[2024-March-6]WG1 Webinar:Navigating Nature-related Risks

On March 6, 2024, the GIP Climate and Environment Risk Assessment Working Group (WG1) held a seminar titled "Navigating Nature-related Risks" The event featured experts from banks, insurance companies, and think tanks who shared their insights on biodiversity risks and presented the findings of a biodiversity survey conducted among GIP members.

In her opening remarks, YIN Hong, Deputy Director from the Credit Approval Department at the Industrial and Commercial Bank of China (ICBC), emphasized the critical importance of biodiversity. She highlighted that biodiversity loss could lead to systemic financial risks, encompassing physical risks and transition risks—the latter being tied to policy changes affecting related industries. YIN also noted that in 2024, the World Food Programme has made biodiversity risks a central theme, conducting relevant surveys on financial institutions.

YANG Ping, Director of the Market Division at the Research Bureau of the People’s Bank of China, outlined China's efforts to support biodiversity conservation. She highlighted measures such as the 2021 issuance of guidelines to strengthen biodiversity protection, the integration of biodiversity into the five pillars of the green finance system. These include, but are not limited to, incorporating biodiversity into the green bond project catalog and the green loan statistical framework, as well as the growing number of financial institutions disclosing biodiversity-related information. YANG emphasized the importance of mobilizing societal efforts and leveraging market-based mechanisms alongside fiscal funding and international aid to address biodiversity challenges.

David CRAIG, Co-Chair of the Taskforce on Nature-related Financial Disclosures (TNFD), introduced the TNFD framework and its application. Built on the Task Force on Climate-related Financial Disclosures (TCFD) framework and aligned with ISSB standards, the TNFD focuses on managing nature-related risks and opportunities. Craig discussed the TNFD’s publication of case studies and guidance documents for key industries to help businesses understand the impacts of nature-related risks and improve their disclosures.

Jessie JIN, Associate Director of Climate Change and Sustainability at PwC, shared the key findings from GIP's biodiversity survey. The survey revealed that while most member institutions recognize the role of finance in biodiversity conservation, only 14% have a deep understanding of the topic. Over 90% have taken action, yet fewer than 60% use quantitative tools for analysis. Challenges include inconsistent standards and policies, a lack of unified assessment metrics, limited technical capabilities, and data availability. Members seek greater support from GIP in areas such as research, information sharing, assessment tools, and capacity building.

In the case sharing session, four speakers shared the practices from financial institutions:

DENG Kaixin, Deputy Head of Industry Division II at the Credit and Investment Management Department at ICBC:

In her keynote speech, DENG Kaixin shared ICBC's advancements in green finance and biodiversity risk management.ICBC’s Ecological Protection Redline Risk Control Map Project leverages GIS technology to digitize ecological redline information. Using this tool, ICBC staff can determine whether a project falls within the government-designated ecological redline area and conduct environmental risk assessments. Generally, projects within the redline area are not eligible for financing, except under special circumstances.

CHEN Han, Head of Speciality Solution for China and Global Head of Agricultural Solution at Swiss Re:

In his speech, CHEN shared Swiss Re’s innovative risk transfer solutions, including insurance products designed for wetlands, coastal mangroves, and grassland droughts. These solutions utilize satellite remote sensing and index-based insurance to support ecosystem stability. Additionally, Swiss Re's CatNet® platform quantifies risks for 15 major disaster types, enabling institutions to evaluate the impact of climate risks on their investment portfolios.

XU Jiayi, Program Director at the Beijing Green Finance Center:

In her speech, XU shared the key steps should be taken by financial institutions on managing biodiversity-related risks, such as developing long-term institutional strategies, exclusion lists, no-go policies for critical ecological areas, sector-specific credit policies, compliance and disclosures. Using examples from railways, renewable energy, and palm oil, XU outlined actionable steps for reducing biodiversity risks and advised financial institutions to proactively identify biodiversity issues linked to investment and trade activities and to take active conservation measures while ensuring compliance with environmental regulations.

LI Cheng, General Manager of the Corporate Banking Department at Bank of Qingdao:

In his speech, LI showcased the Bank of Qingdao’s pioneering work in blue finance, including the development of the world’s first commercial bank blue asset classification standard. Covering 37 sub-industries across seven sectors, the bank supports eligible activities with a blue project loan environmental and social management system. In 2023, the Bank of Qingdao partnered with IFC on a second-phase capacity-building project for blue and green finance, which includes expanding blue credit offerings and conducting third-party due diligence on high-risk projects.