NGFS and INSPIRE have established a joint Study Group on Biodiversity and Financial Stability, with the aim to understand the potential implications of biodiversity loss for financial stability.
Biodiversity is declining faster than at any time in human history. Policy efforts have been unable to slow the global loss of biodiversity, while the pressures driving this decline continue to intensify. In addition to increasing awareness of the impacts of economic activities on biodiversity, some central banks and financial supervisors are starting to recognise the potential of biodiversity loss as a threat to their core mandates for financial and monetary stability.
Applying a ‘double materiality’ approach to biodiversity loss could be particularly insightful. Nature-related hazards can affect companies and financial institutions, but companies and financial institutions can also affect biodiversity and the climate. This suggests that a comprehensive approach to risk management should account for how financial institutions are exposed to biodiversity-related financial risks, but also how they contribute to such risks