NGFS provides new tools to manage nature-related financial risks

The package provides practical tools for central banks and supervisors to integrate nature-related risks into their work to help strengthen the resilience of the financial system. Nature degradation, such as deteriorating water or soil quality, can have knock-on effects that can lead to economic and financial damage.   
Building on the NGFS Conceptual Framework on Nature-related Financial Risks developed in 2024, the package includes three complementary notes: a technical note on nature-related data, a note on modelling tools for nature scenarios, and a note on supervisory practices.

Note on Nature-Related Data

More data is becoming available to support the analysis of nature-related financial risks. This note helps users identify relevant data sources and prioritise data and metrics according to specific use cases. It presents case studies showing how nature-related indicators can support financial risk analysis. Key lessons include the need for centralised data infrastructure, improved geospatial information, and combined datasets to better reflect complex ecosystem dynamics. The note also highlights the potential of new technologies, such as artificial intelligence, as well as stronger public-private cooperation to improve data quality and availability

Note on Modelling Tools for Nature Scenarios

This note takes a forward-looking view of how nature-related scenarios can better reflect the links between nature, climate and the economy. It highlights current modelling gaps, especially in understanding how climate change and nature loss interact, and points to the growing set of tools available to assess nature loss. It identifies priorities such as aiming at more granular data, multidisciplinary approaches and better treatment of uncertainty. The note also provides a set of core design principles to support the development of future NGFS nature scenarios.

Note on Supervision of Nature Related Financial Risks

Nature-related risks – whether physical or transition – can affect established financial risk categories. As financial institutions’ reliance on ecosystem services becomes clearer, these risks are gaining prominence. Although some supervisory challenges persist – including data gaps, methodological fragmentation and the need for closer alignment with climate-related work – supervisory practices in this area are emerging. To help support this progress, this note proposes a pragmatic four step approach that builds on existing climate supervision and addresses current limitations. It offers a pathway towards a more integrated climate-nature prudential framework.

Quote from Sabine Mauderer, Chair of the NGFS and First Deputy Governor of the Deutsche Bundesbank

It is increasingly important for central banks and supervisors to understand the risks linked to nature loss. When ecosystems are damaged, the effects can spread through the economy. With this package of reports, we provide practical tools to help assess and manage these risks. Challenges remain, especially when it comes to improving data and understanding the complex links between nature, climate and the economy. The NGFS will continue working on these topics, to support a resilient financial system that can manage nature-related risks. 

About the NGFS 

The Network for Greening the Financial System (NGFS), launched at the Paris One Planet Summit on 12 December 2017, is a group of central banks and supervisors, which on a voluntary basis is willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 149 central banks and supervisors and 24 observers. 

The NGFS is chaired by Sabine Mauderer, First Deputy Governor of the Deutsche Bundesbank, with the support of the Vice Chair, Fundi Tshazibana, Deputy Governor of the South African Reserve Bank and Chief Executive Officer of the Prudential Authority. The Secretariat, headed by Yann Marin, is provided by the Banque de France. 

For more details, visit the NGFS website, LinkedIn and 2024 Annual Report, or contact the NGFS Secretariat at Banque de France sec.ngfs@banque-france.fr  

Press Office at Banque de France: +33 (0) 1 42 92 39 00 / presse@banque-france.fr