Achieving the finance targets of the global biodiversity framework: a scenario approach for the United Kingdom

Preprint

Nature degradation is increasingly recognised as a systemic source of economic and financial risk, yet the mechanisms linking private financial flows to global biodiversity loss remain insufficiently understood. For the United Kingdom, potential GDP losses of up to 12% by the 2030s highlight the macroeconomic significance of ecosystem decline. Given that roughly half of the UK’s nature-related financial risk is generated outside its borders, analysing the international biodiversity impacts of UK-financed activities is essential for informing governance strategies aligned with the Kunming–Montreal Global Biodiversity Framework (GBF). This study integrates financial exposure data, ecosystem-service dependency assessments and environmental-pressure modelling to evaluate how UK banks’ overseas portfolios both depend on and contribute to ecological degradation.

We map cross-border exposures for the six largest UK banks, quantify sectoral dependencies and risks using the ENCORE framework, and assess portfolio impacts across thirteen categories of environmental pressure. While financial flows are concentrated in manufacturing and services, we find that high-impact sectors—agriculture, mining and transport—generate disproportionate pressures through land conversion, pollution, and resource extraction. Risks are most pronounced for ecosystem services related to flood protection, water regulation and climate regulation. Exploratory scenario analysis, combining nature-action pathways with geopolitical dynamics, demonstrates that coordinated policy interventions—particularly subsidy reforms and a global plastics treaty—could generate meaningful reductions in nutrient pollution, biotic resource extraction and solid-waste generation. A complementary assessment of green financial regulation indicates that mandatory disclosures, capital and collateral adjustments, and allocative credit policies could reduce financing linked to land-use change, though their effectiveness depends on international cooperation to prevent financial leakage.

Overall, the findings underscore the interdependence of financial systems and ecological integrity, and illustrate how coherent regulatory, fiscal and trade measures could realign UK financial flows with global biodiversity goals. The study highlights the need for integrated governance approaches capable of addressing cross-border ecological risks embedded within contemporary financial globalisation.

Authors: Alvarez, J; O'Donnell, E; Sabuco, J; Marsden, L; Hawkins, I

• Publication status: Published
• Peer review status: Not peer reviewed
• Preprint server: SSRN
• DOI: 10.2139/ssrn.5867802
• Server owner: Elsevier
• Language: English