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New Guide Helps Banks, Investors, Insurers Assess Their Natural Capital Impacts

Image credit: Ethan Hoover/Unsplash

The Natural Capital Finance Alliance (NCFA), together with the Natural Capital Coalition and VBDO, has launched a groundbreaking guide to help financial institutions understand and assess their reliance on natural capital — i.e. the clean air, oceans, ecosystems and minerals that most of our goods and services depend on. 

Connecting Finance and Natural Capital: A Supplement to the Natural Capital Protocol was launched at an event hosted by ICAEW in London on October 12.

The supplement was published against the backdrop of the latest Special Report from the IPCC (Intergovernmental Panel on Climate Change), which warned of the negative consequences to the natural systems that underpin the global economy, given the current rate of climate change. This creates significant consequences for many businesses, and those who finance or insure them.

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“The latest report from the IPCC paints a worrying picture of climate change,” said NCFA Steering Committee member Niki Mardas, who spoke at the ICAEW event. “It shows that 2°C of warming poses enormous and irreversible threats to coral reefs, insects, plant life and marine ecosystems. It also increases the likelihood of natural capital-related risks such as forest fires, extreme weather events and the spread of invasive species.

“But the report also concludes that a 1.5° world is possible if we act quickly and undertake rapid and far-reaching transitions in energy, land, urban, infrastructure and industrial systems. The implications of this for financial institutions are monumental, with entire industries needing to change business models and rethink their relationship with natural capital.

“The supplement is an important step to helping financial institutions start the journey of measuring and valuing natural capital risks and opportunities.”

Today’s guidance is the first of two major launches this year to help financial institutions understand natural capital risk. In November, NCFA will launch its Natural Capital Explorer —the world's first comprehensive knowledge base and tool enabling banks, asset managers and insurers to screen their portfolios for natural capital risks. The tool will deliver a simple 'heat map' to financial institutions, detailing how companies they lend to or invest in — across 167 business sectors — depend on nature to enable their production processes, what the associated risks may be, and the data that can be used to qualify and quantify risk exposure at a global and national level. 

Launched in 2006, Sustainable Brands has become a global learning, collaboration, and commerce community of forward-thinking business and brand strategy, marketing, innovation and sustainability professionals who are leading the way to a better future. We recognize that brands today have… [Read more about Sustainable Brands]

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