A new study from the Green Finance Institute (GFI) and the WWF (World Wide Fund for Nature) has revealed that “a degraded natural environment is negatively impacting businesses across the UK and therefore hindering economic growth”[i].
The new Business Investment in Nature Report: Supporting UK Economic Resilience and Growth finds that nature-related risks including water scarcity, pollution, soil degradation, flooding, and resource scarcity are already impacting the UK economy. Key sectors facing disruption include housing, energy, agriculture, manufacturing and tourism, with nature-related risks driving up operational costs, threatening asset viability and undermining regional economic resilience.
The research is supported by additional findings from the GFI in partnership with the University of Oxford, University of Reading, UNEP-WCMC and the National Institute for Economic and Social Research. They find that continued nature degradation, exacerbated by climate change, could lead to a 4.7% reduction to UK GDP by 2030 – outweighing gains from current growth initiatives.
Action on nature-based risk is crucial, according to the UN of the 8.7mn species of animals and plants on the planet, more than 1mn are in danger of being wiped out. Yet more than half the world’s economic output — about $58 trillion of global GDP — is moderately or highly dependent on nature, according to an analysis from PwC[ii]. Further, late last year the WEF (World Economic Forum) warned that firms which fail to address climate risks face substantial financial losses. Businesses that delay could see up to 7% of annual earnings wiped out by 2035, an impact the WEF argues is akin to COVID-19-level disruptions every two years[iii].
Looking specifically at the UK, the GFI & WWF research claims that increased water stress alone could lead to additional system costs of between £20-450 million per year for the nation’s thermal power capacity which requires high volumes of freshwater. Additionally, more than six million properties across the UK are currently at high risk of flooding and this is expected to rise to eight million by 2050.
To tackle the growing risk, GFI and WWF suggest the development of Nature-Positive Transition Pathways (NPPs), national plans co-designed by government and the private sector that provide guidance on how different sectors are expected to align with, and deliver on, environmental targets.
They note that whilst individual businesses are starting to act, they require guidance and better coordinated action to help create a level playing field across sectors and to give them the confidence to invest at scale.
Thus far, the GFI and WWF have been working together to convene businesses and trade organisations, and currently 28 of which have signed a statement supporting the development of NPPs in the UK, to scale up investment, achieve the targets of the Environmental Improvement Plan (EIP), and strengthen the UK’s economic growth prospects[iv].
Vassilis Gkoumas, Economist at WWF, said: “A real plan to save UK nature must bring the private sector with it. The evidence paper published today shows that the scale of the opportunity, and the statement of support demonstrates that many businesses want greater clarity around how they can contribute to the transition. Now we need more to come forward and play their part, and the UK government to recognise Nature-Positive Transition Pathways as a key part of their economic strategy”[v].
[ii] More than half of global GDP is exposed to material nature risk without immediate action
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
