The planetary boundaries framework was developed by a group of Earth system scientists led by Johan Rockström and Will Steffen in 2009. This framework identifies nine planetary boundaries within which humanity can operate safely to maintain Earth’s stability and resilience. Its primary focus is on global environmental sustainability.
The nine planetary boundaries include climate change, biodiversity loss, biogeochemical flows, land system change, freshwater use, ocean acidification, stratospheric ozone depletion, atmospheric aerosol loading, and chemical pollution.
In 2023, a new study led by Katherine Richardson, an earth systems scientist at the University of Copenhagen, confirmed that six boundaries have already been crossed (see the graph below) due to human activities such as greenhouse gas emissions, deforestation, pollution, and unsustainable resource use. The study’s results are available on Science.org, and a summary is covered in the Scientific American.
Credit: Azote for Stockholm Resilience Centre, based on analysis in Richardson et al 2023.
In anticipation for the biodiversity panel held by Clear Skies Investment Management in Montreal on May 13th entitled “Making nature our Business: Harnessing capital for Biodiversity”, our team examined how biodiversity loss affects the boundaries.
Of the nine planetary boundaries, biodiversity is a concept that encompasses several of them. Specifically, biodiversity loss is closely linked to other boundaries such as land-system change, biosphere integrity, and biogeochemical flows. These boundaries are interconnected and collectively contribute to the overall health and resilience of ecosystems and biodiversity on Earth. Efforts to address biodiversity loss can have significant impacts on mitigating other planetary boundary challenges.
Biosphere integrity:
The biosphere is defined as the region on, above, and below the Earth’s surface where life exists (The National Geographic). Richardson and her colleagues examined biosphere integrity from two perspectives: genetic diversity and functional diversity. Regarding genetic diversity, they assessed the extinction rate, estimating it to be approximately 100 times higher than the background rate (baseline rate at which species would go extinct in the absence of significant external influences, such as human activities).
Functional diversity, on the other hand, focuses on the variety of ecological functions performed by different species within an ecosystem. It considers the range of ecological roles and functions that organisms fulfill, such as nutrient cycling, pollination, pest control, and decomposition. A novel consideration in their analysis is the measurement of “primary production,” indicating the level of photosynthesis occurring globally, as an indicator of ecosystem function. They found that humans now use approximately 30 percent of primary production for various purposes, predominantly through agricultural activities. This contrasts starkly with the pre-industrial era when only 2 percent of primary production was appropriated by human activities.
An Investor Perspective:
Investors can find several insights in the concepts within the boundaries. Below is a deeper look at how to consider the biosphere integrity boundary and biodiversity restoration to inform analysis and investment decisions.
- Risk Assessment: Understanding the impacts of biodiversity loss on industries and companies is essential for investors. Industries reliant on natural resources, such as agriculture, forestry, fisheries, and pharmaceuticals, are particularly exposed to biodiversity-related risks. Investors can assess how companies manage these risks, including their environmental policies, conservation practices, and efforts to minimize negative impacts on biodiversity.
- Opportunities in Sustainable Practices: Companies that adopt sustainable practices to protect biodiversity can offer investment opportunities. For example, investing in companies engaged in sustainable agriculture, eco-tourism, conservation-focused enterprises, and renewable energy can contribute to biodiversity conservation while potentially generating financial returns.
- Engagement and Advocacy: Investors can engage with companies to encourage them to adopt biodiversity-friendly practices, such as reducing deforestation, minimizing pollution, and supporting conservation initiatives. Shareholder engagement, proxy voting, and collaborative initiatives with other investors can amplify investors’ influence in promoting biodiversity conservation.
- Environmental KPIs: Incorporating biodiversity considerations into environmental analysis can provide a more comprehensive assessment of investment risks and opportunities. Investors can utilize ESG data and metrics related to biodiversity, such as biodiversity footprint assessments, species at risk, and habitat conservation efforts, to evaluate companies’ environmental performance.
- Long-Term Value Creation: Recognizing the interconnectedness between biodiversity, ecosystem services, and human well-being, investors can prioritize investments that contribute to long-term value creation by safeguarding biodiversity and promoting sustainable development. This falls under risk assessment as well; Companies that demonstrate a commitment to biodiversity conservation are more likely to mitigate regulatory, reputational, and operational risks over the long term.
By aligning investment decisions with biodiversity conservation goals, investors can play a critical role in fostering sustainable economic development and environmental stewardship. We believe the planetary boundaries framework provides a critical lens through which to understand the intricate relationship between biodiversity and biosphere integrity, essential for sustaining life on Earth. As discussed, biodiversity loss directly impacts biosphere integrity, threatening ecosystem stability and resilience.
At Clear Skies, we recognize the importance of addressing biodiversity-related risks and opportunities, and we are committed to integrating strategies that promote biosphere integrity into our investment practices. Through proactive engagement, responsible stewardship, and innovative investment approaches, we strive to contribute to a more sustainable future where biodiversity thrives, and the biosphere remains resilient for generations to come.
