"Discussion by Anders Nordheim of our acronym on the significant part played by Natural Capital, a silent supporter key to our societal and economic flourishing"
Financial institutions are increasingly recognising the importance of considering nature as a form of capital. Anders Nordheim, Programme Leader - Ecosystems and Sustainable Land Use at the United Nations Environment Programme Finance Initiative (UNEP FI), emphasised this point in the launch of 'Connecting Finance and Natural Capital'.
This approach does not replace existing sustainability or environmental risk management initiatives but can build on existing practices. The goal is to generate trusted, credible, and actionable information for decision-making around operational, market, reputational, and societal risks.
The Natural Capital Finance Alliance (NCFA), a collaboration between UNEP FI and banks, insurers, and investors, has developed a suite of tools to help financial institutions assess natural capital assets like water and forests. One such tool is the ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure) platform, often referred to as a "Heatmap" due to its visual representation of how various sectors depend on natural capital.
Several major financial institutions support the NCFA, including AXA, BNP Paribas, Credit Suisse (until its acquisition by UBS), ING, Rabobank, Standard Chartered, Citi, HSBC, Allianz, and Zurich Insurance Group.
While there is no publicly accessible, verifiable information about a specific Supplement titled "Connecting Finance and Natural Capital" being officially developed and published by a specific group of financial institutions, there are numerous initiatives and publications around the topic of Natural Capital and Finance, with various institutions cooperating.
Some of the key organisations and initiatives in this field include the World Business Council for Sustainable Development (WBCSD), the World Economic Forum (WEF), and the Taskforce on Nature-related Financial Disclosures (TNFD).
The NCFA is currently working on a project that maps the reliance on natural capital for 160 economic sub-sectors, creating a heatmap of natural capital dependencies. The Advancing Environmental Risk Management (AERM) research will be available towards the end of the year.
The 'Connecting Finance and Natural Capital' report, which can be downloaded here, provides guidance on how financial institutions can assess the impacts and dependencies around natural capital.
In most of the world, natural capital is being depleted and destroyed, compromising our ability to continue business as usual. By considering nature as a form of capital, financial institutions can improve their identification and management of natural capital-related risks and opportunities.
Further Information
- ENCORE Tool
- Natural Capital Finance Alliance
- UNEP FI
- TNFD
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