http://www.guardian.co.uk/environment/2010/oct/27/biodiversity-loss-terrorismBiodiversity loss seen as greater financial risk than terrorism, says UNLoss of ecosystems perceived by banks and insurance companies to be agreater economic risk than terrorism, finds UN reportJonathan Watts in NagoyaThursday October 28 2010guardian.co.ukThe financial risks posed by the loss of species and ecosystems have risensharply and are becoming a greater concern for businesses than internationalterrorism, according to a United Nations report[http://www.unepfi.org/fileadmin/documents/CEO_DemystifyingMateriality.pdf"From over-depletion of fish stocks and soil degradation caused byagricultural chemicals to water shortages and mining pollution, the paper ?commissioned by the UN Environment Programme [http://www.unep.org/" title="]and partners ? said the likelihood has climbed sharply that declines inbiodiversity would have a "severe" $10bn (?6bn) to $50bn impact on business.With the European Uni
 on and other regions increasingly holding companiesliable for impacts on ecosystem services, it suggests banks, investors andinsurance companies are starting to calculate the losses that could arisefrom diminishing supplies, tightened conservation controls and thereputational damage caused by involvement in an unsound project.Achim Steiner [en.wikipedia.org/wiki/Achim_Steiner" title="], UNunder-secretary general and Unep executive director, said: "The kinds ofemerging concerns and rising perception of risks underlines a fundamentalsea change in the way some financial institutions, alongside naturalresource-dependent companies, are now starting to glimpse and to factor inthe economic importance of biodiversity and ecosystems".The briefing paper cites the 55% crash of BP's share price and the declineof its credit rating in the wake of the Gulf of Mexico oil spill as anextreme example of the potential impact of inadequate environmentalcontrols.Richard Burrett, who co-chairs the 
 Unep Finance Initiative[http://www.unepfi.org/" title="] and authored the report, said such caseshighlighted the need for a new form of risk assessment that takes the valueof ecological services into account. Water systems and forests are currentlyconsidered "externalities" that do not show up on corporate books. In thepast year, he said, biodiversity loss is increasingly seen as a businessconcern and that a World Economic Forum [http://www.weforum.org/" title="]survey in 2010, found it was perceived as a greater economic risk thaninternational terrorism.But he insisted this should be just the start. "The way we assess theperformance of companies is flawed. It does not account for allexternalities," said Burrett in releasing the briefing paper, which is aimedat executives and fund managers. "We believe we must bring theseexternalities into mainstream accounting."For the report, the UN commissioned a study of 3,000 of the world's biggestcorporations, which found them responsib
 le for $2.15 trillion inenvironmental costs in 2008, equivalent to 7% of their combined revenues andabout a third of their profits. Based on this figure, the report estimatesthat institutional investors with a $100m holding in a typical diversifiedequity fund could "own" $5.6m in external costs.However, the authors note that awareness of biodiversity risks is still atan early stage, partly because they remain difficult to quantify. Concernsare clearly very different from nation to nation. This year, PwC conducted aseparate study[http://www.ukmediacentre.pwc.com/News-Releases/Biodiversity-threat-will-eclipse-climate-change-economic-impacts-but-still-misses-CEO-and-valuations-radar-PwC-study-e9b.aspx" title="] that found strong awareness of biodiversityrisks among South American executives, but worldwide it said only two of theworld's largest 100 companies saw loss of species and ecosystems as astrategic business risk.Efforts to change values are gathering pace. This year,  Une
 p released theresults of a two-year study: The Economics of Ecosystems and Biodiversity[http://www.teebweb.org/" title="], which estimated the global impact ofbiodiversity at between $2-4.5tn annually[http://www.guardian.co.uk/environment/2010/may/21/biodiversity-un-report"title="], up to 7.5% of global GDP.Other major global financial institutions are also urging a recalculation ofnatural capital. The head of the World Bank [http://www.worldbank.org/"title="], Robert Zoellick, said today that finance ministers and businessesneed to factor in the value that nature provides for food, medicines,tourism and industry."Productivity of the land and seas is diminishing, and with them theecosystem services that are crucial for people to get out of poverty," hesaid."Endangered species are fading away for ever before our very eyes."

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