© Barrie Willilams / Scottish Government
Key points
- A new report show that the Iran conflict threatens global food security and inflation as 30% of global fertilisers pass through the Strait of Hormuz.
- The authors urge the financial sector to recognise the fragility of the food system – caused by conflict, biodiversity loss and climate change – as a systemic financial risk.
- Policymakers and regulators are called upon to use integrated climate-nature scenarios to understand interconnections between pressures such as soil degradation and water scarcity.
Threats to the global food system from conflict, biodiversity loss and climate shocks pose a risk to the financial system, according to a new report from the UK’s Institute and Faculty of Actuaries (IFoA) and Anglia Ruskin University.
The report shows how pressures such as soil degradation and water scarcity are already leading to lower crop yields, with shocks like trade disruption, extreme weather and ecological collapse adding further stresses, resulting in higher and more volatile food prices.
“The potential collapse of nature is a realistic possibility,” said the report’s lead author Professor Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin University. “It is a tanker going in the wrong direction and it needs to be stopped.”
The report’s authors note that the Iran war is further threatening the fragile food system due to the fact that 30% of global fertilisers normally pass through the Strait of Hormuz.
Sandy Trust, another lead author and director of sustainability risk at investment managers Baillie Gifford, said the current conflict in the Gulf posed a much greater risk to food security than the 2022 Ukraine crisis.
“The impact of energy prices may then be further compounded by global food shortages, leading to the potential for structurally high inflation. This is all hitting a food system already under strain from biodiversity loss and climate impacts, and a society already struggling from cost of living pressures,” Trust said.
Central bankers around the world have been examining the impact on prices of climate change, especially in relation to the policy of targeting inflation. Global warming could add up to 3 percentage points to annual food inflation and up to 1.2 points to headline inflation globally by 2035, according to some projections.
The new report calls on actuaries and the financial sector to recognise food system fragility as a systemic financial risk, with impacts far greater than the GDP contribution of agriculture.
It notes that the food system is interwoven with energy and political systems, which make it difficult to calculate exact financial risk.
“This is why it’s important that we get actuaries from the insurance industry modeling the future,” Mike Barry, co-founder of sustainability and health consultancy Planetary Alliance, told journalists.
The EU agriculture sector could see annual losses jump by as much as two-thirds by 2050 due to the increasing risk of drought and floods, according to a report in 2025 from the European Investment Bank and the European Commission. Extreme weather means the sector already faces average annual losses of €28bn across the 27 countries of the EU, or around 6% of crop and livestock production, the study found.
The IFoA report called on policymakers and regulators to recognise nature as the critical foundation of society and the economy, and to use integrated climate-nature scenarios to understand the interconnection between biodiversity and climate.
“We are currently managing our global natural assets with a level of negligence that would be unthinkable in any other sector of the economy,” said Emma Howard Boyd, chair of environmental group ClientEarth.
“We are treating a finite, interconnected ledger of biological wealth as an infinite extraction fund, and the maths simply no longer adds up. To the finance sector, the message is clear: nature risk is financial risk.”
The Network for Greening the Financial System, a group of central bankers focused on understanding how climate change risks impact the economy, has released a framework to help supervisors integrate nature risks into their financial assessments.
This page was last updated April 30, 2026
Written by
Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
