As nature loss accelerates globally, nature-related risks and their potential impacts on economic and financial stability are gaining attention from policymakers, supervisors and financial institutions around the world. The cumulative economic costs of nature degradation over the next 5 years is estimated to reach US$2.15 trillion if the loss of ecosystem services such as pollination or regulation of air and water quality is left unchecked.[1] The chain of risks triggered by nature loss and degradation is well documented, moving from ecosystems to the production of goods and services, and in turn impacting the financial system.[2]

A new UNEP FI policy brief, “Nature-related Regulation of Banks in China and the EU: A comparative landscape analysis”, examines how nature-related considerations are being incorporated into banking-relevant regulation across these two major economic and financial systems.

The publication provides a comparative overview of developments across China and the European Union, focusing on three interconnected areas: environmental policy context, corporate regulation and market frameworks, and prudential regulation and supervision. The brief aims to help financial sector practitioners and policymakers understand how nature-related considerations are being incorporated into banking-relevant regulation in China and the EU, within a rapidly evolving global landscape.

As nature-related factors become more frequently considered alongside longer-established climate-related elements, financial institutions operating across jurisdictions are navigating a growing range of regulatory expectations, disclosure requirement, taxonomy and supervisory schemes. Understanding how these frameworks are developing across jurisdictions has become increasingly relevant for both banks and regulators.

A central theme of the brief is the interaction between different layers of regulation (see Figure 1). Environmental strategies and biodiversity-related policy objectives influence the operating environment of banks’ clients. Corporate disclosure, taxonomy and due diligence frameworks shape how information is generated and reported. Prudential regulators and supervisors, in turn, are increasingly considering how nature-related risks may affect financial institutions and the broader financial system.

Figure 1: The nature-related sustainable finance policy landscape. Visual adapted from “Navigating Nature-Related Regulations for Banks” (UNEP FI and WWF, 2024).

The brief explores each of these layers:

  • Governance and environmental policy context
    Both jurisdictions have expressed commitment to implementing the Kunming–Montreal Global Biodiversity Framework and other multilateral environmental agreements through their respective environmental policy frameworks. China combines centrally coordinated strategic guidance, shaped by the concept of “ecological civilization”, with local pilot experimentation, while the EU operates through a multi-level governance structure combining EU-wide regulations with national transposition of directives. The resulting policies shape the operating environment of banks’ clients and, consequently, banks’ lending and investment portfolios.
  • Corporate regulation and related market frameworks for nature finance
    In both jurisdictions, taxonomy and disclosure frameworks have expanded their treatment of environmental topics beyond climate. While the respective frameworks differ in structure, legal basis and scope, the brief notes that they are becoming increasingly relevant sources of information for financial institutions seeking to understand nature-related risks and impacts associated with lending and investment activities.
  • Nature-related prudential regulation and supervision
    The brief also reviews how supervisors and regulators in China and the EU are approaching nature risks within banking regulation and supervision, including developments related to governance, risk management, supervisory review processes and prudential disclosures. It finds that while nature-related prudential measures are at an earlier stage compared to climate-related consideration, approaches continue to evolve and rapidly gain relevance.

While China and the EU are both integrating nature-related considerations through different institutional, legal and technical pathways, their shared participation in international platforms can help enable innovative and consistent regulatory development, transparency and implementation across jurisdictions. It also gives rise to opportunities for mutual learning, technical exchange and improved comparability in approaches to nature-related financial regulation.

The policy brief is part of UNEP FI’s Asia Pacific Policy Brief series and builds on UNEP FI’s broader work on sustainable finance regulation, nature-related financial risks and the evolving role of the financial sector in responding to environmental challenges.

Read the policy brief, and register for the related UNEP FI Regulatory Implementation Support Programme (RISP) webinar, featuring a panel of experts exploring the prudential perspective of nature-related regulations in greater depth.

 

 

[1] Ceres (2025). Nature’s Price Tag – The economic cost of nature loss.

[2] NGFS (2024). Nature-Related Financial Risks: A Conceptual Framework to Guide Action by Central Banks and Supervisors.