"Real action at work comes from having a connection with nature", according to an environmental specialist. But how can investors understand how to measure the impact of nature preservation?
Independent consultant Will McDonald, a sustainability and public policy expert who has worked in government and in financial services, said it was important to reconnect with nature if we want to really understand the positive impact of environmental economics.
Speaking on the latest FT Adviser editor's podcast, McDonald said we have for many years had too narrow a view of what nature preservation really means.
"We've viewed it as little parcels of land, some of which are special for various reasons - a particular butterfly that doesn't exist anywhere else, or a plant - and we have given these protection... But this has not really worked; it has not really saved nature.
"These pockets of protected land are brilliant, and entirely necessary but if you have a five-acre woodland surrounded by 3,000 acres of intensely farmed land, the animals in that little oasis can't mingle with other animals... that world is too small."
He said nature is so vast, so clever, a "zero waste system" that it is vital to protect and defend it, as well as focusing on agricultural, residential and other areas which aren't nature reserves.
This is where the intersectionality with the financial ecosystem comes into play.
McDonald said: "We have people with muddy boots who look after nature, and then you have the asset managers and financial services companies who are looking at it from a top-down perspective and trying to understand the impact and risks in the portfolio."
However, he said the muddy boots defenders and the asset managers too often do not understand nature and the potential material impact, which is why it is important to work together.
He added: "With climate change you can measure the emissions of a company and do something about it. It doesn't work like that in nature; it is geospecific, and a complex system.
"So the best place to start is to step away from ESG language and just start about material issues. For example, if you are in housebuilding, you would have been talking about biodiversity for a while."
According to McDonald, generally if you talk about nature overall it "can be hard to get your head around" but when you understand specific, quantifiable impacts then you can see how preserving biodiversity can go hand-in-hand with good business strategy.
And that intersectionality is the sweet spot where nature and capitalism can flourish.
To listen to the full podcast, click on the link above. You can contact Will McDonald here.
