Are financial institutions overlooking nature-related risks?


Despite the vital role of nature in financial decision-making, a new report indicates that the majority of institutions are not giving it due consideration.

The ‘Nature in Green Finance’ report by the global non-profit disclosure platform, CDP, underlines the urgent need for financial institutions to embed a “holistic approach” in their operations, taking into account both nature and climate. This approach is pivotal not only for the health of our ecosystems but also to achieve net-zero emissions by 2050.

An interesting finding from the report reveals that almost 95% of financial institutions have integrated climate change into their business strategies or financial planning. This is a significant number, showing a growing awareness and consideration of the impact of climate change on finance. However, the narrative changes when it comes to forest issues and water security, with less than a third of institutions taking these vital factors into account.

The CDP report points out a stark shortcoming in governance and expertise at the board level, suggesting that many institutions “lack the necessary governance mechanisms and board-level expertise” to seamlessly integrate nature-related matters across their operations.

Opportunities worth over $5tn across climate, forest, and water sectors are up for grabs. Yet, less than 30% of financial institutions are making the most of these potential profits.

CDP Global Director, Requesting Authorities – Capital Markets, Claire Elsdon commented, “Financial institutions must fully commit to addressing environmental issues holistically to better position them to capitalise on emerging opportunities; offer green financing solutions that support businesses in mitigating deforestation and water-related impact; get ahead of upcoming reporting requirements; rapidly decarbonise their portfolio and meet net zero ambitions.”

Keep up with all the latest FinTech news here.

Copyright © 2023 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.