Governments, central banks, and financial institutions around the world are increasingly recognizing the importance of addressing the interconnected threats to people, economies, and ecosystems posed by climate change and nature loss—from increasing extreme weather events such as wildfires, floods, and unprecedented precipitation to dwindling supplies of natural resources due to environmental degradation and biodiversity loss.  

UNEP FI and WWF’s Greening Financial Regulation Initiative have conducted new research that finds the adoption of nature-related regulations for banks is accelerating globally, albeit with regional differences. The report, “Navigating Nature-related Regulations for Banks: Mapping the Policy Landscape”, underlines the need for future actions to be 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.  

Policy landscape analysis shows increasing integration of nature-related risks globally, with significant leadership in the Global South 

Through a comprehensive 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 77 trillion USD of banking assets—have started to consider nature risk in their prudential frameworks.  

“With this report, we aim to equip banks, policymakers, and others in the financial sector with up-to-date analysis on nature-related regulatory best practices and developments around the world,” said Laura Canas Da Costa, Global Policy Co-Lead at UNEP FI. “We hope this report provides useful insights that help decision-makers prepare for and implement regulatory requirements coming down the line and learn from other jurisdictions’ initiatives.”

Using nature-related indicators from WWF’s 2024 Sustainable Financial Regulations (SUSREG) assessment framework, the report finds 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.

Whole-of-government approach is needed to ensure coherence and synergies across the policy landscape 

The report focuses on how policymakers 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. It goes beyond examining prudential regulation to consider the wider system of rules and frameworks, such as 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.

Three key areas the report identifies for promoting coherence and synergies between prudential regulation and the broader policy landscape for banks are: 1) increasing accessibility and availability of reliable nature data, 2) mobilizing resources towards advanced risk measurement modeling of nature risks, and 3) prioritizing policies that address environmental externalities related to the drivers of nature loss. 

“The Earth is approaching dangerous tipping points, posing grave threats to humanity. This calls for urgent action to transform our global finance system. 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,” said Maud Abdelli, WWF Greening Financial Regulation Lead. “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 is committed to collaborating with members and partners to support and accelerate the financial sector’s efforts in developing innovative strategies that drive progress on nature and biodiversity protection while fostering nature-positive financial flows and enhancing nature-related financial architecture for the benefit of society and the stability of ecosystems and wildlife populations,” said Romie Goedicke den Hertog, Nature Co-Lead at UNEP FI. “This report highlights the urgent need for banks and regulatory authorities to embed nature into their prudential regulation, ensuring that financial systems are aligned with the protection of natural capital and resilient ecosystems.”

UNEP FI and WWF are currently exploring follow-up work in the realm of nature and policy. WWF is also currently working on guidance to support central banks and financial regulators in addressing the many facets of nature challenges, including forest, water, and oceans. Stakeholders are encouraged to contact the authors of the report for more information. 

The report was developed with financial support of the Swiss State Secretariat for Economic Affairs (SECO) under the project From Awareness to Action: Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) Phase II.