Insights

International insights

Demystifying biodiversity finance(Opens in a new tab/window)

A new paper on demystifying biodiversity finance, published(Opens in a new tab/window) in the Nature Reviews Biodiversity journal, highlights the importance of the financial sector in biodiversity conservation and restoration. It calls for an interdisciplinary bridge between the finance and conservation sectors.

The paper compares three financial mechanisms that support upfront biodiversity financing: equity, loans and bonds. When analysing private equity investments, from the details available, findings show a focus on forestry, agriculture or soil management interventions. It also finds that the average size of biodiversity financing was larger than ordinary conservation projects, with an average of US$22.8 million. The viability of equity investments in biodiversity relies on the strength and reliability of the invested businesses’ revenue streams. This is supported by regulatory demands. The paper provides the example of the UK’s Biodiversity Net Gain policy, which provides investors greater certainty over future sales of offset units in the UK thereby increasing the predictability of cash flow and supporting up-front equity investment. 

The paper concludes that return-seeking biodiversity finance that generates commercial returns without delivering ecological outcomes is unsustainable. Scaling these return-seeking mechanisms, while ensuring they better contribute to meeting global biodiversity goals, will require more attractive returns, lower risks or both for investors.

Working Paper: Measuring ecosystem state for biodiversity footprints(Opens in a new tab/window)

The Biodiversity Footprint Company (TBFC) has published(Opens in a new tab/window) a paper on measuring ecosystem state. The paper consolidates existing work, identifies gaps and provides solutions to enable businesses to meaningfully apply this knowledge. The paper includes a case study from the Sunshine Coast, Queensland to demonstrate TBFC’s practical approach to ecosystem state measurement. It shows that the differences in typology, spatial scale, measurement methods and reference states leads to substantially different ecosystem state assessments. Finer resolutions may reveal residual biodiversity liabilities, which may remain hidden in courser levels, but are difficult to scale. 

TBFC concludes that credible biodiversity foot printing requires methodological transparency, ecological consistency, and explicit recognition of uncertainty. By adopting rigorous and well-documented methods, businesses can generate assessments that are comparable, defensible, and aligned with the deeper objective of reversing biodiversity loss.

Making nature finance investable(Opens in a new tab/window)

The Institute of Chartered Accountants Scotland shared(Opens in a new tab/window) insights and a recording of a discussion it hosted at this year’s Scottish Forum on Natural Capital on exploring what it takes to make nature investible. The discussion highlighted that nature restoration, to attract capital, needs to operate with clear rules, consistent measurement and a shared understanding of risk and value. Speakers noted that confidence grows when governments step in to create structure through regulation, reporting requirements or market mechanisms. 

The panel noted that insurance can enable change and unlock investment by reducing uncertainty. Nature-based projects need better risk management, which may include insurance, legal covenants and sound governance structures, to mitigate the risk of long project timelines and evolving data. The panel also noted that a mindset shift needs to occur to rethink how we value nature, that we need to ensure communities benefit from projects, and that innovation and systems change is needed to move towards a more circular, nature-based economy.

Nature loss is a business-critical risk(Opens in a new tab/window)

Institute of Chartered Accountants in England and Wales (ICAEW) has published(Opens in a new tab/window) insights following a UK government report(Opens in a new tab/window) (January 2026) warning that nature loss presents a threat to UK prosperity and security. The insights emphasise that the starting point is not predicting ecosystem collapse. Instead, understanding where business models, supply chains and earnings depend on stressed natural systems, and how those dependencies transmit to risk into financial performance. ICAEW Sustainability Manager, Toby Roxburgh, notes that ‘nature risk rarely arrives with a neat label. It may show up as disrupted supply chains, price volatility or inflationary pressure’.

The insights highlight that no country is insulated from the risks of ecosystem collapse. The ICAEW calls for members to identify nature-related risks and opportunities, to integrate nature into core financial processes and risk frameworks, strengthen cross-functional insights and collaboration and to engage stakeholders with decision-relevant insights.

The future of biodiversity finance(Opens in a new tab/window)

Nobel Prize laureate, Professor Joseph E. Stiglitz, from the School of International and Public Affairs at Columbia University, argues that nothing less than complete economic transformation can protect natural ecosystems and life on Earth as we know it. Published by the World Economic Forum, Biodiversity as an Asset Class(Opens in a new tab/window) is a five-episode series that profiles leading global thinkers on how we must reconstruct our economic system to protect nature and the future of life on Earth.

Each ~3-minute episode explores topics that include removing barriers to action, the valuation of natural capital, a nature-positive business approach, and the role of philanthropic capital.

Good practices for climate and nature risk management(Opens in a new tab/window)

The European Central Bank (ECB) has published(Opens in a new tab/window) a report providing a supervisory compendium of observed good practices to help banks strengthen their management of climate and nature‑related risks. The report includes insights from a multi‑year supervisory programme (2020–2025) with a self‑assessment by banks, a 2022 thematic review with deep dives, and follow‑up monitoring against staged deadlines through 2024. The report also includes examples from over 60 institutions with varying sophistication, including smaller banks. It provides practical examples specifically for nature‑related risks, an emerging area, including scenario analysis, exposure mapping, client assessment, sector policies, and risk mitigation actions. 

The assessments demonstrate that institutions have predominantly approached the topic from the perspective of corporate social responsibility and have yet to develop a comprehensive risk management approach. The guide, while not binding, describes how the ECB expects institutions to consider climate-related and environmental risks, as drivers of existing categories of risk, when formulating and implementing their business strategy and governance and risk management frameworks.

The role of biodiversity risk in shaping bank lending decisions(Opens in a new tab/window)

The European Central Bank (ECB) has published(Opens in a new tab/window) a paper as part of its working paper series, which finds that biodiversity risk is financially material for banks and firms. The paper finds that borrowers with higher biodiversity risk face significantly higher loan spreads, showing that banks already price this risk into lending decisions. However, the impact is mainly reflected in pricing rather than credit availability, with evidence suggesting banks adjust along the pricing margin rather than restricting credit supply. 

The paper highlights that biodiversity loss threatens essential natural resources such as water, soil quality, and biological inputs that underpin production processes, making it directly relevant to corporate performance and creditworthiness. It also shows that when firms experience environmental violations, banks become more sensitive to biodiversity risk, increasing loan pricing penalties and reinforcing the link between environmental performance and financing costs. 

The paper’s findings provide the first systematic evidence that biodiversity risk constitutes a financially material dimension of environmental risk that is incorporated into bank lending decisions. The paper includes key drivers that capture overall exposure, including air pollution, climate change, land use and water pollution. The paper suggest that banks incorporate biodiversity risk primarily through loan pricing rather than through credit allocation and that biodiversity risk may play an increasingly important role in financial contracting as disclosure practices and regulatory frameworks continue to evolve.

Canada’s Strategy to Protect Nature(Opens in a new tab/window)

Canada’s Secretary of State (Nature), the Honourable Nathalie Provost, has highlighted(Opens in a new tab/window) 16 projects across British Columbia representing a $272 million investment to plant over 95 million trees. The projects are intended to help protect nature and biodiversity in Canada by restoring critical habitats for species at risk and wildfire-affected areas, as well as supporting Indigenous-led reforestation efforts through tree planting.