Can capitalism save nature? Here's a 7-step solution

Move over, tree huggers. Potato farmers, urban planners and mountain bikers are the new vanguard of biodiversity.

Call it Conservation 3.0.

The big UN biodiversity conference in Montreal this week will see a shift from forests to finance as the host country Canada looks to capitalism to unleash trillions of dollars needed to protect and enhance nature, and fight climate change.

If Conservation 1.0 was about ring-fencing nature, going back to the tragedy of the commons in the 1800s, and Conservation 2.0 was about integrating nature and development, a new chapter of biodiversity thinking has turned to the economics of ecology. With a capitalist bent.

Nature as an “asset class” will be a major theme at the United Nations Conference of the Parties—yes, another COP—as the UN tries to advance its Convention on Biological Diversity.

Over the past 30 years, since the first Earth Summit in Rio, the world has slashed our natural capital per capita by 40% while doubling production per capita. It’s not all bad news. Nature United figures soil, trees and water could absorb 37% of current greenhouse gas emissions. But we need to move fast to restore what’s been lost.

Canada is pushing countries to adopt a 30-by-30 goal, to ensure 30% of nature is protected by 2030. The UN says we will need to get to 50% to mitigate climate change, too.

Here are some ways business can help restore and enrich nature:

1. Give nature a business model

Business models can be anathema to some nature lovers, but they may be the only way to generate the revenue needed to attract capital to enhance forests, land and water. The current gap is about US$700 billion, far more than governments and philanthropists can cover. But here’s the thing: nature already powers our economy, accounting for roughly 12% of GDP, and is critical to countless businesses beyond extractive sectors like mining and forestry. According to the World Economic Forum, as much as half the world’s economic output—US$44 trillion—is highly dependent on nature. Just ask a coalition of resorts in Cancun, Mexico that are investing in coral reef protection. No reef, no business.

2. Set finance loose in the wild

Finance is already creating opportunities for nature, and will need to do a lot more. Consider a bike park in Akron, Ohio. The city was able to protect forests where bikers, rather than builders, could roam, and financed it with bonds backed by increased taxes from tourism. More significantly, governments are using green bonds to finance conservation, appealing to investors who want their money to support biodiversity while also generating funds to restore habitats. We’ll need a lot more. Of the US$632 billion of climate capital invested in a typical year, only 2% goes to nature.

3. Think inset, not offset

The race to Net Zero has inspired many companies to buy carbon offsets that finance nature-based solutions such as the planting of trees. A bigger opportunity may lie in “insets” that allow companies to pay for natural climate solutions through their own supply chain. Among the most popular insets now are “soil capture” investments that see farmers adopt regenerative agriculture practices, such as cover cropping, in return for money from food producers and retailers trying to reduce their own footprint. It’s not only economically powerful, but it helps companies trace the roots of their production back to nature.

4. Develop nature-minded housing

Canada is going to see more tensions between people and nature as our population grows by 500,000 a year through immigration. That will require a lot of new housing development, as the debate over Ontario’s Green Belt has shown. But the debate needn’t be binary, between sprawl and condos. Innovative urban design—and suburban design—is showing how more housing can be built sustainably using nature corridors, integrated wild lands and small-scale farming in the same vicinity.

5. Eat as if our lives depended on it

One reason for this year’s food crisis is that too much of the world’s diet depends on a small range of crops and animals. Roughly 75% of the world’s food comes from 12 plant and five animal species. Regardless of your food preferences, diversity is the spice of nature. It not only provides more interesting meal choices, it makes us all less dependent on monocultures. The World Economic Forum estimates US$310 billion in business opportunities—equivalent of another Singapore—could be generated annually if we enhance biodiversity in our food systems.

6. Reward nature as your star talent

Every good asset manager knows you have to reinvest some of your proceeds if you want to keep growing your assets. A more capitalist approach to nature would see us place a clearer price on biodiversity, just as we have with carbon, and then funnel some of that price into restoration and enhancement. Such investments would be good for the economy, too. Consider natural sea walls that not only protect cities but help nurture sea life. Or storm sewers that keep runoffs from wiping out forests and fields. Just as with climate, we will need new accounting methods and systems to measure the costs and benefits of nature, and build them into our economic equations.

7. See nature tech as a growth sector

Seems paradoxical to apply artificial intelligence to nature but scientists are—and it’s working. According to a Worldwide Fund for Nature (WWF) study, general purpose technologies like AI, remote sensors and environmental DNA are quickly helping us do more than count trees. Sophisticated AI-driven models linked to satellite imagery and ground sensors are allowing countries to map their natural assets and measure both depletion and growth. After all, what gets tracked gets measured, and what gets measured gets managed. With billions of dollars flowing into biodiversity, nature tech may just become a new asset class of its own.

As Senior Vice-President, Office of the CEO, John advises the executive leadership on emerging trends in Canada’s economy, providing insights grounded in his travels across the country and around the world. His work focuses on technological change and innovation, examining how to successfully navigate the new economy so more people can thrive in the age of disruption. Prior to joining RBC, John spent nearly 25 years at the Globe and Mail, where he served as editor-in-chief, editor of Report on Business, and a foreign correspondent in New Delhi, India. Having interviewed a range of prominent world leaders and figures, including Vladimir Putin, Kofi Annan, and Benazir Bhutto, he possesses a deep understanding of national and international affairs. In the community, John serves as a Senior Fellow at the Munk School of Global Affairs, C.D. ‎Howe Institute and is a member of the advisory council for both the Wilson Center’s Canada Institute and the Canadian International Council. John is the author of four books: Out of Poverty, Timbit Nation, and Mass Disruption: Thirty Years on the Front Lines of a Media Revolution and Planet Canada: How Our Expats Are Shaping the Future.

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