GRA · Climate and Nature Financial Risk
Spatial financeWhere capital meets hazard, exposure and transition
Nature dependencies
Businesses depend on nature for water, pollination, soil fertility, flood regulation and raw materials, and they affect nature through land use, pollution and extraction. As ecosystems degrade, dependent firms face higher costs and disruption, and regulation of impacts creates transition risk. This page sets out how nature-related financial risk arises, how it is assessed, and who decides.
Nature dependencies on the record.
Nature dependencies: how the risk develops.
Ecosystem services, degradation and economics. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Ecosystem services decline
Loss of pollinators, soil health or water regulation raises costs and reduces output for agriculture, food, beverages and other dependent sectors.
Water stress hits operations
Firms in water-stressed basins face supply interruptions, higher costs and conflict with other users, affecting revenue and licence to operate.
Regulation targets impacts
Deforestation rules, protected area expansion and pollution limits raise costs or restrict activity for firms with high nature impacts.
Risks are location-specific
Nature risk depends on where an asset sits and what ecosystem it relies on. Portfolio aggregates hide the location detail that drives exposure.
Assets on the grid, and the portfolio they make.
Where a portfolio's assets sit, and how much of its value is most exposed. Hypothetical assets, not an assessment.
What is measured, and how well.
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Portfolio exposure to sectors with high nature dependency | currency and share | annual | ENCORE-based assessments | ESTIMATED |
| Assets in water-stressed basins | count or value | annual | Asset location with water risk data | MODELLED |
| Assets in or near key biodiversity areas | count or value | annual | Asset location with biodiversity data | MODELLED |
| Exposure to deforestation-linked commodities | currency | annual | Supply chain and trade data | ESTIMATED |
| Organisations reporting under TNFD recommendations | count | annual | TNFD adopter records | DECLARED |
| Mean species abundance or similar biodiversity footprint | dimensionless or area-equivalent | per assessment | Biodiversity footprint tools | MODELLED |
Nature risk screening.
The screen a team would use to follow this subject: its measures, states and decisions. Names are examples and values are illustrative.
Nature risk screening
Nature dependencies · Nature-sensitive sectors · LEAP cycle 1
LEAP
- Locateborrower sites
- Evaluatedependencies · impacts
- Assesscredit and reputational risk
- Preparetargets · disclosure
Dependencies by sector
| Agriculture | 3 | High | High | High | High |
| Food processing | 3 | High | Medium | Medium | Medium |
| Mining | 4 | High | Low | Medium | Medium |
| Real estate | 7 | Medium | Low | Low | Low |
Where the evidence comes from.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) | Dependencies and impacts of economic sectors on nature | Free, terms to check |
| WRI Aqueduct water risk atlas | Water stress and related risk indicators by basin | CC BY 4.0 |
| Integrated Biodiversity Assessment Tool (IBAT) | Key biodiversity areas, protected areas and Red List data for site screening | Licensed, commercial terms |
| NGFS conceptual framework on nature-related financial risks | Framework for assessing nature risk | Free, NGFS terms |
| Trase supply chain data | Commodity supply chains linked to deforestation risk | Free with attribution, terms to check |
Trace a shock in nature dependencies to the balance sheet.
Assembled from the Nexus Standards area profile Climate risk standards: the shocks it names, the systems and sectors that carry the loss, the controls that dampen it and the data that observe it. Pick an initiating shock and step through the cascade to see which exposures it reaches and where losses could concentrate. The Map view places the run on an example geography with open data. Every weight is a stated assumption. An exercise, not a forecast, a valuation, a rating or investment advice. To model a place of your own choosing, open the full System Builder.
Hazards
- Sea-level rise
- Coastal flood (set off downstream)
- Storm surge (set off downstream)
- High-tide flooding (set off downstream)
- Coastal erosion (set off downstream)
- Saltwater intrusion (set off downstream)
- Estuary flood (set off downstream)
- Coastal habitat squeeze (set off downstream)
- Wetland loss (set off downstream)
- Mangrove loss (set off downstream)
- Groundwater flood (set off downstream)
- Climate-driven migration and relocation (set off downstream)
- Mass displacement (set off downstream)
Systems and couplings
Controls
NS-0Constitution and principlesNS-1The UNI and the artefact catalogue (grammar v0.2: domain, sector, region and environment segments)NS-3Risk record UNIs (grammar, legacy crosswalk, allocation authority)NS-3bDataset and product metadata profile (STAC, DCAT, PROV-O)NS-9Contextual UNIs (deployments, instances, programme instances)NS-11Verification and monitoring (evidence, attestations, zero-trust conformance observation)NS-14Conformance and crosswalk to external standardsNRS-H65Hazard family: Planetary boundary transgressions (NHS-1 planet.boundary)NRS-H62Hazard family: Compound and multi-hazard events (NHS-1 sys.compound)NRS-H71Hazard family: Deep-time and cosmic catastrophes (NHS-1 planet.deep-time)NRS-H79Hazard family: Mental health crises (NHS-1 health.mental)NRS-H75Hazard family: Climate-sensitive illness (NHS-1 health.climate-sensitive)NRS-H7Hazard family: Large-scale circulation anomalies (NHS-1 atmo.climate-mode)
Observation
- ERA5 reanalysis (Copernicus Climate Data Store) (listed for reference)
- CMIP6 climate projections (Copernicus Climate Data Store) (listed for reference)
- NGFS Scenario Explorer (listed for reference)
- INFORM Risk Index (listed for reference)
- Number of deaths, missing persons and directly affected persons attributed to disasters per 100,000 population
- Total greenhouse gas emissions per year
- Direct economic loss attributed to disasters in relation to global GDP
Example geography
- Pacific Island states: 150 hexagonal cells
- Night lights tonight, outages (VIIRS Day/Night Band), NASA GIBS
- Surface water through cloud, 30 m (OPERA DSWx-S1 radar), NASA GIBS
- Rain rate, last half hour (IMERG), NASA GIBS
- Vegetation disturbance alerts, 30 m (OPERA DIST-ALERT), NASA GIBS
Who decides, and what the evidence serves.
Climate and Nature Financial Risk prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| Bank and insurer risk functions | Whether nature-related risk is material for their portfolios | Sector dependency data and location screening |
| Asset managers and owners | How nature risk enters investment and stewardship | Company disclosures and location data |
| Supervisors and central banks | How to assess nature-related financial risk | NGFS framework and exploratory analyses |
| Standard setters | What nature-related disclosure requires | TNFD experience and consultation evidence |
Outputs this topic produces
- Guide to nature dependencies and impacts by sector
- Method note on location-specific nature risk screening
- Brief on the TNFD LEAP approach for financial institutions
- Questions for boards on nature-related exposure
Where exposure in nature dependencies travels.
The sectors that carry exposure in nature dependencies and how a loss in one passes to the others, across portfolios and public finances.
Signature
Biodiversity and its partners
Biodiversity gives pollination and soils to food (0.6), watershed regulation to water (0.5) and zoonotic spillover and medicines to health (0.4).
W · E · I · F · H · B
- Sectors
- 4 of 6
- Relations
- 6 of 15
- Coupling
- 0.46 share of total
Strongest relations in play
- Food → Biodiversity · land conversion0.6
- Water → Food · irrigation0.8
- Water → Biodiversity · environmental flows0.6
- Food → Health · nutrition0.7
What analysts ask about nature.
- Which sectors depend most on which ecosystem services?
- Which activities drive degradation, and how might regulation or markets respond?
- How does nature loss interact with climate change?
- How can location-specific ecological change be linked to financial exposure?
What nature dependencies means for exposure, loss and capital.
The exposure, loss, scenario and capital views a risk officer, supervisor or ministry of finance would ask for, with the frameworks they report against. Structures follow supervisory and actuarial practice. Values are illustrative: never prices, ratings or advice.
Scenario pathways
How nature dependencies could be stressed under the scenario families central banks and supervisors use.
| Scenario family | Transition risk | Physical risk | What a stress test asks |
|---|---|---|---|
| Orderly | Early, gradual policy | Lower | Can the book absorb a steady repricing? |
| Disorderly | Late, abrupt policy | Lower to medium | What breaks under a sudden repricing and credit migration? |
| Hot house world | Limited policy | High and rising | Where do physical losses concentrate in collateral and insurance? |
Dependencies and impacts.
Nature-related risk has two sides. Dependencies are the services a business relies on; impacts are the effects its activities have on nature. Degradation of a service on which a firm depends creates physical risk, for example lower crop yields where pollinators decline. Measures to halt nature loss, such as land-use restrictions, create transition risk for activities that drive degradation.
Nature risk is highly local: the same activity has very different effects in different places. Ecological change can be non-linear, with thresholds beyond which systems shift abruptly. Climate change and nature loss reinforce each other.
Assessing nature-related exposure.
- 01
Dependency and impact mapping
Linking sectors to ecosystem services and pressures, using ecology and biodiversity science. Sector-level mappings are coarse.
- 02
Location-based assessment
Combining asset locations with ecological data, using spatial statistics and geostatistics. Ecological data are patchy.
- 03
Disclosure frameworks
Frameworks such as that of the Taskforce on Nature-related Financial Disclosures guide assessment. See Disclosure and data.
- 04
Valuation
Estimating economic value of services. Valuations are uncertain and contested.
How it is studied, and what the methods cannot say.
- 01Ecology and biodiversity scienceEcosystem service dependency · Ecosystem condition at asset sites · Thresholds and regime shiftsApplied here
- 02Spatial statistics and geostatisticsGeolocating exposures · Aggregating location risk · Resolution sensitivityApplied here
- 03Financial economics and macro-financeCredit risk transmission · Market pricing studies · Cross-sector transmissionApplied here
- 04Scenario design and stress testingTranslating NGFS scenarios · Short-term climate scenarios · Dynamic balance sheetsApplied here
Questions and answers.
What is nature-related financial risk?
What is the LEAP approach?
Why does location matter for nature risk?
What is an ecosystem service?
How is nature risk different from climate risk?
Does the platform measure firms' nature impacts?
Can nature be valued in money?
Contribute evidence from this page.
Reports is the Consortium's quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.
- EmailGateway GW-GRASend it from this pageEvidence, a correction, a case, a method, a review, a translation or profile input. It arrives tagged with this page, so the editor who owns it receives it.
- ZenodoOpen depositDeposit it and submit to the communityPublish your own record on Zenodo with your ORCID iD, then submit it to the Reports community there. Curators review it; the DOI stays yours.
- ReportsGlobal Risks AllianceSee every way to contributeThe contribution types, how each is reviewed, what credit you receive, the licence and what is never accepted.
Never send personal data, sensitive infrastructure detail or anything you have no right to share. A contribution is reviewed before use; sending it confers no authorship or editorial rights, and sponsorship never buys a finding.
Bring an exposure or capital question to the Alliance.
Information and enquiries are open today. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.
Legal documents.
Maps, data and figures on this site are shown for context and general information. They are not advice, forecasts or warnings; the limits of the information are set out in the Disclaimers and Data Notices.