Integrating nature risks into decision-making: The study of the Dutch Central Bank

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Integrating nature risks into decision-making: The study of the Dutch Central Bank

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Business and biodiversity basics Identifying and measuring impacts and dependencies Integrating biodiversity into a business context Sustainable investment

The degradation of our natural world poses a threat to our economies and human well-being ambitions currently expressed in the UN's Sustainable Development Goals. Ecosystems, species and the services they provide are highly threatened by economic activities, but at the same time by providing almost all goods and services.

To achieve the goals set out in the Kunming-Montreal Global Biodiversity Framework, the whole of society, particularly business and finance, must halt and reverse its negative effects on nature and contribute to planetary well-being.

Central banks and supervisors have a responsibility – or mandate – to ensure financial stability and identify long-term risks. If a systemic risk is identified, they influence national policies by advising governments and establishing relevant supervisory policies for financial institutions. They also indirectly influence the business sector by ensuring that financial institutions manage risksin their investments, loans, and insurance. Central banks and supervisors play an important role in achieving a nature-positive economy through their policies, their research and approach to long-term risk, and guidance to governments and financial institutions to manage nature-related risks.

The Central Bank of the Netherlands (DNB) has proven to be a leading financial and regulatory institution for its integration of nature into policy and decision-making. DNB's research into risks related to the nature of nature can affect the stability of financial institutions, businesses, and the economy at large.

The bank's investigation also revealed that Dutch financial institutions are exposed to the financing risks they offer through loans, investments and insurance. Natural risks could affect financial stability and therefore fall within the mandate of the Central Bank of the Dutch Central Bank. As part of its Sustainable Finance Strategy, DNB is taking steps to integrate sustainability risks, including nature, into all its core functions and engages with others, including policymakers, to contribute to the management of risks related to nature and financial systems.

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