Nature degradation could lead to 12% GDP loss in the UK, new analysis warns
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An analysis conducted by the Green Finance Institute (GFI) reveals that the deterioration of the UK’s natural environment poses a significant threat to the economy, potentially resulting in a staggering 12% reduction in GDP.
This unprecedented study, supported by top researchers from leading institutions including the University of Oxford and the UN Environment Programme World Conservation Monitoring Centre, underlines the urgent need for action to address nature-related financial risks.
Comparing the potential impact to past crises, the analysis indicates that the economic fallout from nature degradation could surpass the blows inflicted by both the 2008 financial crisis and the Covid-19 pandemic. Despite the gravity of these findings, nature-related risks have been largely overlooked in financial decision-making, leaving the economy vulnerable to escalating threats.
Key sectors such as agriculture, manufacturing, and utilities are particularly susceptible to nature-related financial risks, ranging from water shortages to soil degradation. The consequences extend beyond the real economy, with banks and financial institutions facing potential portfolio devaluations of up to 4-5%.
In response to these alarming revelations, the report calls for immediate action from governments, regulators, and the financial sector to address nature-related risks and bolster resilience. Embracing early-mover advantages, businesses are urged to prioritize sustainability within their supply chains and disclose nature-related risks.
As the UK stands at a pivotal juncture, stakeholders are urged to heed the recommendations outlined in the report, including robust disclosures of nature-related risks and steadfast commitment to meeting targets outlined in the Global Biodiversity Framework.
“The analysis underscores the urgent need for action to address nature-related financial risks and safeguard the UK economy.” – Green Finance Institute
“Nature-related risks pose a significant threat to sectors crucial for economic stability, including agriculture and utilities.” – Lead Researcher, Environmental Change Institute, University of Oxford
“It’s imperative that governments, regulators, and businesses take swift and decisive action to mitigate nature-related financial risks and ensure long-term resilience.” – Financial Conduct Authority
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