The UK economy could shrink by almost 5% by 2030 if businesses fail to increase investment in nature, according to a report by the Green Finance Institute (GFI) and WWF.

The study, Business Investment in Nature: Supporting UK Economic Resilience and Growth, warns that the UK is among the most nature-depleted countries in the world, and environmental decline is already eroding productivity. “In the last few years, many large UK businesses have experienced a financial impact on their operations and supply chains from floods, droughts, disease outbreaks, soil health decline and air and water pollution,” the report says.

Soil degradation alone costs between £0.9bn and £1.4bn annually in England and Wales, mainly linked to the impacts of loss of organic content in soil, compaction and erosion.

The report advocates for the adoption of Nature-Positive Transition Pathways (NPPs), which are sector-specific plans that guide industries in transitioning to more sustainable practices. Multiple priority sectors, including construction, food and farming, finance and infrastructure, are most exposed to nature-related risks.

The report points to several businesses as examples of the benefits of NPPs, including First Milk, a regenerative dairy cooperative that reported a 38% increase in sales in 2023, alongside a 5.5% reduction in water use and a 6% decrease in energy consumption, after it adopted nature-friendly practices.

Small and medium-sized enterprises (SMEs), which account for 99% of UK businesses and dominate sectors such as farming, food processing and construction, are especially vulnerable to the ways environmental harm hurts the bottom line. Rising costs from soil erosion, flooding and water scarcity can put pressure on margins, but SMEs that adopt sustainable practices may gain a competitive edge in securing contracts or accessing green finance.

In a statement, Vassilis Gkoumas, economist at WWF, emphasised that “a real plan to save UK nature must bring the private sector with it … many businesses want greater clarity around how they can contribute to the transition. Now we need more to come forward and play their part.”

Charlie Dixon, Associate Director at GFI, added: “The empirical evidence is clear that business investment in nature is a powerful engine for economic growth. UK businesses are keen to contribute to the delivery of the UK’s nature targets but need better guidance and coordination in order to do so.”

With the government preparing a national plan for nature and the environment this autumn, the report urges ministers to embed NPPs at the heart of economic strategy, warning that without urgent action, both prosperity and long-term resilience are at risk.