Governments, central banks and financial institutions around the world are becoming increasingly attuned to addressing the threats that climate change and nature loss pose to people, economies and ecosystems. From extreme weather events to dwindling supplies of natural resources, the crises demand strong policy signals and coordinated responses.
Together, the United Nations Environment Programme Finance Initiative and WWF’s Greening Financial Regulation Initiative conducted research in December 2024 that found the adoption of nature-related regulations for banks is accelerating globally, albeit with regional differences. The jointly published report underlined the need for future actions to function as part of an array of broad, coherent public and private sector policies and initiatives that address the crucial interplay between banks, the global financial system and the real economy.
Through an evaluation of more than 50 jurisdictions spanning all major regions, the report finds that central banks and supervisors in at least 29 of these jurisdictions – totalling more than €75tn in assets – have started to consider nature risk in their prudential frameworks. While further policy landscape analysis reflects this, showing increased integration of nature-related risks worldwide, much of these integration efforts are occurring in the global South.
Using nature-related indicators from WWF’s 2024 Sustainable Financial Regulations assessment framework, the report found that the global South is displaying significant leadership in integrating nature into banking regulation. Countries in Latin America, led by Brazil, and in southeast Asia – including Singapore, Malaysia and the Philippines – along with some African countries, such as Morocco, have all begun to reflect nature-related issues in prudential regulation. Europe has also seen an influx of new prudential, corporate disclosure and taxonomy regulations that address nature-related topics.
Policy-makers globally are starting to tackle both the physical risks arising from ecosystem degradation and transition risks posed by economic actors’ activities that are misaligned with the protection and restoration of nature. While the report focuses on this dynamic, it goes beyond examining prudential regulation to consider the wider system of rules and frameworks. This includes the need for aligning taxonomies with nature, corporate disclosures and due diligence obligations, that depend on and inform each other – both locally within jurisdictions as well as globally across jurisdictions.
There are three key areas outlined to promote coherence and synergies between prudential regulation and the broader policy landscape for banks. First of which is increasing accessibility and availability of reliable nature data. Second is mobilising resources towards advanced risk measurement modelling of nature risks and lastly, prioritising policies that address environmental externalities related to the drivers of nature loss.
Strong policy signals and coordinated responses by governments, central banks and financial institutions are crucial to help protect financial stability by reducing nature-related risks and supporting nature-positive activities. The case studies provided in the report show how this can be done and what types of regulatory actions are currently undertaken to halt biodiversity loss by 2030.
UNEP FI and WWF are exploring follow-up work in the realm of nature and policy. WWF is also working on guidance to support central banks and financial regulators in addressing the many facets of nature challenges, including forests, water and oceans.
The report was developed with help from the State Secretariat for Economic Affairs under the project ‘From Awareness to Action: Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) Phase II’.
Maud Abdelli is Global Lead at the Greening Financial Regulation Initiative at WWF and Laura Canas da Costa is Global Policy Co-Lead of the United Nations Environment Programme Finance Initiative.
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