El Niño risks and biodiversity investing in a warming world

The 2026 El Niño is shaping up to be one of the most powerful on record. The National Oceanic and Atmospheric Administration (NOAA) currently assigns a 90% probability that it develops into a Super El Niño between October and December.

El Niño can trigger crop failures, food shortages, supply chain disruptions and inflationary pressures, while extreme weather damages infrastructure, reduces labor productivity, strains water and energy systems, and drives higher insurance losses. The result is a macroeconomic shock with significant implications for inflation, economic growth and corporate earnings. The IMF estimates that a typical El Niño increases global food prices by roughly 5% within a year, although there are regional differences.¹ Citi estimates cumulative economic losses of USD 5-7 trillion over five years, equivalent to 4.5-6.4% of global GDP.²

Forests regulate rainfall, wetlands store water during droughts, healthy soils improve water retention, and biodiversity supports pollination and agricultural productivity. As biodiversity declines, these resilience mechanisms weaken and with significant economic consequences.

More than half of global GDP depends directly or indirectly on nature and the World Bank estimates harming it could result in economic losses of USD 2.7 trillion by 2030. That’s annual, not total. Yet the interaction between biodiversity loss, climate volatility and economic growth remains materially underappreciated by capital markets. As Mark J. Spalding, President & CEO of The Ocean Foundation, notes:

His observation highlights the growing interconnection between biodiversity, climate resilience and economic performance. As natural capital deteriorates, economies become more vulnerable to climate shocks, affecting inflation, resource availability, supply-chain stability, corporate earnings and crucially, political capital.

The investment opportunity is not driven exclusively by government policy and corporate sustainability commitments. When climate disruption and biodiversity loss begin to affect harvests, water supplies, commodity prices and the reliability of global supply chains, they reshape the economics of entire industries. That creates demand for businesses that operate with greater resilience and produce with fewer natural-resource inputs.

The benefits of which can include improving water availability and quality, reducing pollution and waste, restoring degraded land, strengthening agricultural yields, or making materials and production processes more efficient. These solutions are increasingly becoming operational necessities rather than discretionary initiatives.

The effects also extend specifically to consumer-facing companies that depend on agricultural commodities, water and other natural-resource inputs. Businesses that improve soil health, protect water sources and secure more sustainable supply chains are better placed to secure essential raw materials, manage volatility in input costs and maintain production during environmental shocks.

For investors, this expands the opportunity from a narrow ‘green spending’ theme into a broader structural shift in how economies produce food, manage resources and build resilience. The World Economic Forum estimates that nature-positive business models could create up to USD 10 trillion in annual opportunities by 2030, including USD 3.6 trillion from sustainable food, land and ocean use.³

Importantly, biodiversity investing is already accessible today. Companies delivering environmental solutions, improving resource efficiency and enabling a more nature-positive economy operate across multiple sectors and collectively represent a multi-trillion-dollar market.

Momentum is building ahead of COP17 in Yerevan, Armenia (19-30 October 2026) where 196 countries will conduct the first formal review of progress against the 2030 Global Biodiversity Framework targets. While approximately 90% of countries have established national biodiversity targets, data, implementation strategies, and funding gaps remain significant challenges.

COP17 is expected to mark the transition from biodiversity target-setting to biodiversity implementation, with a strong focus on financing, accountability and measuring progress against previously agreed targets. It’s time to put meat on the bones of the agreed USD 200 billion per annum spend. Greater policy support, regulatory clarity and financial commitments could further accelerate private-sector investment in biodiversity-related solutions and strengthen the long-term growth outlook for companies exposed to these themes.

The Robeco Biodiversity Equities strategy focuses on companies that either help solve biodiversity challenges or are helping mititage biodiversity loss. The portfolio is built around three clusters:

• Solution providers benefit directly from rising demand for water management, waste treatment, technology enablers and environmental infrastructure.

• Transitioning consumer companies are reducing their biodiversity footprint through sustainable and environmentally responsible supply chains.

• Lower-impact material providers that enable the transition through sustainable packaging, environmental monitoring tools, alternative chemicals and lower-impact construction materials.
  

Together, these segments aim to provide diversified exposure across the biodiversity value chain while maintaining a focus on high-quality companies with durable competitive advantages, strong cash generation and attractive long-term returns. For example, Veolia (a solution provider) is a critical supplier of water treatment and recycling solutions for cities and industries. Sprouts Farmers Market (a transitioning consumer) is a large US supermarket chain offering fresh, natural and organic foods. Finally, Novonesis – of the lower-impact materials group – makes natural, bio-based inputs to replace chemicals in food, agriculture, biofuels and other household products (see Figure 3).⁴

Beyond stock selection, engagement is intended to serve an important lever for real-world impact. Robeco aims to have 25% of the Biodiversity Equities strategy under enhanced engagement, led by our Active Ownership team. These long-term agreements outline clear milestones which underpin the goal of improving corporate biodiversity performance and strengthening long-term value creation.