Here in the Netherlands, we have enjoyed 80 years of peace, food security and abundance. We’ve become accustomed to it. It’s almost impossible to imagine life without clean water running from our tap or picking up some fresh groceries. But the rapid decline in biodiversity is putting these certainties at risk, making us unnecessarily vulnerable in times of geopolitical instability.
As investors we have an important role to play in strengthening European resilience. This includes safeguarding our natural resources.
Ecosystem collapse is a national security threat
Ecosystem collapse, largely fuelled by capital markets, is making us extremely vulnerable. Last month it became officially recognised as a security threat. A landmark UK government report cites, “Biodiversity loss is putting at risk the ecosystem services on which human societies depend, including water, food, clean air and critical resources”.
Rather than positioning ecosystem collapse as a separate issue to today’s geopolitical instability, the report demonstrates they are inextricably linked. Ecosystem collapse creates conflict. And vice versa. It’s a spiralling vicious cycle.
In a case study, the report explains how ecosystem destruction and climate-related drought and flooding drove more than 300,000 farmers in Central America to migrate, both within the region and to the USA. Over the past decade, more than 250 million people have already been displaced because of our worsening climate. This perfectly coincides with the rise in anti-immigration sentiments and alarmist headlines. By 2050, over one billion people in 31 countries will face mass displacement as their nations cannot withstand ecological crises.
Bursts of increased migration cause civil unrest. And aggression spikes when resources (like space, food or water) feel scarce. It fuels polarisation and pushes politicians towards protectionist policies.
Pension savings are putting our most important asset at risk
The problems of conflict, climate change, loss of nature, and geopolitical instability are interwoven. Yet, frustratingly, capital markets exacerbate them.
For every one dollar invested in protecting nature, USD 30 are spent destroying it. The ultimate irony is that much of this money is coming from our pensions, managed by the very people we entrust to provide our future. And the double irony, is that incumbent financial services themselves will fall if nature collapses. 57% of the world’s largest businesses rely directly on nature and will be hit hard when nature fails to provide essential services and resources.
As a new world order moves into focus, many institutional investors may be looking to divest from some regions. This is the perfect opportunity to move the investment into protecting the natural resources on which we all depend. Now is the moment.
As I have mentioned in my previous column, it is not the role of pensions to fund weaponry. That is the responsibility of governments. But pension money can very well help strengthen our resilience in other ways.
Good for investors, good for European resilience
Food security is vital for peace and resilience. To increase it, we must protect nature, reduce our dependency from global supply chains and optimise local production. Working with nature instead of against it gives us a stronger chance of success.
Countries with sustainable, nature-based food systems will be better positioned to cope with potential threats, be they geopolitical or climate related. Nature-inclusive farming methods offer superior nutritional quality, increased employment and diversification benefits over extractive megafarms. It’s the obvious way forward.
As investment managers, we must mitigate against all risks, not only for the future of Europe but for the futures of our clients. It is their money. And we have a responsibility not to harm them or their children. Institutional investors must not go down in history books as the ones who denied the facts and exacerbated the situation. We can still reverse this devastating story.
To put our money where our mouth is, we are currently co-developing a Nature-based Solutions fund that will convert conventional farmlands to nature-inclusive farming practices. This not only contributes to local food security, it also helps restore biodiversity and capture carbon at the same time.
Investing in nature is the only way forward. And by doing so at scale, we can deliver long-term returns that power Europe’s self-sufficiency, prevent conflicts and preserve our health. The structures already exist.
The time to invest in European resilience is now.
