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AB: From the Ground Up
Sowing the Seeds of Biodiversity Investment
AB: From the Ground Up
Sowing the Seeds of Biodiversity Investment
Published 08-02-23
Submitted by AllianceBernstein
What You Need to Know
Biodiversity is taking on increasing importance as a consumer concern, but it isn’t always top of mind for investors. We think that could soon change. Beyond the obvious environmental benefits, there’s an economic case to be made for protecting biodiversity. New, innovative technologies are disrupting age-old systems that are both lower-yielding and environmentally destructive. We believe the next wave of innovation will be fueled by secular growth trends that could reshape the way we think about the world’s ecosystems. Ultimately, we believe protecting and maintaining biodiversity is an attractive financial proposition for growers, consumers and investors alike.
90%
Percentage of global deforestation attributable to farmland expansion.
$824 Billion
Annual amount required to bridge current funding levels with what’s needed to reverse biodiversity loss.
10 Billion
Earth’s projected human population by 2050.
Author
Joseph Sun, CFA| Senior Research Analyst—Sustainable Thematic Equities
Just outside Gibson City, Illinois, a modern-day farmer named Greg is tasked with the responsibility of helping to feed America. Back when Greg’s father managed their farm, it took a full day to harvest just one bushel of corn by hand. Over the years, the introduction of innovative farm tools and equipment significantly enhanced production speed and efficiency, and when Greg eventually took over the farm, he benefited from the improved machinery and industrial chemicals. As a result, the farm’s yield and productivity experienced exponential growth.
But as Greg transitions the family’s assets to his son, their multigenerational farm faces the global challenge of biodiversity loss. Across the North American corn belt and beyond, a decline in soil health from years of excessive agrochemicals has impaired growers’ ability to deliver higher yields to feed the world’s expanding population.
Greg’s story highlights the power of technology in addressing farm productivity. But technology can also help us understand the dangerous loss of biodiversity in the ground beneath our feet—the very soil that feeds the world. Across every industry, we must look to technology to solve the challenges of declining marginal yields and the loss of ecosystem services.
As biodiversity awareness grows, companies that provide effective solutions to biodiversity loss are enjoying substantial growth potential. When science and industry combine to address sustainable development issues, exciting opportunities arise for investors. In recent decades, we’ve seen the decoding of the human genome open new markets in biotech and pharmaceuticals. Today, the nascent synthetic biology revolution is building on those developments to create new products in areas ranging from consumer goods to industrials. We’re now on the cusp of a new agricultural revolution that can harness the power of science to address these invisible threats to human sustenance.
It's not too soon for investors to start discovering the opportunities that can be created by addressing the growing biodiversity funding gap. The market could be sizable. By some estimates, more than $800 billion annually will be required to bridge current funding levels with what’s needed to reverse biodiversity loss (Display). That could add up to roughly $8 trillion by 2030.
Past performance, historical and current analyses, and expectations do not guarantee future results.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.
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AllianceBernstein
AllianceBernstein
AllianceBernstein (AB) is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals, and private wealth clients in major world markets. We believe corporate responsibility, responsible investing and stewardship are intertwined. To be effective stewards of our clients’ assets, we strive to invest responsibly—assessing, engaging on and integrating material issues, including environmental, social and governance (ESG), and climate change considerations in most of our actively managed strategies. We also believe that strive to hold ourselves as a firm to similar practices that we ask of issues. Our stewardship practices, investment strategy and decision-making are guided by our purpose, mission and values.
Our purpose—pursue insight that unlocks opportunity—inspires our firm to act responsibly. While opportunity means something different to each of our stakeholders; it always means considering the unique goals of each stakeholder. AB’s mission is to help our clients define and achieve their investment goals, explicitly stating what we do to unlock opportunity for our clients. We became a signatory to the Principles for Responsible Investment (PRI) in 2011. This began our journey to formalize our commitment to identify responsible ways to unlock opportunities for our clients through integrating material ESG factors throughout most of our actively managed equity and fixed-income client accounts, funds and strategies. AB also engages issuers where it believes the engagement is in the best financial interest of its clients.
Because we are an active manager, our differentiated insights drive our ability to deliver alpha and design innovative investment solutions. ESG and climate issues are important elements in forming insights and in presenting potential risks and opportunities that can have an effect on the performance of the companies and issuers that we invest in and the portfolios that we build.
Our values provide a framework for the behaviors and actions that deliver on our purpose and mission. Values align our actions. Each value emerges from the firm’s collective character—yet is also aspirational.
- Invest in One Another means that we have a strong organizational culture where diversity is celebrated and mentorship is critical to our success. When we invest in one another, we empower our employees to reach their potential, so that they can help our clients realize theirs. This enables us to partner with clients to design and deliver improved investment outcomes.
- Strive for Distinctive Knowledge means that we collaboratively identify creative solutions to clients’ economic, ESG and climate- related investment challenges through our expertise in a wide range of investment disciplines, close collaboration among our investment experts and creative solutions.
- Speak with Courage and Conviction informs how we engage our AB colleagues and issuers. We seek to learn from other parts of our business to strengthen our own views. And we engage issuers for insight and action by sharing ideas and best practices.
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As of September 30, 2023, AB had $669B in assets under management, $458B of which were ESG-integrated. Additional information about AB may be found on our website, www.alliancebernstein.com.
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