Climate change and biodiversity loss are no longer isolated issues. They increasingly threaten our food security, financial systems, national resilience, and therefore the long-term capital on which many charities depend. What does this mean for charitable endowments, and what should trustees and investment committees be alert to as they seek to build resilience and protect long-term capital?
The photographs are dramatic: orange skies, exhausted firefighters and roads jammed with cars, as thousands of residents and holidaymakers escape lines of burning trees. By late July, more than 325,000[1] people had been forced to flee their homes in France and Spain as wildfires raged across Western Europe.
At their peak, the fires in the Gironde region had advanced to within nine miles of the Bordeaux metropolitan area, home to more than a million people. Such was the scale and intensity of the blaze that it generated a phenomenon seldom seen before in Europe: pyro cumulonimbus or ‘fire thunderstorms’, in which wildfires effectively generate their own weather systems, producing high winds and lightning strikes that spread the footprint of the fires further still. In Spain, 265,457 hectares had burnt by 12 August 2026 which is more than half of the EU’s total burnt area for the year according to the EU’s Copernicus European Forest Fire Information System (EFFIS). That is still below the more than 382,000 hectares Spain had lost by the same point in 2025, the worst wildfire season in the EFFIS record (2006–present).[2]
By late August, the element had changed, but the images were no less shocking. Along the Nepal–Tibet border, a glacial collapse so violent that its seismic signal was initially mistaken for a magnitude 5.2 earthquake, sent a wall of water, ice and rock down the Bhote Koshi and Trishuli river systems. The Trishuli rose by as much as nine metres in just half an hour. At the time of writing, more than 390[3] people had been reported dead and over 1,400 missing; at least 19 bridges had been destroyed and nearly 40km of road damaged. Scientists have not yet established how much climate change contributed to this particular collapse but the wider trend is unambiguous: glaciers across the Hindu Kush Himalaya are now losing ice 65% faster than the rate recorded at the turn of the century.
Fire and flood may appear to be opposite calamities. In practice, both are symptoms of the same fragility, and the feedback loop between climate change and biodiversity loss. Heat, drought and fire degrade forests and soils, while retreating glaciers expose darker underlying rock, soil or ocean water that absorbs more solar heat. Degraded ecosystems store less carbon, regulate less water and offer less protection against future shocks. What looks like an environmental problem can therefore quickly become agricultural, economic, political and, ultimately, an issue of national security.
Losses migrate through the economy in multiple, and often self-reinforcing ways. Homes and crops must be replaced; transport, energy and water infrastructure repaired; insurers and banks absorb claims and credit losses; tourism and local commerce suffer; and governments fund emergency relief, reconstruction and, increasingly, insurance backstops. For charities, there is a double materiality: the social and/or environmental needs they exist to address may intensify just as the real value of the assets supporting their missions comes under pressure.
Security begins with nature
This is the central message of the Joint Intelligence Committee’s assessment, Global biodiversity loss, ecosystem collapse and national security[4]. Its institutional provenance matters. This is not a campaign paper produced by an environmental group, nor a prospectus from the defence industry. It was developed by analysts and experts across the security services and applies the methods, probability language and uncertainty framework used in intelligence assessments.
The report’s conclusions are stark. It judges with high confidence that ecosystem degradation and collapse threaten UK security and prosperity, and that every critical ecosystem it examined is on a pathway to collapse. It traces the consequences through food and water insecurity, inflation, migration, organised crime, conflict and interstate competition, and identifies the Amazon and Congo rainforests, boreal forests, the Himalayas, and South-East Asia’s coral reefs and mangroves as especially critical. The precise timing is uncertain, as it should be in any honest forecast; nevertheless, the report sees a realistic possibility of some collapses occurring as soon as 2030.
The connection made to security is intuitive: damaged ecosystems mean weaker pollination, soil formation, water regulation, disease control and carbon storage. The next links are crop failures, water scarcity, fisheries losses, extreme weather and disrupted supply chains. These, in turn, can lead to food inflation, increased poverty, migration, organised crime, political polarisation and competition between states for land, water and critical resources. Nature is not scenery surrounding the economy; it is the infrastructure beneath it.
The UK is particularly exposed to food insecurity. We import around 40% of our food and are also partly dependent on imported fertiliser[5]. The assessment warns that the failure of two or more major food-producing regions would almost certainly drive global food prices sharply higher and could limit the UK’s ability to import. In a fragmented world, increasingly scarce supply is unlikely to be allocated by a frictionless market: states will intervene, secure provisions and restrict exports.
What action can charity investors take?
As stewards of our clients’ capital, our first responsibility is to recognise the regime in which we are operating. As physical climate losses become more frequent and economically material, not only will affected communities suffer, but governments will be under intense pressure to provide disaster relief, reconstruction, public insurance schemes and support for households and companies. That will intensify pressure on public resources and, as many climate shocks constrain supply, drive more volatile inflation. Central banks already recognise that acute physical events can push output and inflation in unhelpful directions at the same time.
Rebuilding may temporarily lift measured economic activity, but replacing a bridge, factory or home is not the same as creating new wealth. GDP growth can rise while the stock of physical, human and natural capital falls. Investors need to distinguish activity from prosperity, and growth in output from growth in wealth.
There is no credible way to put a precise figure on the consequences. The interactions between climate, ecosystems, technology, policy and geopolitics are too complex. But precision is not the same as preparedness. The task is first to face in the right direction: to stress-test assumptions, demand larger margins of safety where risks are under-priced, and look for companies and assets that strengthen resilience.
This thinking shapes the themes on which our equity stock selection process focuses. Sarasin introduced Security as its sixth investment theme in April 2025, alongside Ageing, Automation, Climate Change, Digitalisation and Evolving Consumption. We deliberately grouped Security with Climate Change under the broader heading of ‘Future Security’ because the boundary between them is inherently porous. Energy security depends on grids, storage and diversified supply. Food security depends on healthy soils, water, seeds, fertiliser and agricultural productivity. Access to critical minerals depends on geology, processing capacity, trade routes and political relationships. Cybersecurity, defence and resilient infrastructure naturally sit within the same system.
At a more granular level, a company may benefit from expenditure on grid resilience while facing water stress in its factories. A miner may supply metals essential for electrification while imposing material costs on land and communities. An agricultural technology business may improve yields, but only if its products are affordable and protect the natural systems on which crops depend. Ultimately our role, as allocators of capital, is to understand the practical consequences of these deeply interconnected themes and identify those that will be most material.
From analysis to stewardship
Climate and nature are embedded in our fundamental analysis. Our Sustainability Impact Matrix considers fifteen environmental, social and governance factors. Five are explicitly environmental: climate change, circular economy, land, water and air. This gives us a consistent way to identify both financial materiality: how environmental shifts affect a company’s operations, and impact materiality: how a company itself affects both people and planet. The two frequently converge through regulation, litigation, resource costs, customer demand, capital expenditure and the cost of capital.
This work is supplemented by Net Zero Alignment Assessments and Climate Value at Risk analysis of our most carbon-intensive holdings. We examine physical disruption as well as transition risks and opportunities. Where a business is poorly placed to adapt and long-term capital is at risk, that matters to valuation and investment selection; where it has the capacity to transform, active ownership can help accelerate progress.
Stewardship is therefore not an optional accompaniment to portfolio construction; it is an integral part of risk management. Our research into banks illustrates this point. Banks are exposed when severe weather damages borrowers and collateral, when transition changes undermine business models, and indirectly when climate shocks weaken economic growth. In a July 2026 Financial Times letter, Sarasin and the Local Authority Pension Fund Forum cited estimates that California’s 2025 wildfires cost $95bn-$164bn; a state law granting mortgage forbearance to affected borrowers made the connection to bank lending explicit[6].
We believe that climate should be treated by financial institutions like other risks, such as cyber, global pandemics or geopolitical instability. Expected-credit-loss accounting is forward-looking to ensure that banks build resilience to future threats; climate risk should not receive a special exemption. That principle informs our engagement with company boards, auditors, regulators and accounting standard-setters. We press for material climate assumptions to be visible in accounts, capital allocation and lending decisions, and we escalate where dialogue fails. The purpose is not to produce tidier sustainability reports. It is to protect long-term capital by making sure risks enter the numbers on which decisions are based.
A practical choice for charities
Climate is integral to how we think about economies, themes, securities and stewardship. For charity investors seeking a more explicit approach, the Sarasin Climate Active Endowments strategy is designed to promote alignment with the goals of the Paris Agreement across a long-term, diversified multi-asset portfolio, targeting UK CPI + 4% over 7 - 10 year rolling periods. It combines climate-aware investment analysis with robust engagement, intended to promote real-world emissions reduction, rather than relying solely on divestment. The approach is also available through segregated mandates, including equity-only or bespoke multi-asset portfolios, for charities requiring a stronger climate tilt or additional exclusions.
Trustees do not need to predict the date of the next wildfire or ecosystem tipping point. They do need to ask whether their investment policy, appointed manager and reporting recognise that climate and nature loss can affect inflation, balance sheets, company cash flows and social stability all at once. National security begins with functioning natural ecosystems. Financial security does too.
[1] Al Jazeera, “Wildfires in southwest Europe: what we know so far” 27 July 2026
[2] European Commission Joint Research Centre, “Current wildfire situation in Europe,” data from the Copernicus European Forest Fire Information System (EFFIS), updated 28 August 2026, https://joint-research-centre.ec.europa.eu/scientific-activities/natural-and-man-made-hazards/forest-fires/current-wildfire-situation-europe_en
[3] The Independent, “Nepal flash floods cause glacier avalanche, landslide,” 30 August 2026, https://www.independent.co.uk/asia/south-asia/nepal-flash-floods-cause-glacier-avalanche-landslide-b3040094.html
[4] Department for Environment, Food & Rural Affairs / Joint Intelligence Committee, “Global biodiversity loss, ecosystem collapse and national security: A national security assessment,” 20 January 2026, https://assets.publishing.service.gov.uk/media/696e0eae719d837d69afc7de/National_security_assessment_-_global_biodiversity_loss__ecosystem_collapse_and_national_security.pdf
[5] AHDB, “Where does the UK import fertiliser from?,” 25 March 2024, https://ahdb.org.uk/news/where-does-the-uk-import-fertiliser-from
[6] Sarasin & Partners LLP and the Local Authority Pension Fund Forum (LAPFF), letter to the Financial Times in response to Lisa Sachs, 24 July 2026, https://www.ft.com/content/d017af42-e51b-47a5-8697-32f8dd714ab0
Important information
This document is intended for UK registered charities and persons acting in an investment capacity on their behalf. You should not act or rely on any information contained in this document without seeking advice from a professional adviser.
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