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Chapter 1

Introduction

Victor Galaz and Megan Meacham 

Our living planet and the climate system are changing at an unprecedented speed. The way our economies are organized and capital is allocated, needs to adapt to this new planetary reality to secure a safe and just future for all. These changes need to happen with a sense of urgency and based on the best available evidence. 

This report is the result of several ongoing research projects hosted by, or connected to, the Stockholm Resilience Centre at Stockholm University. Our ambition is to offer the latest insights from research that explores the connections between investments, ecosystems and the biosphere (chapter 2, 3). We focus particularly on the challenges facing the Amazon, including its proposed “tipping point” and its broader implications for the region (chapter 4-5); the way in which some of these abrupt changes can cascade through economic sectors, thus resulting in novel financial risks (chapter 6); and on tangible solution pathways that can help mitigate and act on such risks proactively and for the benefit of both people and planet (chapter 7-9).

The work presented in this report is an extension of previous work prepared for Stockholm+50, an international meeting convened by the United Nations General Assembly held in Stockholm, Sweden from 2-3 June 2022. The results are also the result ongoing collaborations between the Natural Capital Project (Stanford University), Stockholm Resilience Centre (at Stockholm University) and the Inter-American Development Bank Lab (IDB Lab).

We hope that this short review report offers some new insights and contributes to decisive political action and financial innovation which is truly able to secure a prosperous future for all. 

The work behind this report has been funded by Formas through the research projects “Networks of Financial Rupture”, FinBio funded by Mistra, and by the Marianne and Marcus Wallenberg Foundation (2017.0137). 

Chapter 1

A New Planetary Reality

Our living planet, with its biosphere and physical climate system, is changing at an unprecedented speed. Changes in the climate system and the biosphere, previously assumed to unfold in a distant future and affect only future generations, are happening now and with increasing speed and force.

Since 1950, global human population has increased substantially. On average it has also become healthier and more prosperous. This growth has been enabled by substantial consumption of resources from the planet’s oceans, rivers, forests, grasslands, coastal plains and other landscapes. With a dramatic rise in telecommunications, tourism, and foreign direct investment, it has also been driven by rapidly growing economies in the now globalised world.

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We live in a fundamentally new planetary reality: we are more connected than ever before; abrupt and sometimes irreversible changes occur; the climate system is destabilised; and the biosphere that supports humanity grows ever more fragile and depleted. This has major implications for our economies and the financial sector.

Ecosystems absorb carbon and reduce our vulnerability to climate hazards and extreme events; they are key to the achievement of the Sustainable Development Goals.

Recent analyses show that without healthy ecosystems and biodiversity, the world would already have breached the Paris Agreement 1.5°C target. Oceans, forests, wetlands and grasslands absorb about 55% of our annual carbon emissions. But with continued greenhouse gas emissions and the loss of biosphere resilience, this capacity cannot be taken for granted. 

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To curb climate change it will be critical both to reduce emissions, and to enhance the regenerative capacity of the biosphere and its diversity.

Current trends move in the opposite direction.

Human activities have directly altered at least 70% of the planet’s land surface, approximately 85% of its wetland area and over 66% of the ocean. Over 96% of Earth’s mammal biomass is now accounted for by people (36%) and our livestock (60%) – with less than 4% represented by wild animals.

New risks follow an altered biosphere

By now, the human alterations of the planet (into cropland monocultures, forest plantations, filled wetlands, and fish farms) have already changed the properties of the entire biosphere. As a result, new global risks could emerge, affecting our long-term ability to provide food, fibres, and fuel, and jeopardising food security for a growing and wealthier human population.

Shocks, such as disease outbreaks or droughts, that previously occurred locally within one sector, risk becoming “globally contagious” and more prevalent as sectors are intensified and become more intertwined.

Such cross-continental connections can emerge from changes in the environment that are rooted in policy, financial activities or information flows. This connectivity presents not only a new type of challenge, but also opportunities to support sustainability transformations.

The stability of the climate system and the production of ecosystem services for human well-being fundamentally depend on the resilience of our living planet and its rich biodiversity – resilience and biodiversity that are currently being eroded.

This new planetary reality has enormous repercussions for all life on Earth. This needs to be the basis of discussions, strategies and actions about how to move towards just futures on a thriving planet, not the least in the financial system and among its many influential institutions.

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