A new study from the Environmental Change Institute (ECI) at the University of Oxford shows that the UK’s financial system – one of the most globally connected in the world – both relies on and impacts ecosystems that are critical to biodiversity. The research highlights how targeted policy interventions could redirect private finance toward protecting sensitive ecosystems and supporting the Global Biodiversity Framework (GBF) goals.
Mapping the impact of UK finance
The study was led by Dr Jimena Alvarez, Research Associate and Lead of the Greening Finance for Nature project, working with ECI colleagues Dr Juan Sabuco, Senior Researcher; and Sarah Gall, DPhil student.
Dr Alvarez said:
Implementing a ‘whole of government and the whole of society’ approach for the UK to meet its commitment to achieving the Kunming-Montreal Global Biodiversity Framework targets by 2030, is a strategic move to safeguard biodiversity and the UK economy. A stark reminder for those keen on the pursuit of growth: long-term sustained growth cannot be achieved if there are not supporting resources (ecosystem services) to enable it.”
The team analysed loans, bond issuance, and equity flows from six of the UK’s largest banks. While much of UK finance goes to high-income economies such as the US and Europe, a significant portion is directed toward ecologically critical regions in the Global South, including the Amazon rainforest (Brazil), boreal forests (Russia and Canada), tropical peatlands, and mangroves (Indonesia).
Using detailed environmental and financial data, the researchers identified key ecosystem services—such as water (quantity and quality), soil fertility, and climate stabilisation—that UK-financed activities both depend on and can degrade. Manufacturing and service sectors were highlighted as major conduits of nature-related risks, while agriculture and extractive industries, though smaller in value, have disproportionately large impacts on ecosystems.
Policy pathways for a nature-positive financial system
The study tested a range of financial and regulatory interventions that could steer private finance away from environmentally harmful activities:
- Public subsidy reform to support biodiversity-positive outcomes
- Mandatory nature-related disclosures
- Increasing capital requirements for environmentally harmful activities
- Greening collateral requirements
- Allocative or quantitative credit policy
- Global Plastics Treaty introduction
- International coordination to amplify impact
Scenario analyses suggested that policies explicitly targeting high-impact activities could substantially reduce finance flowing to companies harming sensitive ecosystems. Strategic coordination with the EU or ecosystem-hosting countries further increases effectiveness, particularly in high-risk regions such as the Amazon rainforest.
Exploratory findings highlight opportunity
Although exploratory, the study shows the potential of combining financial and environmental data to guide policy. The ECI team emphasises that UK finance could shift from being a driver of ecological harm to a global leader in funding nature-positive transitions. Delaying action risks escalating costs, while proactive interventions could generate an estimated US$10.1 trillion in annual business value and create 395 million new jobs globally.
ECI researchers leading the way
The multidisciplinary project combined expertise in environmental economics, biodiversity science, and finance. The team also collaborated with researchers from the University of Oxford’s Biology Department and UCL. Their work underscores the importance of interdisciplinary research to understand and mitigate the ecological impacts of financial systems.
Looking ahead
The researchers recommend that the UK government:
- Implement mandatory nature-related disclosure
- Align capital and collateral rules with environmental risk
- Explore direct lending restrictions away from environmentally harmful activities
- Repurpose harmful public subsidies and fiscal incentives to support ecosystem protection
- Coordinate internationally to maximise global influence
By taking these steps, the UK could leverage its global financial position to support the GBF’s nature-positive goals and demonstrate leadership in sustainable finance.
Read the full report: Achieving the Finance targets of the Global Biodiversity Framework: a scenario approach for the United Kingdom