Marsden, Lydia; Ryan-Collins, Josh; Abrams, Jesse F; Lenton, Timothy M; (2025) Financial System Interactions With Ecosystem Tipping Points: Evidence from boreal forests and mangroves. (UCL Institute for Innovation and Public Purpose (IIPP) Working Paper 2025-10). UCL Institute of Innovation and Public Purpose: London, UK.

Preview

Text Financial_System_Interactions_With_Ecosystem_Tipping_Points.pdf - Published Version Download (874kB) | Preview

Abstract

Evaluating how financial actors and policies can support global climate and biodiversity goals requires understanding where they enable drivers of nature loss in specific ecosystems. Of particular importance are ecosystems that could exhibit threshold behaviour on a large-scale, where passing potential ‘tipping points’ would lead to shifts in global- and regional-scale ecosystem services with severe economic, financial and social consequences. Financial system interactions with many such ecosystems are underexplored and focus on a narrow set of transmission channels. This paper fills this gap by mapping financial flows to companies linked to land-use change and degradation in two ecosystems at risk of tipping points: boreal forests and mangroves, both crucial for ecosystem service provision and as contributors to climate stability. We focus on countries with the largest remaining extent of both ecosystems: Canada and Russia for boreal forests, and Indonesia for mangroves. Using open-access, firm-level datasets, including spatially explicit data when available, we create proxies to identify companies potentially linked to land-use pressures via forestry (boreal forests), and palm oil and aquaculture (mangroves), which are the sectors most directly linked to resilience loss in these ecosystems. We construct a deal-level dataset of financial flows across multiple asset classes accounting for ownership changes over time. Our results identify financial flows across a diverse set of asset classes, geographies and financial institutions, stretching beyond where ecosystems are located. This uncovers cross-border transmission channels for nature-related risks and impacts not reflected in trade data or previous studies, as well as highlighting possible substitution opportunities across different types of finance and jurisdictions. We trace a more complicated actor network, involving state-owned financial institutions and corporate self-financing alongside private financial institutions. Our findings contribute to research on the alignment of finance with environmental targets – which, in these ecosystems, has largely focused on mobilising private capital for conservation rather than those financial flows enabling ongoing degradation – as well as to the growing literature on nature-related financial risks.

Download activity - last month

Export as JSONCSVXML

Download activity - last 12 months

Export as JSONXMLCSV

Downloads by country - last 12 months

Export as XMLCSVJSON

Archive Staff Only

View Item