The Institute and Faculty of Actuaries (IFoA) and Anglia Ruskin University have released a study showing that biodiversity loss now represents a systemic financial threat, endangering food supplies, inflation rates, and investment stability. Their report, Planetary Solvency: Tipping into the wild unknown, identifies soil degradation, water scarcity, and declining pollinator numbers as key drivers of shrinking crop yields and rising food price volatility.
These challenges are being intensified by acute disruptions—extreme weather, trade disruptions, and geopolitical conflicts. The Strait of Hormuz stands out as a major vulnerability, since roughly 30% of the world’s fertilizer shipments pass through it. Any interference there could delay planting-season applications, leading to permanent drops in harvests. Sandy Trust, the lead author, states that current climate conditions have made food security risks far more severe than they were in 2022, when Ukraine’s energy crisis and extreme weather already pushed prices upward. Conflict in the Gulf region threatens to place further pressure on supply chains passing through the Strait of Hormuz.
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The study positions food system instability as a financial hazard with far-reaching consequences beyond agriculture. Pollinators, which sustain three-quarters of global crop production, are disappearing, while deforestation—especially in the Amazon rainforest—disrupts rainfall patterns and carbon cycles that underpin stable yields. Aled Jones, director of Anglia Ruskin’s Global Sustainability Institute, points to the UK’s National Security Assessment on Global Ecosystems as proof that nature’s breakdown is a realistic possibility. “Our economy is set up to deliver efficiency, profit and a just-in-time system that provides little to no resilience against nature collapse,” he explains. “We need radical new policy and direction to tackle these emerging risks.”
Nature loss now a financial time bomb
Actuaries and financial firms are being urged to treat these dangers with the same seriousness as climate risks. The report calls for urgent investment in sustainable land use, protection for pollinators, and stronger supply chain resilience. It also urges policymakers, regulators, actuaries, and the wider financial sector to use integrated climate-nature scenarios. Paul Sweeting, IFoA president, stresses that actuaries must quantify these risks to prevent them from being ignored in financial and policy planning. “Nature loss is not only an environmental crisis but a serious risk to economic stability and societal resilience due to the rise in food insecurity,” he states.
Pension funds blind to climate risk in assets
In a separate analysis, Ortec Finance has identified climate risks as an overlooked factor in pension fund portfolios. Their 2026 climate scenario update warns that higher warming levels could increase national debt burdens, raise sovereign risk premiums, and cut bond returns. Long-term assets like infrastructure and real estate, typically held for 15 years or more, are especially vulnerable. Maurits van Joolingen, managing director for climate scenarios at Ortec, calls climate risk “an important missing link” in investment assessments. Pension funds investing in private assets, he notes, often downplay physical climate risks because of the illiquidity and extended holding periods of these assets.
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The report argues that today’s economic systems, optimized for efficiency and just-in-time operations, offer little protection against nature’s collapse. Without action, it suggests, food price volatility, inflation, and investment instability could become permanent rather than temporary issues.
The report calls for urgent investment in sustainable land use, protection for pollinators, and stronger supply chain resilience. It also urges policymakers, regulators, actuaries, and the wider financial sector to use integrated climate-nature scenarios.
The Strait of Hormuz remains a flashpoint for trade disruptions that could worsen fertilizer shortages, which are vital for planting seasons. Trust emphasizes that delayed fertilizer applications cannot be fully recovered later, risking lasting harm to crop productivity. The report frames the Strait of Hormuz as an existing vulnerability, with conflict in the Gulf region threatening to place further pressure on supply chains.
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Amazon and pollinators: global food security threads
The report’s focus on UK and global financial systems carries broader implications. The Amazon rainforest, for example, regulates rainfall and carbon cycles, and its further degradation could destabilize farming output across distant regions. Meanwhile, pollinator declines directly affect 75% of global crops, creating a cycle where biodiversity loss fuels food insecurity.
Actuaries have long modeled risks like market crashes or pandemics, but the IFoA report insists that nature’s collapse demands the same level of attention. Jones notes that current economic models treat nature as an external variable rather than a core component of financial stability. Without changes, the report concludes, the cost of inaction will likely surpass the cost of prevention.
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