31 October 2014, Cape Town, South Africa – Natural capital: Advancing innovative approaches to environmental risk management in the financial sector
The Natural Capital Declaration (NCD) and International Finance Corporation, World Bank Group hosted a workshop titled Natural capital: Advancing innovative approaches to environmental risk management in the financial sector on 31st October 2014 in Cape Town, South Africa.
This workshop was supported by
The Natural Capital Declaration (NCD) is an industry-led initiative signed by over 40 financial institutions who have committed to work together to integrate natural capital considerations into financial products and services.
NCD and International Finance Corporation, World Bank Group, in collaboration with several other NCD signatories – Banorte, Nedbank, Rabobank, UniCredit, National Australia Bank, Caisse des Dépȏts, Calvert and Pax World hosted a workshop that aimed to:
(i) Discuss how viewing the Earth’s natural resources as capital and its rapid deterioration as a threat to business can help demonstrate that environmental risk is financially material vis-a-vis investment / credit risk for banks and asset managers; and
(ii) Share current practices and consult on concrete approaches being developed under the NCD umbrella to help financial institutions better understand natural capital-related risks and strengthen integration of appropriate factors into their operational models.
Download the presentations from the workshop:
- Marcos Mancini, Banorte; Ekaterina Grigoryeva, World Bank Group, Pilot project: Understanding natural capital risks for financial institutions and embedding them in credit risk assessment
Ekaterina Grigoryeva, World Bank Group, presenting at the workshop
View the workshop videos, featuring the World Bank Group, UNEP FI, UniCredit, Yes Bank, Infraprev and more.
The World Bank Group is a pioneer in this space. See WAVES Partnership article on the NCD workshop: Business and Finance Sectors Gaining Ground on Factoring in Role of Nature.
Video messages from Charles Anderson, Director, UNEP-FI and NCD Secretariat and Bill Rahill, Director, Environment and Natural Resources Global Practice (World Bank Group) and Chair, NCD Steering Committee and other NCD Signatories and Supporters are available on the NCD website. The videos were shown during the workshop, with NCD Signatories and supporters outlining the importance of a financial sector response to natural resource challenges linked to loans and investments.
Welcome and introduction to the workshop
Charles Anderson, Director, UNEP-FI and NCD Secretariat
Bill Rahill, Director, Environment and Natural Resources Global Practice (World Bank Group) and Chair, NCD Steering Committee
The growing momentum around addressing economic implications/ risks of the rapid depletion of natural capital (the Earth’s living and non-living natural assets such as soil, air, water, flora and fauna).
Natural Capital and the Financial Sector
Liesel van Ast, Global Canopy Programme (NCD Manager)
Ekaterina Grigoryeva, World Bank Group
- – How do we define natural capital and what types of initiatives / knowledge are emerging in the field?
- – The landscape of initiatives for governments, companies, investors.
- – How is it relevant to the financial sector’s ESG risk management?
- – What are the links and differences with existing frameworks (e.g. IFC Performance Standards)?
Natural Capital Declaration:
Anders Nordheim, UNEP-FI
Goals, roadmap, signatories, governance structure, current projects and outputs
NCD Flagship Pilot Project: “Mapping Natural Capital Risks Across Portfolios and Embedding them in Credit Risk Assessment”
Ekaterina Grigoryeva, World Bank Group
Marcos Mancini, Banorte
- – Project objectives, structure, participating institutions.
- – Preliminary results of FI survey and project scoping study developed in collaboration with ICMA Centre (Henley School of Business) and Sociovestix Labs.
- – Overview of structure and topics for group discussions.
15:45-17:30 Group Discussions
NCD signatory institutions to moderate table discussions
- – What are the priorities for the financial sector with regard to natural capital-related risks?
- – NCD natural capital and credit risk project: How to ensure success and industry leadership?
Panel discussion – Natural Capital and Finance: Where we are, where do we want to be, and how do we get there?
Vicky Beukes, NedbankJan van Mullem, Rabobank
Shawn Miller, Citigroup
- – How relevant are natural resource constraints to credit risk now and over the next 5-10 years?
- – What are the current approaches FIs have to natural capital risk management and what is missing to achieve the transformation?
- – How can financial institutions collaborate to collectively build capacity to address these gaps?
- – Emerging government regulation around natural capital: How can financial sector get a seat at the table?
Morgan Landy, Director, Transaction Risk Solutions, IFC (TBC)
Stakeholder consultation: The Business Case for Mapping Natural Capital Risks Across Portfolios and Embedding them in Credit Risk Assessment
This workshop launches the first of a series of consultations on an NCD Pilot Project “Mapping Natural Capital Risks Across Portfolios and Embedding them in Credit Risk Assessment.” The project aims to find a feasible way to translate operational natural capital risk into credit risk, which can catalyze a breakthrough innovation in ESG risk management. This will address limitations in existing approaches for FIs to quantify the natural capital risks in their portfolios.
In late 2013, a group of NCD signatories came together to conceptualize this pilot. To ensure that the project’s outcomes address the needs of the financial sector, we would appreciate your inputs early in this process about (a) the interest of financial institutions in factoring natural capital into their ESG risk management; (b) views on the relevance of what we are proposing, and (c) insight into relevant current practices.
During the workshop, we will present and seek feedback on the first outcomes of a scoping study for this project. The study, in partnership with the ICMA Centre of the Henley School of Business and Sociovestix Labs, reviews the financial industry’s business case for integrating natural capital risk and assesses the current state of global knowledge in this area.
NCD signatories currently participating in the project are IFC (WBG), Banorte, UniCredit, National Australia Bank, Caisse des Dépȏts, Calvert and Pax World.
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