Erste Asset Management Investment Blog

Biodiversity – nature’s natural intelligence

Biodiversity – nature’s natural intelligence
Biodiversity – nature’s natural intelligence
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Any news articles today on biodiversity will invariably come with the added information that we have witnessed a massive loss of it – i.e. biodiversity – in recent decades. It is also often said that the biodiversity crisis is an even greater threat to humanity than the climate crisis. While the climate crisis decides how we can shape our everyday life on Earth in the future, the biodiversity crisis decides whether this future exists for humans in the first place.

A world full of crises

These are all very powerful and also true claims. However, the multiple crises that have accompanied us for years are also making us more and more numb. Similar to many parts of Ukraine, where despite the daily threat of a missile attack, people try to go about their daily lives as best they can.

The miracle of nature

Therefore, instead of writing about a crisis, I will try to write about the miracle of nature. While we humans try to find methods to get greenhouse gases out of the atmosphere, using a great deal of resources, our nature has had working solutions in real use for millions of years. Trees, for example, which unlike industrial plants work in complete silence, are beautiful to look at and contribute to our well-being. While we are enthusiastically searching for artificial intelligence, we forget about the natural intelligence that surrounds us.

The origins of the biodiversity crisis

While the climate crisis can be traced back to the concentration of greenhouse gases in the atmosphere and thus to our massive volume of CO2 emissions since the Industrial Revolution, the biodiversity crisis is less tangible. Yet its origins could also be dated to around the time of the Industrial Revolution, when people started to switch from permacultures to monocultures. These are more easily scalable and allow the use of ever larger machines with less and less human input. This has resulted in an increasing level of alienation from nature.

Modern portfolio theory vs. billions of years of biodiversity

Harry Markowitz received the Nobel Prize for the insight that a diversified portfolio is less risky than the sum of the individual investments. The simplified metaphor is that you should not put all your eggs in one basket, because if this basket falls down, all the eggs are broken.

The same is true for nature: spruce monocultures are not only harmful to the diversity of forest organisms, but they also increase the risk of loss of value resulting from pests such as bark beetles. In a near-natural forest, these would have no chance to spread. Instead of giving nature more space and strengthening the natural self-defence power of plants, our solution is the use of more and more pesticides.

Harm set, harm get

It seems patently absurd that the biggest opponents of renaturalising agriculture are those political representatives who claim to represent our farmers in the best possible way. Instead of breaking the vicious circle of more pesticides, more resistant pests, and again more pesticides, they warn of crop failures. This is a rather bizarre argument in view of the vast amounts of food that are thrown in the proverbial bin every day because of overproduction. Yet a return to nature would prepare the basis of subsistence for the next generation of farmers. An EU-wide regulation would also ensure that the same standards apply to all and cannot be undercut. The only loser would be the agrochemical industry.

Let’s take the first step

It is in the hands of all of us to fight the biodiversity crisis. A lawn with a thuya hedge is no natural environment, and it therefore requires a lot of maintenance. Birds’ nests may make a little dirt, but they also guarantee that fewer flies and mosquitoes disturb the evening meal in the garden. And by the way, they eat the annoying box tree moth, which would otherwise devour the hedges.

Let’s enjoy nature and let it help us instead of trying to dominate it. Nature heals itself and has already survived the dinosaurs, whose footprints are still visible today in Brijuni, Croatia.

Capital investment can also make a positive contribution: on the one hand directly, as in the case of Erste AM with its long-standing partnership with WWF and joint investments in biodiversity projects. On the other hand, also indirectly, in the investment and dialogue with the companies. Therefore, under the leadership of our biodiversity expert, we have drafted a new policy for Erste AM, which not only does justice to the high value placed on biodiversity but is also publicly viewable in order to entice as many imitators as possible.

More information, insights and expert opinions on the topic of biodiversity can be found in our new ESGenius Letter.

For a glossary of technical terms, please visit this link: Fund Glossary | Erste Asset Management

Legal note:

Prognoses are no reliable indicator for future performance.

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