Emerging Weak Signal: The Escalating Risk of Biodiversity Loss Driven by Climate Change and Inadequate Nature-Based Investments

Despite growing awareness and commitments toward nature preservation, global biodiversity is deteriorating at an accelerating pace, propelled not only by habitat loss but increasingly by climate change. Underinvestment in nature-based solutions (NbS) combined with policy setbacks could trigger widespread disruptions across industries tied to natural resources, supply chains, and ecosystem services. This article highlights an underappreciated weak signal—the growing dominance of climate change as a driver of biodiversity loss—and explores how gaps in financing and governance may exacerbate this trend, presenting significant risks and opportunities for businesses, governments, and society over the next two decades.

What’s Changing?

Recent data reveals alarming acceleration in forest loss and biodiversity degradation globally. In 2024 alone, 8.1 million hectares of forest were lost, roughly equivalent to half the landmass of England (Impakter, 2025). This figure overshoots global deforestation targets by 63%, indicating a significant deviation from the pathway to achieve the 2030 zero-deforestation goal (Impakter).

Meanwhile, the United Nations Environment Programme (UNEP) estimates that global investments in NbS—interventions that protect, sustainably manage, and restore natural or modified ecosystems—are currently around USD 200 billion annually. This is less than half the estimated amount needed by 2030 to adequately address biodiversity decline, land degradation, and heat stress effects on ecosystems (Forbes).

Moreover, achieving the United Nations Rio Convention targets requires expanding protected areas by up to 1 billion hectares by 2030, demanding billions more in annual investments to protect forests, avoid deforestation, and promote reforestation (InsightsonIndia).

Complicating the picture, climate change is projected to overtake direct land use change as the primary driver of biodiversity loss beyond 2050 (AXA IM). This forecast entails profound shifts in ecosystem dynamics, species survival, and habitat availability, compounding the effects of deforestation and degradation. For instance, sensitive insect populations such as Europe's threatened butterfly and wild bee species face combined threats from warming climates and habitat loss (The Gazette).

Not all recent developments signal progress. Legislative decisions in Brazil have partially relaxed protections, increasing deforestation risks and threatening Indigenous communities residing in the Amazon rainforest, a critical biodiversity hotspot (EnviroNews Nigeria).

Corporate commitments to achieve zero-deforestation by 2030 remain unaccompanied by matching capital flows aimed at transforming supply chains sustainably. Investments in sustainable sourcing and traceability remain below required levels, undermining large-scale mitigation efforts (UNEP).

The increasing global prominence of environmental risks, as highlighted by the Global Risks Report 2025, lists extreme weather as the top threat, followed closely by biodiversity loss and ecosystem degradation (Drishti IAS).

Why is this Important?

These converging dynamics suggest that biodiversity loss is entering a new phase, driven increasingly by climate-influenced ecosystem fragility rather than traditional land use alone. This shift could reconfigure risk profiles across multiple sectors:

• Agriculture and Food Security: Declining pollinator populations and reduced soil health may lower crop yields and resilience.
• Pharmaceuticals and Biotechnology: Loss of genetic diversity could limit discovery of new compounds and medicines.
• Supply Chains and Raw Materials: Resource scarcity may increase volatility in commodities such as timber, fiber, and water.
• Insurance and Finance: Rising catastrophe risks and valuation uncertainties tied to ecosystem degradation may alter underwriting and investment decisions.
• Governance and Social Stability: Impacts on Indigenous communities and rural livelihoods could trigger displacement and conflicts, affecting regional security.

From a policy standpoint, the financing gap poses a substantial barrier. The required multiplier in capital investments to meet the scale of NbS needed might stress traditional funding mechanisms, pushing a call for innovative blended finance, public-private partnerships, and more stringent regulatory frameworks to incentivize sustainable land management.

Geopolitical and environmental controls weakening in key regions like the Amazon might undermine the efforts of international climate accords and biodiversity conventions, putting global targets further out of reach and accelerating feedback loops of ecosystem collapse.

Implications

The unfolding scenario indicates that businesses, governments, and civil society should prepare for a future where biodiversity loss, exacerbated by climatic stressors and financing shortfalls, could disrupt multiple interconnected systems.

Key implications include:

• Strategic Risk Integration: Organizations should incorporate biodiversity and ecosystem health metrics in enterprise risk management to anticipate supply chain shocks and reputational risks.
• Investment Recalibration: There may emerge heightened demand for impact investment vehicles specifically targeting NbS that reconcile profitability with conservation outcomes.
• Policy and Regulatory Evolution: Governments might adopt more rigorous protections and monitoring, possibly leveraging technology like satellite imaging and AI-powered analytics to enforce compliance.
• Community and Indigenous Engagement: Effective collaboration with local and Indigenous populations could become essential to design and implement sustainable land use strategies that balance economic and ecological needs.
• Cross-Sector Collaboration: Coordination among agriculture, forestry, finance, technology, and conservation sectors will likely be necessary to devise systemic solutions addressing the root causes of biodiversity loss.

Without preventive action in the near term, the compounded effects of warming climates and ecosystem fragmentation might catalyze irreversible tipping points, altering planetary biogeochemical cycles and exacerbating risks for future generations.

Questions

• How can businesses integrate climate-driven biodiversity risks into financial disclosures and operational planning more effectively?
• What new funding models could bridge the identified investment gap for nature-based solutions globally?
• In what ways might emerging technologies improve real-time monitoring of deforestation and biodiversity health to enforce compliance?
• How could public policies incentivize corporates to move beyond pledges towards substantial sustainable supply chain transformations?
• What roles should Indigenous communities play in co-developing conservation programs to ensure social equity and ecological resilience?
• How should multi-sector partnerships be designed to respond flexibly to rapid environmental change while aligning with global biodiversity frameworks?

Examining and addressing these questions will help stakeholders anticipate and shape a future where mitigating biodiversity loss becomes a central pillar of resilience and sustainable development.

Keywords

biodiversity loss; nature-based solutions; deforestation; climate change; ecosystem services; sustainable supply chains; investments in nature; indigenous land rights; global environmental risks

Bibliography

• Current global investments in NbS total approximately USD $200 billion per year, less than half what the United Nations Environment Programme estimates is needed annually by 2030 to effectively address biodiversity loss, land degradation, and the effects of hotter days. Forbes.
• Rising need for nature-based solutions: Achieving Rio Convention targets requires expanding 1 billion ha by 2030, with protected forests and avoided deforestation needing US billion annually, while reforestation requires US billion. Insights on India.
• In 2024 we lost 8.1 million hectares of forest—about half of England—putting the 2030 zero-deforestation goal 63% off course. Impakter.
• More than half of Europe’s threatened butterfly species are affected by climate change, and some such as the critically endangered Nevada grayling are suffering from a combination of habitat loss and global warming. The Gazette.
• Climate change is a primary driver of biodiversity loss and will likely overtake land use change to become the largest contributor beyond 2050. AXA Investment Managers.
• Brazilian President Luiz Inacio Lula da Silva has partially passed legislation expected to unleash higher rates of deforestation and threaten Indigenous communities. EnviroNews Nigeria.
• Although hundreds of corporations pledged zero deforestation by 2030, investments in sustainable supply chains remain minimal. UNEP.
• Environmental risks dominate the 10-year outlook, with extreme weather ranked first, followed by biodiversity loss and critical Earth system changes. Drishti IAS.