Primer on the financial materiality of Nature-based Solutions (NbS)
8 August 2023 – Cambridge Institute for Sustainability Leadership’s (CISL)’s ClimateWise showcases a new primer on the financial materiality of Nature-based Solutions (NbS).
Download the primer.
Naturance
The main objective of the Naturance project, funded by European Union’s Horizon Europe research and innovation programme, is to examine feasibility and performance of solutions that are built on and combine disaster risk financing & investments with nature-based solutions.
The primer
Building on CISL’s Nature-related financial risks workstream, including Why Nature Matters: Nature-related risks and opportunities for insurance underwriting and Roadmap: Identification and integration of nature-related risks and impacts in underwriting and insurance brokerage, ClimateWise has developed this primer on the financial materiality of NbS as half of the re/insurers surveyed believe that nature-related risks are material for their underwriting business. However, nature-related risks are not currently being assessed in underwriting by the majority of re/insurance industry participants. Nature-related risks are also challenging to measure as there are multiple interrelations between nature, society and the global economy that amplify uncertainties.
Building a nature-positive insurance industry
There are at least four different approaches that insurers can adopt to reduce the impact on nature or contribute to its restoration:
- Incentivising nature-positive behaviours with clients and customers
- Innovating in asset protection
- Facilitating capital flows
- Collaborating with governments
The re/insurance industry has an opportunity to revisit and redefine its role in society to support risk management through proactive nature-positive measures and contribute to the protection and restoration of nature, and not simply by reactively responding to claims following a disaster or loss.
Further action
All financial firms are vulnerable to nature-related financial risks; and the financial materiality of nature loss evidenced constitutes an urgent call to action.
We call on the financial community to start identifying nature-related financial risks. The sooner we begin the journey to embedding nature into financial decision-making, the sooner we rewire our economy to protect and restore our natural world.
Citing this report
University of Cambridge Institute for Sustainability Leadership (CISL). (2023). Primer on the financial materiality of Nature-based Solutions (NbS). Cambridge, UK: University of Cambridge Institute for Sustainability Leadership.