There is growing awareness that biodiversity loss poses a significant risk to the global economy and that it can translate in financial risk across different asset classes, this awareness has been enhanced by the development of the Taskforce on Nature-related Financial Disclosures (TNFD) framework in response to the global recognition that financial decisions must consider nature and biodiversity.
However, there is a lack of clarity on what this means for different investable assets, and how the financial risk and impact methodologies can be designed and tested across project finance, large corporate lending or SME lending exposed to nature and biodiversity-related risks (N&B risks) and impacts, either directly or through supply chain dependencies. Furthermore, the scope of regulation, notably in the EU, has evolved extremely fast with the integration of biodiversity sensitive and protected areas as a key principle adverse impact which sustainable financial products need to observe and improve on over time.
It is therefore essential for NatWest Group (NWG), and more generally for the banking sector, to understand how N&B risks and impacts could be analysed and integrated in their investment decision making processes.
Participating Members
Professor Theodor Cojoianu