With Biosphere at Risk, EU Announces Record Green Bond Issue


The biosphere—the space for life—is being destabilized in shocking ways, at a speed never seen in Earth’s history. The 5th Global Biodiversity Outlook finds the world has failed to meet any of the 20 nature protection goals set 10 years ago in Aichi. Climate destabilization, ongoing deforestation, and destruction of ecosystems on land and in the ocean, are driving the 6th mass extinction. Every continent & every kingdom of life is affected.

Outside of shock events, like a major meteor impact, biodiversity loss has never happened this quickly over such a wide range. Only a week earlier, a shocking new report found an acceleration in the total loss of wildlife across the world. The Guardian reported:

On average, global populations of mammals, birds, fish, amphibians and reptiles plunged by 68% between 1970 and 2016, according to the WWF and Zoological Society of London (ZSL)’s biennial Living Planet Report 2020 . Two years ago, the figure stood at 60% .

It is in this context that we need to understand the significance of the European Union announcing it will issue €225 billion in green bonds—nearly the total amount issued worldwide last year.

The announcement is part of a new €750 billion economic recovery plan. The 27-nation EU has also committed to drive its recovery from the COVID-19 economic disruption by speeding ahead with its EU Green Deal. Ursula von der Leyen, President of the European Commission, also announced today an upgrade of EU emissions reduction plans, to 55% by 2030.

The news demonstrates both a recognition by European leaders of the wisdom of aligning urgently needed major COVID recovery investments with the foundations of sustainable future prosperity. The €225 billion in new green bond issuance comes on top of the $134.3 billion in new green bond issues in 2020 so far, as tracked and reported by the Climate Bonds Initiative.

The Resilience Intel aggregate of climate-smart finance commitments has nearly doubled in less than 2 years, with green finance increasing at 4 times the 2011-2018 rate. The new EU commitment is a major increase in the overall aggregate, and will be used to catalyze more widespread private-sector green finance.

That this one bond issue constitutes such a major contribution to the world of sustainable finance is a clear signal that far more needs to be done to halt the widespread routine destruction of nature. Nature-positive investment and innovation will be critical to rescuing national and local economies from the COVID collapse.

What cannot get lost, however, is that human activity is so disrupting nature, that vital life-giving systems are facing an increasing risk of collapse. This reality changes the discussion about sustainability in fundamental ways: while it is ethical to pursue sustainable investments, ethics is no longer the primary logic behind doing so; the very foundations of value creation are now at risk.

The steadily increasing destruction of ecosystems, exacerbated by accelerating climate disruption, is putting food production at risk. The Food and Agriculture Organization is now warning that we could be approaching the time when multiple major food-growing “breadbasket” regions could experience simultaneous harvest collapse. The COVID emergency has revealed significant food-security vulnerabilities inherent in today’s supply chains.

Climate disruption, depletion of fresh water supplies, erosion of arable land, and rapidly expanding urbanization, are all driving habitat destruction and ecosystem collapse. All of these drivers of biodiversity loss were also factors in creating the enhanced risk of zoonotic virus transfer from wildlife to the human population.

As recently as January 2020, it was unthinkable that one country could spend $6 trillion in just a few weeks, to address the ripple effects caused by such “non-market” forces. But that is what happened this April in the United States. The outer limits of hidden costs have shifted dramatically, as has the measurable market value of resilience-building activities.

The Centre for Risk Studies at the University of Cambridge Judge Business School has found that a prolonged COVID-driven economic depression could result in $82 trillion in lost GDP over just 5 years, with high likelihood at least $26 trillion in lost economic activity. Keith Wade, Chief Economist at Schroders, reports:

Studies of the economic effects of pandemics point to significant long run effects. Growth and returns on assets are depressed for a considerable period of time, up to 40 years after the pandemic has passed.

The idea that we must “build back better” is not just a nice-sounding slogan; it is an existential pressure. With near 70% depletion of all living organisms on Earth since 1970, the fragility of life-supporting natural systems will only worsen. Ecological richness is a measure of health and resilience in the systems that form the foundation of all value in the human economy, but we have not adequately valued ecological richness.

The pandemic is showing us in a very condensed, high-impact moment of disruption what can happen when the foundations of value creation, or even basic sustenance, are disrupted significantly. The collapse of the biosphere is, and will be, a bigger problem; we must start responding to it without further delay.

There are new calls for financial instruments that do consider and sustain that value. Former US Treasury Secretary Henry Paulson recently called for a new asset class to value healthy soils and robust pollinator populations. Such assets would enhance the investability and accelerate the deployment of resilience-building activities, which in turn create and sustain value that benefits everyone.

Such innovations create the opportunity to use finance to consistently infuse whole economies with new value, by creating conditions for sustainable inclusive health and resilience. What does that mean? It means investments in areas unrelated to soil health and food production can operate free from the threat of economy-shattering food price spikes when multiple crop collapses happen simultaneously.

Most of all, it means the emergence of measurable resilience value, through directly investable activities that investors and decision-makers know will protect and expand the value of their other investments. We need to invest in the health and resilience of nature, or we will lose the chance to invest in opportunities of all kinds.

Categories: Macrocritical ResilienceTags: , , , , , , , , , , , , , ,
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