Nature loss is a present threat to UK prosperity and security. That was the view of a government report published in January, that assessed the risks accelerating ecosystem degradation and biodiversity loss.

Economically important ecosystems are being degraded at an unprecedented rate due to human activity, threatening food production, water availability, global supply chains and geopolitical stability.

In the UK, the consequences are already being felt. Price volatility, disrupted trade and rising systemic risk are already reshaping business costs, the availability of key inputs and the continuity of operations – shortening planning horizons and increasing exposure to volatility across supply chains.

For ICAEW members, the message is clear: nature loss is a growing risk with important implications for business performance, resilience and long-term value.

The starting point is not predicting ecosystem collapse, but understanding where business models, supply chains and earnings already depend on stressed natural systems – and how those dependencies transmit risk into financial performance.

These conclusions align closely with other recent global assessments. In February, the Intergovernmental Science Policy Platform on Biodiversity and Ecosystem Services (IPBES) published its Business and Biodiversity Assessment.

Its summary for policymakers reinforces the message that business activity depends on and affects nature – and that failure to address biodiversity loss is creating rising material risks for companies, investors and economies.

The UK is exposed to global trends

A central message of the IPBES assessment is that no country is insulated from the risks of ecosystem collapse, whether those risks originate domestically or overseas.

For the UK, one of the most significant exposures is food security. Nearly half of the UK’s food, including fresh produce, sugar and animal feed, are imported. The UK also relies heavily on imported fertilisers. As a result, domestic supply chains and pricing are sensitive to global disruption and geopolitical instability.

The Financial Times has reported how conflict in the Middle East has disrupted global fertiliser supply chains, pushing up  prices and prompting concern over crop production, food security and effects on consumer prices.

Sourcing food from other countries may not always be possible if global constraints limit availability.

At the same time, biodiversity loss and climate change threaten domestic food production through depleted soils, loss of pollinators, drought and flooding. The IPBES assessment warns that, without significant improvements in resilience, the UK would struggle to maintain food security if ecosystem degradation intensifies geopolitical competition and trade disruption

The World Economic Forum’s 2026 Global Risks Report shows that while environmental risks have slipped down short-term rankings, environmental decline continues to create knock-on effects across systems. Over the longer term, climate change, biodiversity loss and critical changes to Earth systems remain among the most severe threats facing the global economy.

Accountants need to broaden the scope of risk

One of the most important implications of the UK government’s assessment for accountants is the need to move beyond narrow or siloed views of risk.

Nature loss and climate change are interacting, multiplying physical risks for businesses and capital providers. These effects are already being felt across markets.

Crucially, environmental pressures can also no longer be treated as background conditions. Nature loss has implications for the finance system and wider economy, contributing to costs linked to food security, health, infrastructure damage and national resilience – all areas with downstream effects on financial stability, growth, taxation and public spending.

As Toby Roxburgh, ICAEW Sustainability Manager for Nature and Biodiversity, explains: “Nature risk rarely arrives with a neat label. It may show up as disrupted supply chains, price volatility or inflationary pressure, for example, rather than as an explicit environmental issue.

“This underlines the importance of understanding how environmental risks are transmitted across systems. That’s why accountants are so important – they are trained to trace how underlying drivers affect financial outcomes, even when the connections are complex.”

Nature is a board-level issue

In the UK, the Climate Financial Risk Forum – an industry-led initiative convened by the Prudential Regulation Authority and Financial Conduct Authority – has issued guidance for financial institutions on nature-related risks, emphasising the importance of board oversight, integration into existing risk frameworks and decision-useful disclosures.

The recently published UK Sustainability Reporting Standards (UK SRS), while currently voluntary, signal an expectation for companies to disclose how sustainability-related risks and opportunities   might reasonably affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term. Investors may use this information to make decisions.

Relatively recent legal interpretations of directors’ duties indicate that nature-related risks are foreseeable and potentially financially material. Failure to manage and disclose these risks could result in a breach under UK company law, and potential personal liability.

Litigation risk related to nature is also evolving. The number of nature-related cases, while still modest, is growing each year globally.

Taken together, these signal that nature is becoming a board-level issue, to satisfy emerging regulatory requirements and mitigate litigation and reputational risk.

Annabel Nelson, ICAEW Sustainability Committee member who works closely with boards on sustainability risk and governance, says: “The UK government's high-confidence rating isn't a warning about the future, it's a description of the present. That changes the governance conversation. Directors can no longer treat nature risk as a distant or specialist concern. It falls squarely within their duty to identify and manage foreseeable, material risks.”

A profession at the centre of resilience

Organisations that proactively implement sustainability strategies can both reduce risk exposure, and unlock new opportunities for growth and value creation, such as:

• cutting costs through resource efficiency measures,
• reaching new markets for sustainable goods and services, and
• attracting investors. 

Ravi Abeywardana, ICAEW Director of Sustainability Reporting and Assurance, sees this moment as pivotal for the profession: “We’re seeing a clear shift. Organisations are increasingly expected to identify entity-specific sustainability-related risks and opportunities – including those linked to nature – and to explain how these affect resilience, strategy and long-term value.”

The ISSB Standards and UK SRS, are an important step, the real challenge and opportunity is to go beyond compliance, according to Abeywardana. He says: “Climate, nature and social-related risks are fundamental business drivers, and accountants play a critical role in ensuring their effects are reflected in internal decision-making, risk management and, where applicable, the financial statements.”

For ICAEW members, this starts with understanding where sustainability intersects with business fundamentals, including revenues, costs, capital expenditure, asset values and operational continuity. Then they must ensure that these factors are visible within core finance, risk and governance processes.

How to act now

ICAEW members can take practical steps that align with existing professional responsibilities and emerging expectations.