Connecting Finance and Natural Capital

Connecting Finance and Natural Capital: A Supplement to the Natural Capital Protocol

The Supplement will be released on April 23rd, 2018 in Hong Kong at the Hong Kong Institute of Certified Public Accountants. If you are interested in attending, please let us know.

With increasing attention on the role of nature in the economy and society, financial institutions need a common framework that provides a clear introduction to natural capital issues, and a structured process to identify, measure and value their direct and indirect impacts and dependencies on natural capital.

A variety of initiatives and methodologies are being developed to enable financial institutions to better understand the natural capital risks and opportunities associated with their direct operations, and their investment, lending and insurance portfolios.

Examples include the tools and methodologies developed by the Natural Capital Finance Alliance (formerly Natural Capital Declaration) and the Dutch Association of Investors for Sustainable Development (VBDO).

To provide the clear and unified guidance needed, the leading organizations in this space have agreed to build upon the framework of the Natural Capital Protocol. This Finance Sector Supplement to the Natural Capital Protocol will provide guidance to help financial institutions incorporate the consideration of natural capital impacts and dependencies into their lending, investment and insurance practices and processes.

The Finance Sector Supplement will focus on three key sub-sectors:

  • Banking: Provision of debt through project finance, corporate lending and underwriting activities.
  • Investment: Provision of equity by asset owners and fund managers. This may also involve active ownership and impact investing.
  • Insurance: This includes corporate underwriting and reinsurance.

Stay up to date with the development of the Finance Sector Supplement by signing up here.

Public Consultation :

The Public Consultation on the Draft Finance Sector Supplement has Now Closed.

The public consultation has allowed a broad range of organizations and professionals to contribute to the Supplement’s development. This builds upon an ongoing collaborative development process, running from October 2016 – May 2017, and involving 249 people from 193 organizations (report here). The project has also been guided by a steering group of industry experts, and has received input and review from members of the Natural Capital Coalition Advisory Panel.

Objectives of the Consultation:

  • Provide an opportunity for a wide range of organizations and experts to contribute to the Supplement content and development.
  • Build momentum and increase endorsement for integrating natural capital within finance sector decision-making

And gather input from:

  • Pilot testing program with financial institutions
  • Public online consultation
  • Workshops with stakeholder groups in different regions

The public online consultation was run through the online consultation system Collaborase. Collaborase facilitates transparency by collating all submitted comments on one platform, making them visible to all reviewers.

The Supplement is being developed by the Natural Capital Coalition, the Natural Capital Finance Alliance (NCFA) (formerly the Natural Capital Declaration) and the Dutch Association of Investors for Sustainable Development (VBDO).

This project has been made possible by generous funding and support from The Rockefeller Foundation, IFC with the support of the Swiss State Secretariat for Economic Affairs (SECO) and the Ministry of Foreign Affairs of the Government of the Netherlands, United Nations Environment Programme (UNEP), and the Dutch Ministry of Economic Affairs.