Nature metrics and the measurement challenge for Financial Institutions

Why nature metrics matter for future decision-making on nature and the environment 

Nature-related risks such as water stress, deforestation, and biodiversity loss are becoming increasingly material for financial institutions, shaping everything from commodity supply chains and infrastructure resilience, to real estate valuations and insurance pricing. These nature-related risks are also becoming central to how financial institutions assess long-term exposure to environmental change. 

As expectations rise, nature and biodiversity are increasingly influencing how institutions think about the risk, resilience, and value across portfolios. 

At the same time, nature-related opportunities are gaining momentum. From labelled financial products (e.g., ESG funds and green bonds) to carbon and biodiversity credit markets and nature-based solutions, nature and the environment are increasingly seen as strategic growth areas for mainstream finance. 

These developments are accelerating the need for clearer nature metrics that can support investment decisions and long-term strategy, including stronger engagement with companies and clients. 

Biodiversity monitoring, nature data, and the future of nature reporting metrics 

Better managing our impacts and dependencies on nature and biodiversity is becoming an economic imperative and, for financial institutions, a source of opportunity. Strengthening decision-making on nature, biodiversity, and the environment can help reduce risk, while unlocking new services, investment products, and capital-raising opportunities for clients. 

However, one major challenge remains: measurement and the ability to apply consistent metrics. 

Unlike climate finance, which benefits from the widely adopted concept of financed emissions, there is no clear equivalent metric for nature. Instead, financial institutions face a fragmented landscape of ESG ratings, voluntary disclosures, and emerging frameworks, often lacking the granularity, consistency, and comparability needed for robust decision-making, risk management, and credible nature reporting. 

This creates a growing challenge for institutions looking to strengthen biodiversity monitoring, improve the quality of nature data, and apply consistent nature-related analysis across portfolios using decision-useful metrics. 

Many financial institutions have already begun identifying nature-related dependencies, impacts, risks, and opportunities (DIRO), and those of their clients, in qualitative terms. They also recognise the need to improve the accuracy of these assessments so they can apply them consistently and systematically across portfolios. This will strengthen nature metrics, improve nature-related data, and support better reporting and decision-making on nature and the environment using comparable metrics. 

Selecting future-ready nature metrics: where do we start? 

With frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Corporate Sustainability Reporting Directive (CSRD) raising expectations, financial institutions are under growing pressure to integrate nature-related metrics into existing risk management, biodiversity reporting, and nature data systems. Yet many still face the same question: 

Where do we start? 

These two reports provide a structured response: the first sets out the key principles for selecting nature-related metrics, while the second provides practical guidance on applying them in decision-making, biodiversity monitoring, nature reporting, and portfolio-level assessment. 

 

> Principles for selecting nature metrics guide 

> Measuring nature: how financial institutions can get started 

Coming soon.

Category: Insight