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The humble bumblebee is a perfect example of how the wellbeing of a single species is fundamentally important to society. These unsung heroes of agriculture are thought to be responsible for directly or indirectly pollinating a
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The humble bumblebee is a perfect example of how the wellbeing of a single species is fundamentally important to society. These unsung heroes of agriculture are thought to be responsible for directly or indirectly pollinating a third of the plants and plant products that we consume.
Sadly, bee populations are dramatically declining worldwide due to pesticide use, habitat degradation, global warming, mono-agriculture and a lack of floral biodiversity. In the EU alone, 15% of 1,101 bee species are threatened or near-threatened with extinction. Roughly 96% of four wild bumblebee species in North America have been lost over the past 20 years.
But what's all the buzz about bees? And why should businesses and the finance sector care? The simple answer is that organisations themselves are also at risk of extinction when animal and plant populations die out.
As we'll explore in more detail below, the loss of species negatively affects value creation and threatens supply chains, production processes and profits. The knock-on effect on a company's value and liquidity represents a material financial risk, not only to the business itself but also banks and investors.
As an example, the Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) estimated the global value of agricultural crop production at $2.6 trillion in 2016. Up to $577 billion of this annual output is at risk due to pollinator losses, providing a real sting in the tail for workers, businesses and the finance industry.
Biodiversity experts discuss the impact of species extinction in the stakeholder value chain at Investec's London office.
The looming threat of species extinction
Last year, the United Nations declared that 20 May will be known as World Bee Day to highlight the necessity of preserving the future of these essential contributors to the global economy. And bees are just one insect.
IPBES recently estimated that one million animal and plant species are at risk of extinction. The resulting impact of widespread species extinction will be catastrophic for ecosystems, businesses and financial markets.
Dr Jill Atkins, chair in financial management at Sheffield University Management School at the University of Sheffield, addresses these themes in Around the World in 80 Species: Exploring the Business Case of Extinction. Dr Atkins, who co-edited the book, delivers chilling insights into the key challenges that nature faces as it undergoes its sixth period of mass species extinction.
Solving these problems requires the world's best and brightest minds. So, Investec UK recently hosted the 'Natural Capital, Species Extinction and Sustainable Capital Markets' seminar. The event comprised a series of presentations, panel discussions and Q&As, bringing together some of the foremost experts from across academia and industry.
Is the situation as bad as it seems? Why should species extinction matter to businesses and the finance industry in particular? And what are the best ways to solve these problems?
Here are five key insights from the day that answer these pressing questions and show why urgent action is needed before it's too late.
Our economic system actually incentivises habitat destruction. This is a real problem.
1. The good, the bad and the ugly: any species can affect business
Bees may be the poster insect of biodiversity efforts, but not every species enjoys the same level of media attention. Many flora and fauna are often overlooked in conservation discussions, with some holding pivotal keystone status within ecosystems.
Take the Malayan flying fox. These large fruit bats contribute to biodiversity in ways we are only now beginning to fully appreciate. Malaysia is a key producer of the durian fruit, and plantation owners have traditionally dismissed flying foxes as nothing more than a pest that consumes crops. However, recent research has indicated the animals are chief pollinators of durian plants.
Why does this matter? Global durian consumption was recently valued at $14 billion, with rapid market growth expected due to rising demand in China. As a result, plantations have expanded and continue to encroach on the surrounding rainforest, critically endangering species such as the Malayan tiger, with fewer than 200 left in the wild.
The tiger's future may not concern durian growers, but flying fox numbers are also dwindling, which could have a significant impact on pollination at plantations, as well as the wider supply chain and, ultimately, investors.
"If you're a big or small investor, you may think now is a fantastic opportunity to invest in durian plantations because of recent growth," Dr Atkins said. "But a risk you should be looking at is how do we save the fruit bat? How do we save the ecosystem that provides the service that pollinates the durian?"
Once considered a pest by durian plantation owners, it now turns out that the Malayan flying fox is the chief pollinator of that crop
Some durian plantations in Thailand have already resorted to artificial cross-pollination by hand because natural pollinator numbers have significantly declined. This method is not only time-consuming and expensive but also potentially dangerous.
Let's look at another example. Dr Monika Böhm, a research fellow at the Institute of Zoology of the Zoological Society of London, focuses her research on assessing global patterns in extinction risks and threats to biodiversity. One of her favourite areas of study is freshwater molluscs, and she has a particular fondness for mussels.
"Freshwater mussels don't have a face, and they're not really cute. They look very boring and are mainly grey, so how do you'sell' them as a species for conservation?" she stated.
"But actually, they're really important for filtering our water systems. They provide habitats for other species and they cycle nutrients. They're also a food source of ma