Chart of the week

There is plenty for investors to think about when marking Earth Day. Sector dependency on nature is widespread, with the pharmaceutical industry especially exposed to biodiversity loss.

This coming Thursday marks Earth Day, intended to unite the world in support of environmental protection. But since 1970, when the first Earth Day was held, threats to land and marine ecosystems as well as species populations have vastly increased. For example, over this 50-year period, 32% of the world’s forest area has been destroyed, 85% of wetlands have been lost, 50% of the world’s coral reef systems have disappeared and there has been, on average, a 60% decline of vertebrate species.[1]

This level of biodiversity loss puts at peril the air we breathe, the water we drink and the food we eat.[2] According to the Sustainable Business Development Commission’s estimates, biodiversity loss directly creates societal burdens at 3% of global gross domestic product (GDP) per year. Only conflict and armed violence, at 9.1% of global GDP, places a more severe burden on the planet.[3] The two are related. According to a 2019 study by Nature, climate has influenced between 3% and 20% of armed conflict risk over the last century and that share could grow in the years ahead, even if we can limit global temperature rise to no more than 2° Celsius.[4] Next week’s Leaders Summit on Climate hosted by U.S. President Biden looks set to highlight these links.

Credible estimates suggest that indirect costs could be higher still: more than half of global GDP depends on nature and the services it provides. Food and beverages, agriculture and fisheries and construction are exhibiting the highest nature dependency.[5] But the pharmaceutical industry also relies heavily on nature. As much as 50% of prescription drugs are based on a molecule that occurs naturally in a plant. When it comes to the treatment of cancer, 70% of cancer drugs are natural or synthetic products inspired by nature.[6] In addition, it is believed that so far only 15% of an estimated 300,000 plant species in the world have been evaluated to determine their pharmacological potential.[7] Therefore, as the world continues to deal with a global pandemic, it is worth pointing out that drug discovery would be a direct casualty of failing to stop the collapse in land ecosystems. That comes at a time when scientists are warning us that antimicrobial resistance is on the rise.3 In short, there is plenty to think about when marking Earth Day.

20210416_CotW_Earth Day_CHART_EN_72DPI.png

Source: Business and Sustainable Development Commission as of 01/2017 (latest data available)

1. WEF (January 2020). Nature risk rising: Why the crisis engulfing nature matters for business and the economy. https://www.weforum.org/reports/nature-risk-rising-why-the-crisis-engulfing-nature-matters-for-business-and-the-economy

2. DWS Chart of the Week (2 October 2020). Burning down the house: Time to value biodiversity

3. Business and Sustainable Development Commission (2017). Better Business, Better World

4. Nature (June 2019). Climate as a risk factor for armed conflict

5. WEF (January 2020), quoted above

6. B. Hawkins, 2008, “Plants for life: Medicinal plant conservation and botanic gardens

7. R. Palhares et al., 2015, “Medicinal plants recommended by the World Health Organization: DNA barcode identification associated with chemical analyses guarantees their quality


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