Financial institutions and corporations around the world are experiencing an accelerating shift in their understanding of nature and climate risks, which are now treated as a single, interconnected and inseparable issue. This shift reflects a growing realization that economic losses from environmental degradation and climate change are no longer future events, but a reality that directly impacts investment decisions, supply chains, and asset management.
First: Shocking numbers and shifting corporate priorities
A 73% decline in biodiversity since 1970, with invasive species losses exceeding $423 billion a year, is a stark indication that environmental degradation is no longer a natural phenomenon, but a fundamental factor affecting global economic security. According to the World Economic Forum, half of the most threatening risks to business over the next decade are directly related to nature and climate.
II: Nature and climate... one feedback loop
Extreme weather events lead to the destruction of ecosystems, while the degradation of nature reduces the environment's ability to absorb climate shocks. This mutual interaction makes it necessary to adopt a unified approach to risk management that goes beyond traditional models that separate climate and biodiversity issues.
III: Toward Practical Approaches - The LEAP Model for Nature Risk Management
Today's leading organizations rely on advanced analysis tools such as the TNFD framework and LEAP methodology, which enable:
Identify the linkages between the organization and the environment across processes and supply chains.
Understand the level of dependence on ecosystem services such as water, pollination, and coastal protection.
Assess the impact of nature loss on business sustainability.
Develop adaptation and disclosure strategies in line with CSRD and European regulations.
IV: Dealing with Residual Risk - The Rise of Parametric Insurance
With climate risks becoming increasingly difficult to control, parametric insurance is an innovative option that provides immediate liquidity when specific climate indicators are met, helping organizations protect their environmentally sensitive projects and continue operations in times of crisis.
Conclusion
Current trends reveal a global strategic shift: Managing natural and climate risks as a single, interconnected ecosystem. Organizations that are able to integrate environmental analysis into their decision-making processes, adopt advanced assessment tools, and activate smart insurance solutions will be better able to survive in an increasingly risky and complex economic environment.
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