World’s first natural capital tool launched for financial sector

An online tool has been launched to help financial institutions assess firms’ exposure to natural capital risks and “plug nature into decision-making”.

Developed by the Natural Capital Finance Alliance (NCFA), the ENCORE tool will determine how dependent businesses are on biodiversity, and the risks they face from, for example, forest destruction and ocean pollution.It is hoped this will help banks, insurers and investors funnel their finance into more sustainable companies.

An assessment of the FTSE 100 found that 13 of the index’s 18 industries – representing $1.6trn in market capitalisation – are associated with production processes with ‘high’ or ‘very high’ dependence on nature.

This comes after the World Wide Fund for Nature found that natural capital provides services worth approximately $125trn a year, helping ensure the supply of fresh air, clean water, food, energy, medicines and other materials.

NCFA chairperson Namita Vikas said: “ENCORE will enable financial institutions to easily identify and mitigate risks and help mainstream natural capital considerations in decision-making.”

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