rethink sustainability
Nature is our most valuable asset
Nature is the bedrock of our economy. The World Economic Forum estimates that more than 50% of global GDP depends on nature1. It is our most productive asset. Multiple sectors, including agriculture, heavy industry, real estate, healthcare and tourism, depend on it, yet we take it for granted. We term our economic model as WILD (Wasteful, Idle, Lopsided and Dirty) and believe it is outdated. This model fails to take stock of Natural Capital2, and the current ‘take-make-waste’ model is depleting these resources faster than they can regenerate. This model cannot continue to support our growing global population and is putting global economic activity at risk.
A cleaner economy
However, powerful forces are driving a transition to a new economic model, based around the principles of being Circular, Lean, Inclusive and Clean (CLIC®). Policymakers are accepting the need for a green economy, with many committing to “build back better” after the pandemic. We already have the Paris Agreement in place and the climate crisis is accelerating the rollout of net-zero policies. Natural Capital is increasingly coming into focus for regulators and 2021 will be pivotal for regulation on nature. New targets for the preservation of biodiversity are expected to be laid out in October 2021 in Kunming, China, at the UN Biodiversity conference, COP 15, effectively creating the equivalent of the Paris Agreement for biodiversity. In November 2020, HM The King launched both the Circular Bioeconomy Alliance and Lombard Odier’s Natural Capital Investment Strategy within the framework of his Sustainable Markets Initiative. The EU Green Deal also focuses heavily on transitioning to a circular economy.
Investing in Natural Capital
While support for eco-friendly policies is accelerating globally, technology costs continue to fall, driving increased investment opportunities. These forces are propelling a new economic model that will prosper in harmony with nature. For investors, it is vital to focus on identifying companies that harness the power of nature, as well as those helping to preserve it. The former is about greater reliance on bio-materials and an increased take-up of nature-based materials. It is also about using waste as a resource, about bioenergy, and a variety of regenerative farming, forestry and fishery practices. Preserving nature means shifting towards greater circularity in our production and consumption model. It is about creating a much leaner form of industry, more efficient use of our resources, a shift in our consumption model, and zero waste strategies.
If we are to grow our economy, we must first preserve and invest in nature. Fortunately energy is now being deployed to get our house in order. Natural Capital will be its most vital foundation.
1 World Economic Forum, Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy (January 2020)
2 This refers to the world’s stock of natural resources, including geology, soils, air, water and all living organisms.
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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