By Thabang Selota, ESG and Impact Analyst at Sanlam Investments
“He who waits for perfect conditions will never plant a seed.” – African Proverb.
The financial sector is used to waiting for certainty – perfect data, complete models, fully formed regulations – before taking action. But when it comes to investing in nature, waiting is the greatest risk of all. Nature will not wait for us to be ready.
Over $44-trillion of global GDP depends directly on nature. Yet the estimated $7000-billion annual funding gap to halt biodiversity loss is not just an environmental crisis – it is a financial, social and economic emergency. Despite growing awareness, the urgency is still not fully recognised by the financial sector.
This is our defining moment as investors, asset managers, and financial institutions. The question is no longer whether we should invest in nature. It is whether we can afford not to.
In our organisation we know that nature is the foundation of our economy and our society. As the first South African financial institution to commit to the Taskforce on Nature-related Financial Disclosures (TNFD), we are actively integrating nature into our financial decision-making – not as a compliance requirement, but as a strategic imperative.
What happens if we don’t act? A glimpse into the future
Nature has long been treated as an infinite resource – free, abundant, and always available. But what if we are wrong?
Picture a world where food prices soar because pollinators vanish. Water shortages cripple industries and cities. Extreme weather becomes uninsurable, pushing families and businesses into financial ruin. Global supply chains collapse as nature’s regenerative systems – forests, fisheries, farmland – break down. Economic instability and social unrest rise, driven by food insecurity, mass migration and resource conflict.
This isn’t hypothetical. It’s already happening.
In South Africa, we’ve lived through the 2018 Day Zero water crisis in Cape Town. We’ve seen key fisheries collapse, threatening food security and coastal livelihoods. We’ve faced rising floods and heatwaves across KwaZulu-Natal and the Eastern Cape, damaging infrastructure and disrupting port activity.
Now, imagine this on a global scale. Biodiversity loss is no longer just an environmental issue. It is a financial stability issue, a human security issue, and an economic survival issue.
Why should the financial sector care?
History shows that the financial industry often responds too slowly to systemic risks. Climate change is one example – many institutions ignored the warnings until stranded assets and regulatory pressures forced a response. We cannot make the same mistake with nature.
Biodiversity is an asset. To lose it is a liability.
Market volatility is increasing as resource scarcity drives up operational costs. Agribusinesses are experiencing lower yields due to drought and soil degradation. Water scarcity is threatening the profitability of the beverage, energy and industrial sectors. Regulation is tightening on unsustainable supply chains, forcing businesses to overhaul sourcing strategies – or face penalties.
As nature degrades, supply chains become costlier and less predictable. The fishing industry is expected to shrink by 30% by 2050. Deforestation is reducing our planet’s ability to absorb carbon, compounding the cost of climate change.
The insurance and lending industries are also exposed. Rising risks are making parts of the economy uninsurable. Environmental degradation is increasing default risks across agriculture, tourism, and real estate. Meanwhile, regulators are requiring disclosure of nature-related financial risks, which will affect access to capital for non-compliant companies. If the financial sector fails to act, it will face lower margins, higher volatility and stranded assets. Ignoring biodiversity is no longer an option.
How the financial sector must respond
Nature-related risks must be treated like credit or inflation risk – factored into valuations, portfolio construction and asset pricing.
First, financial institutions must assess their exposure to biodiversity loss across portfolios. Sectors reliant on natural capital – agriculture, forestry, fisheries, water-intensive manufacturing – must be evaluated for resilience.
Second, financial models must reflect the true cost of natural capital depletion. Traditional methods often ignore biodiversity impacts. By applying scenario analysis and risk-adjusted discount rates, asset managers can account better for long-term consequences.
Third, the financial sector must direct capital to nature-positive investments. This is not just risk mitigation; it’s a growth opportunity. Companies prioritising regenerative agriculture, ecosystem restoration and water efficiency are likely to outperform over the long term.
Nature is the next big investment opportunity
While biodiversity loss is a crisis, it also opens the door to economic transformation. Early movers will benefit. Late adopters will lose out.
At Sanlam Investments, we are piloting solutions that deliver profitability and restore nature. From sustainable agriculture and water management to green infrastructure and biodiversity-linked insurance, we are creating financial mechanisms that support both returns and resilience. We are also exploring biodiversity credit markets, monetising services like carbon sequestration and water purification. These are not theoretical. They are real tools that will shape the future of finance.
A call to action for the financial sector
Governments cannot close the biodiversity financing gap alone. The private sector – particularly asset managers, insurers and banks – must lead. This is no longer just an ESG issue. It is a matter of financial prudence, economic stability and long-term value creation.
The financial sector must embed TNFD-aligned risk assessments, develop nature-positive financial products, and engage regulators to accelerate progress.
If we fail to act now, the cost won’t just be ecological. It will be financial.
The question isn’t whether we should invest in nature. The question is: Can we afford not to?
Thabang Selota is an ESG and Impact Analyst at Sanlam Investments
