What are nature-related financial risks?
Leading companies recognise that a prosperous business relies upon nature. They also recognise that the ‘E’ in ‘ESG’ is about protecting our biodiversity and natural capital, as well as our climate.
Nature’s health is under pressure from global trends in consumption, structural inequalities and economic growth.
This creates long-term risks to business, citizens and wider society who depend on nature. These pose nature-related financial risks to financial institutions
Empowering financial institutions to recognise nature-related financial risks
The Banking Environment Initiative and Investment Leaders Group at the CISL Centre for Sustainable Finance are working closely with member banks and asset managers to:
- Identify and assess the financial risks of nature loss.
- Determine a common language and framework for risk identification, so that nature-related financial risks can begin to be measured and managed by industry leaders.
To achieve these two objectives CISL, financial institutions and academics are co-creating frameworks, methodologies and business briefings, as outlined below. By doing so, we are targeting a third objective:
- Enabling the wider financial community to understand, measure and manage the financial materiality and risk nature loss.
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Connecting finance leaders with Cambridge academics
A steering group of ten global banks and asset managers is co-delivering this programme of work, drawn from the Banking Environment Initiative and Investment Leaders Group. Individuals on the steering group bring a range of expertise, with titles including:
- Head of Asset Allocation
- Global Head of Chief Investment Office
- Head of Responsible Investment
- Head of ESG Research
- Positive Impact Fund Manager
- Global Head of Sustainable Finance
- TCFD Implementation Manager
- Head of Sustainability Strategy
- Climate, Environment and Emerging Issues Lead
In addition to this team, we are joined by academics from the University of Cambridge conservation cluster, the largest of its kind worldwide, and supported by the CISL Business & Nature team:
- Dr Anthony Waldron, Leader of the 30 x 30 Economic Analysis project at the Cambridge Conservation Initiative
- Dr Cath Tayleur, lead for the Trade, Development and Environment Hub project within the CISL Business & Nature team
- Dr Matthew Agarwala, Leader of the Wealth Economy project at the Bennett Institute for Public Policy
The programme is led by Dr Nina Seega, Research Director at the CISL Centre for Sustainable Finance and leading expert in the field of environment risk assessment in financial decision making. The programme team comprises Grant Rudgley, Annabel Ross and Lucy Auden from CISL.
Latest
Handbook for Nature-related financial risks: Key concepts and a framework for identification
1 March 2021 – The University of Cambridge Institute for Sustainability Leadership (CISL) has published a handbook for understanding and identifying nature-related financial risks.
Financial materiality of biodiversity loss and land degradation
May 2020 – The University of Cambridge Institute for Sustainability Leadership (CISL) has published a new briefing document mapping the existing methods and tools that can be used to derive the materiality of biodiversity loss and land degradation.
Measuring business impacts on nature: A framework to support better stewardship of biodiversity in global supply chains
17 April 2020 – A new report from The Natural Capital Impact Group introduces a Biodiversity Impact Metric to help businesses manage their supply chain risks associated with nature. Highlighting the important role of the private sector in protecting and restoring biodiversity, the report is published in the midst of a global pandemic which has, in part, been caused by the breakdown of our relationship with nature. This report has been designed to help companies increase their resilience to such shocks by understanding the impacts they are responsible for and considering the benefits of restoring biodiversity and nature.
