Trade induced extinction risk footprints by European financial institutions.

Biodiversity loss is increasingly recognized as a source of systemic financial risk. The financial sector enables economic activities that exert pressure on ecosystems, sometimes far from where capital is held, so institutions in one region can enable biodiversity loss elsewhere by financing seemingly harmless sectors with value-chain links to harmful activities. We establish a novel correspondence matrix linking 104 environmental pressures to 124 IUCN biodiversity threats, and combine it with the GLORIA input-output model to quantify species extinction-risk for 164 countries. Particulate matter, land-use change, and nitrogenous gases are the most damaging pressures, exerted mainly by agriculture, manufacturing, and construction. Seventy-four countries are net importers of extinction risk and twenty-three net exporters; all twelve European countries analysed are importers, with approximately 40% of their financial assets linked to extinction-risk sectors. Because these pressures are so embedded in production, a 1% reduction in the extinction-risk footprint propagates almost one-for-one through the economy: output falls by about 0.88% on average, while firms' capacity to service debt weakens as revenues drop but interest obligations hold fixed. This exposes how structurally dependent financial systems are on nature-harming activity, supporting efforts to disclose and reduce holdings of assets linked to biodiversity loss.