June 06, 2022

report cover

View/download the report

One of the Coalition's priorities is to improve Members’ understanding of climate- and nature-related risks, as well as opportunities that will arise with the transition to net-zero, nature-positive economies. Nature loss and climate change are interrelated and neither crisis can be successfully resolved unless both are tackled together. As the understanding of the impacts of climate change become clearer, concern about nature loss among Ministries of Finance (MoFs) is growing. Hence, following the publication of the 2021 Coalition report on climate-related risks, the Coalition deemed it crucial to produce a report on nature-related risks. This report has been prepared by the Helsinki Principle 5 workstream, yet covers considerations relevant to all Helsinki Principles.

The gap between humanity’s demands on nature and nature's ability to supply is widening and threatens continued provision of the critical ecosystem services that underpin key economic sectors. Awareness of the resulting nature-related risks among policymakers, real sector companies, financial institutions, and citizens has increased precipitously over the past several years. Simultaneously, the Parties to the Convention on Biological Diversity (CBD) are taking steps to reach an agreement on a post-2020 global biodiversity framework (to be decided at COP15). Finance is central to the negotiations and will be critical to ensuring effective implementation of the framework. For the first time, a range of financial institutions are highly engaged in supporting Parties to reach an ambitious framework. Nature is also playing a more prominent role than ever in the United Nations Framework Convention on Climate Change (UNFCCC) negotiations. For all these reasons, it is a critical time for Coalition Members to deepen their understanding of nature-related risks, how these risks are likely to transmit, and steps they can take to manage them.

This report focuses on economic and financial risks of nature loss, particularly those with fiscal implications. A range of potential policy options is presented, which could help MoFs manage nature-related risks. While the roles and responsibilities of MoFs differ across countries, they all control levers that can make a significant contribution to reducing nature loss and the resulting risks. At the same time, many of the policy recommendations in the report can be most effectively implemented through a coordinated approach with other relevant ministries and possibly with supervisor, regulator, or central bank counterparts. This report is an important step to help Coalition Members better understand nature-related risks and possible fiscal implications, as well as to initiate a discussion about policy challenges and how to best address them.