Green gold
Luc Olivier, CFA, Fund Manager for Echiquier Climate & Biodiversity Impact Europe, La Financière de l’Échiquier (LFDE)│ March 2025
Used notably in the pharmaceutical, cosmetics and agri-food industries, Digital Sequence Information (DSI[1]) is a key component of the environmental and energy transition. Dubbed green gold, DSI benefits from the wealth of biodiversity and is the result of the collection of data extracted from the genetic heritage of plants, animals and even micro-organisms. This information is then stored in freely accessible global databases. While its use makes it possible to substitute ingredients from the oil sector, the massive exploitation of this free data from nature depends entirely on biodiversity. A key topic at COP 16, which was dedicated to biodiversity, the launch of the Cali Fund at COP16.2, held in Rome last February, is a step forward. Its aim is to finance actions to protect biodiversity through contributions from companies using DSI. Although the Cali fund is still in its infancy, we are convinced of the urgent need to finance biodiversity, which is key to the transition.
Companies using DSI are encouraged to contribute 0.1% of their revenue or 1% of their profits to the fund. While we see this contribution as essential in the long term for the conservation of biodiversity and the sustainability of the business models of companies that are highly dependent on nature, we know that this amount could affect their stock market valuations in the short term. For Danish biotech Novonesis, with which we have been engaging since 2024 on their contribution to DSI, the annual amount would be between €4 million and €6 million.[2] By developing biosolutions, Novonesis is positioning itself directly in the DSI segment. The biotech company uses living organisms to produce molecules previously developed through synthetic chemistry. These biosolutions transform each stage of the value chain and impact all sectors, from biofuels to agri-food, probiotics and detergents. They have a direct impact on our ecosystem, preserving biodiversity resources and contributing to the transition.
Driving the transition
Convinced that the ecosystem impact of companies on biodiversity is one of the drivers of the transition, we are looking at leaders across all sectors, such as Novartis, which aims to be carbon neutral by 2040. The Swiss company was a pioneer in addressing DSI in the pharmaceutical industry. In the early 2000s, for example, Novartis entered into an agreement with the Smithsonian Tropical Research Institute of the University of Panama to analyse biological sources from the tropical forest with the aim of developing a cancer treatment. In exchange for plant extracts, Novartis shares its bioanalytical expertise, helps conserve biodiversity and funds local research teams.
The challenges are many. Actions to achieve the goals of the Paris Agreement must be massively scaled up. The World Bank estimates that $700 billion will be needed annually by 2050 to conserve biodiversity.[3] At LBP AM Group, we believe it is our duty as investors to help companies understand these challenges and the actions that need to be taken. This synergy between investors and companies is crucial to addressing one of the greatest challenges of our century: preserving our planet.