Biodiversity and financial stability: exploring the case for action
Following the recent establishment of a Joint NGFS-INSPIRE Study Group on Biodiversity and Financial Stability by the Network for Greening the Financial System (NGFS) and INSPIRE, this vision paper sets out the rationale for the Study Group’s work, its initial agenda and its research focus. The aim of the Study Group is to understand the potential implications of biodiversity loss for financial stability. According to the IPBES, one-quarter of species are threatened, and around 1 million species face extinction – a decline that the UK government has said undermining nature’s productivity, resilience and adaptability, and fuelling extreme risk and uncertainty for economies and wellbeing. To date, most of the environmental work by central banks and supervisors has focused on climate change, while biodiversity loss has remained largely unexplored. In response, the Study Group is establishing an evidence-based approach to consider how central banks and supervisory authorities could account for biodiversity loss in the context of their mandates.