Key takeaways
- Biodiversity refers to all living things on Earth
- Biodiversity loss is on an accelerating path
- Investors are becoming more interested in biodiversity
- Investing in biodiversity can be done via fixed income, market based instruments and/ or Investment funds
- Regulations and policies are driving investment
Understanding Biodiversity
Biodiversity refers to all living things on Earth. It is essential for our ecosystems, air, water, our crops and our climate. It can be broken into three areas – genetic diversity, species diversity and ecosystem diversity. Biodiversity loss is on an accelerating path.
Investing in biodiversity is becoming more popular
For many years responsible investing has been a key focus for a number of investors. However, investing in biodiversity is becoming more and more popular and can be done via fixed income, market based instruments and/ or Investment funds. The paper “Introduction to Biodiversity Risk and Finance” by Thierry Roncalli highlights some of the ways investors can invest in projects aimed at biodiversity loss.
Within fixed income, investors can choose to invest in:
- Blue bonds such as marine and ocean conservation projects
- Debt for nature swaps whereby part of a country’s debt is exchanged for an environmental project
- Green and sustainable bonds which target environmental projects
- Natural capital bonds, nature performance bonds and conservation performance bonds. These are a type of bond that focus on protecting and restoring natural capital
- Sustainability-linked bonds and pay-for-success financial instruments are bonds whose characteristics change based on their sustainability targets1
Market Based instruments include:
- Biodiversity credits/offsets – these are tradable units that represent positive biodiversity outcomes
- Nature-based insurance products are insurance mechanisms to protect natural capital and ecosystem services
- Payments for ecosystem services (PES). These are schemes that provide financial incentives to landowners or communities to manage their land in a way that maintains or enhances ecosystem services1
Investment funds can take the form of:
- Biodiversity impact funds which focus on biodiversity conservation
- Blended finance where public and private capital are combined to attract more capital into biodiversity projects
- Conservation trust funds. These are long-term financing mechanisms for conservation and sustainable development1
Investing in biodiversity is backed by regulation and policies
Potential opportunities to invest in an attempt to tackle biodiversity loss are backed by regulations and policies. For example in May 2020 the EU Biodiversity Strategy for 2030 was published. The strategy seeks to restore biodiversity and healthy ecosystems across the EU. Similarly, under the European Nature Restoration Law, member states need to develop their national restoration plans by 2026. EU member states will have to develop their national restoration plans by 2026. The plans should set out to restore at least 30% of habitats in poor condition by 2030, 60% by 2040, and 90% by 20501. Guidelines have also been developed on forest and soil monitoring. According to Thierry Roncalli, we can expect new biodiversity laws and regulations within the EU1.
These laws, policies and guidelines will create a need for investment to complete projects such as tree planting, restoration projects and organic farming to improve land and reduce pesticides.
We all have a role to play in combatting biodiversity loss and it can’t be the sole responsibility of governments. In fact, the Global Biodiversity Framework set out targets for the private sector whether this be by their actions or in their investments.
Source: Roncalli, Thierry, 2025 Introduction to Biodiversity Risk and Finance. Available at: https://research-center.amundi.com/files/nuxeo/dl/29c68123-9d27-4921-af…?
Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 16 April 2025. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
Date of first use: 16 April 2025
Doc ID: 4401767