Three types of capital are central to understanding risk and return: financial, human and natural capital. While the financial system has long recognised the importance of financial and human capital, the role of natural capital is only now coming into focus.
As financial institutions increasingly view biodiversity loss and ecosystem degradation as systemic threats to economic stability, nature-related risk is moving higher up the financial agenda.
Depending on nature
Nature forms the foundation on which everything else is built. More than half of global gross domestic product – around $58tn – is moderately or highly dependent on nature. Economies rely on healthy ecosystems for everything – from agricultural production and water supply to the raw materials used in construction and manufacturing. Ecosystems also help protect against physical risks such as flooding, wildfires and landslides.
But ecosystems are approaching tipping points across oceans, freshwater and forests. As these ecosystems further degrade, the risks are increasingly being felt across the economy and financial markets. These include disrupted supply chains, inflationary pressures – particularly in food and commodities – and increasing pressure on insurance markets. Nature risk is therefore not only an environmental issue, but a financial stability issue.
Despite the growing economic importance of nature-related risks, it remains largely absent from market pricing and risk assessment. To examine how financial institutions can better measure, assess and address biodiversity and nature-related risks, OMFIF co-hosted a roundtable with WWF’s Greening Financial Regulation Initiative. Participants discussed the constraints preventing more meaningful progress in this area, while also identifying the opportunities for investors.
From data challenges to action on nature risk
Roundtable participants stressed that significant progress has been made when it comes to developing nature-related datasets and analytical risk tools. The challenge now lies in improving their standardisation and ensuring that the existing data can be used more effectively to identify both risks and opportunities.
Unlike climate risk, which can be assessed using a widely recognised metric – greenhouse gas emissions – nature-related risks are often highly location-specific and encompass multiple dimensions of ecosystems, making them more complex to measure.
But this complexity should not be a reason for inaction. Central banks and financial regulators can already start integrating nature considerations into risk assessments using the information available today, while continuing to refine methodologies as data quality improves.
The development of common metrics for ecosystem impacts and dependencies, together with greater corporate transparency on interactions with nature, will further strengthen decision-making. As data, standards and disclosure practices continue to evolve, institutions will be better equipped to identify risks, seize emerging opportunities and scale investment in nature-positive solutions.
Another challenge for central banks and regulators is building capacity and improving coordination. Participants agreed there is a need for shared frameworks and methodologies across jurisdictions, as well as greater coordination between the public and private sectors. Financial institutions also need to invest in training and education to strengthen internal expertise and raise awareness of nature-related risks.
Moving forward
While advances in geospatial data and analytics are improving the ability to identify, measure and map nature-related risks, more work is needed to build credible indicators and standardised datasets that can support financial decision-making.
Standard setting is also evolving. The International Sustainability Standards Board requires companies to disclose material information about all sustainability-related risks and opportunities, including those that could reasonably be expected to affect a company’s prospects (International Financial Reporting Standards S1). The ISSB Board has now proposed a non-mandatory IFRS Practice Statement to provide guidance on how these risks may be reported.
The Task Force on Nature-related Financial Disclosures is emerging as the main reference point for companies and financial institutions to assess, report and act on nature-related issues. It provides a structure for identifying dependencies, impacts, risks and opportunities linked to nature. There is a clear direction towards more harmonised and investor-relevant disclosures. However, fragmentation in frameworks and difficulties with collecting and processing data mean that implementation will take time.
Cross-sector and cross-border collaboration will be essential in developing nature scenarios, improving risk models and creating greater consistency in standards globally.
From risk to opportunity
While much of the discussion focused on risk, participants also highighted the growing investment opportunities linked to nature. Nature-based solutions and resilience investments were identified as areas with strong potential for attracting capital, although a gap remains between investor interest and the availability of investable opportunities.
OMFIF’s Transition Finance Working Group found similar views in discussions with pension funds in 2025. All the institutions we spoke with said that, while they were not yet actively investing in nature-related products and assets, they were closely monitoring the market. Many see long-term potential in nature as an emerging asset class, but some believe that the necessary frameworks are not yet in place for them to fully enter the market.
To address this, participants stressed the need for clearer and stronger incentives to support risk mitigation, making use of blended finance vehicles to allow private investors to enter more deals. Aligning financial returns with nature-positive outcomes would help to enable a shift from treating nature as an externality to recognising it as a core asset within the economy.
A market in transition
Nature-related risk is gradually becoming an integral part of mainstream financial risk management, but the market is still in transition. As the degradation of nature and ecosystems worsens, threats to the stability of the financial system grow stronger every year.
The roundtable provided a valuable platform for bringing together key actors from across the financial and policy landscape, including financial regulators, central banks, finance ministries, data providers and civil society organisations like WWF’s Greening Financial Regulation Initiative. By fostering dialogue across sectors, it helped build a shared understanding of the challenges and opportunities for integrating nature-related risks into financial decision-making.
Building on this momentum, OMFIF and WWF plan to host further roundtables in 2026 to review progress, deepen collaboration and identifiy concrete actions to accelerate the transition towards a net-zero, nature-positive economy and financial system.
Maud Abdelli is Lead, WWF Greening Financial Regulation Initiative and Sarah Moloney is Editorial Director at OMFIF.
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