Nature degradation poses a significant threat to the UK economy, with potential losses of up to 12% of gross domestic product (GDP) by 2030, according to a groundbreaking analysis. The assessment, led by the Green Finance Institute (GFI), highlights the detrimental impact of ecosystem deterioration on the economy and financial sector.
Nature-related risks, such as soil health decline, air pollution, biodiversity loss, and water scarcity, could result in an economic growth slowdown of up to 3% of GDP. Event-driven shocks like floods or pandemics could further increase GDP loss to 12%, comparable to the impact of the financial crisis of 2008 or the Covid-19 pandemic.
The report emphasizes the need for swift action from governments, central banks, regulators, and the financial sector to proactively manage nature-related risks. It argues that these findings present an opportunity to transition to an economic and financial system that values and invests in the natural environment.
The findings are particularly concerning given that the UK is one of the most nature-depleted countries in the world, with three-quarters of the country having a high level of ecosystem degradation. The analysis also showed that half of the UK’s nature-related financial risks originate overseas.
The report highlights the importance of green finance in mitigating nature-related risks. It calls for financial institutions to take an integrated approach to transition planning and disclosures, recognizing that protecting the natural environment is essential for economic security and long-term prosperity.
Environment minister Lord Benyon said: “Nature underpins the health of our economy, and it is under threat from a global nature crisis. The responsibility to conserve nature lies with all sectors and sections of society, and green finance has a crucial role to play. The findings in this report will help people and institutions across the corporate and finance sectors understand that it is in their own interests to go further and faster for the planet to protect it for future generations.”
TNFD chair David Craig said the “groundbreaking” report “illustrates the importance of addressing both nature and climate risks to the UK economy and financial system, and is a call to action for UK financial institutions to take an integrated approach to transition planning and disclosures”.
Steve Reed MP, Labour’s shadow environment secretary, said: “Our economic security depends on protecting nature. That’s why it’s so disastrous that the Conservatives have left the UK as one of the most nature-depleted countries in the world. Labour will reverse the tide of destruction of our natural world by cleaning up our water and air, and growing nature-rich habitats for wildlife to thrive.”
