Whilst progress has been made on understanding climate-related financial risks (CRFR), less attention has been paid to financial risks related to the loss of nature and biodiversity. This policy note reviews the emerging evidence and policy action on these nature-related financial risks (NRFR). As well as facing financial risks from environmental threats, financial actors must contend with the negative impacts facilitated by their financing activities. A key challenge faced by financial institutions and policymakers is that frameworks for understanding NRFR are far less advanced compared to progress made for CRFR. The dynamics and drivers of NRFR are also more complex to estimate quantitatively, whilst some nature-related threats are emerging within a shorter time frame than CRFR. Financial authorities may need to consider interventions on a precautionary basis, justified by judgements and discretion rather than quantitative data.
