For years, biodiversity loss has been treated as an environmental challenge. That no longer reflects reality. It is a material financial issue reshaping economic outcomes, business performance and investment returns.
For financial institutions and capital providers, nature risk, like climate risk, cannot be diversified away. It affects companies across sectors, geographies and asset classes, making it a challenge that touches virtually every investment portfolio.
Economic resilience and national security
While healthy ecosystems underpin long-term value creation, biodiversity loss creates vulnerabilities that affect entire industries, markets and economies. The UK government's recent assessment of nature-related threats highlighted how biodiversity loss and ecosystem collapse can undermine resilience, prosperity and even national security.
The link is straightforward. Biodiversity supports resource availability, agricultural productivity, water security and resilient supply chains. When ecosystems deteriorate, companies face higher costs, operational disruptions and greater uncertainty. These are not abstract concerns. They directly affect cash flows, business models and long-term investment returns.
The implementation gap
Yet awareness has not translated into action. We have the evidence, data and frameworks but lack implementation at scale. The latest review of the Global Biodiversity Framework shows that progress on private-sector engagement and aligning financial flows remains far too slow.
Capital flows further underline the gap. According to IPBES, around $7.3 trillion a year is directed into activities that harm biodiversity, roughly 33 times the $220 billion invested in conservation and restoration. The financial system depends on nature's resilience but continues to finance its decline.
Solutions exist. Capital must follow
The encouraging news is that solutions already exist. From ecosystem restoration and resilient food systems to nature-positive infrastructure and business models, the opportunities to deploy capital are increasingly clear. Yet financing solutions alone will not be enough. While investment in nature-positive activities must scale rapidly, governments and financial markets must also address the far larger flows that continue to drive biodiversity loss and ecosystem degradation.
This requires ambitious policy change. Governments should identify, disclose and phase out incentives and subsidies that encourage deforestation, habitat conversion, overexploitation of natural resources, and pollution.
They must also create frameworks that reward long-term nature stewardship, strengthen corporate accountability, and give investors the certainty to scale investment in nature-positive solutions.
The real test for COP17
As policymakers, businesses and investors gather at COP17 in Yerevan, the focus must be on implementation.
COP17 must also deliver the policy foundations that will turn commitments into measurable outcomes and accelerate capital towards nature-positive solutions.
Nature loss is not a future threat. It is a systemic risk that already affects markets and societies, requiring immediate action to protect both our environment and our economies.