Expectations of new FIs wishing to Sign
Signatories of the Natural Capital Declaration make four commitments.
The four commitments by financial institutions that sign the Natural Capital Declaration are to:
1. Build understanding of the impacts and dependencies on natural capital relevant to operations, risk profiles, customer portfolios, supply chains and business opportunities.
2. Support the development of methodologies that can integrate natural capital considerations into the decision making process of all financial products and services – including in loans, investments and insurance policies. We recognise that given the diversity of the financial sector, embedding natural capital considerations will differ across asset classes and types of financial institutions. We therefore aim to build on work undertaken through other initiatives, such as the UN-backed Principles for Responsible Investment, the Equator Principles, the United Nations Environment Programme Finance Initiative (UNEP FI) Principles for Sustainable Insurance, and The Economics of Ecosystems and Biodiversity (TEEB), so that we can develop methodologies to:
a. Apply a holistic approach to evaluating bonds and equities through the integration of natural capital considerations in environmental, social and governance (ESG) risk analysis in short, medium and long-term growth forecasts of investee companies;
b. Systematically consider and value natural capital considerations in the credit policies of specific sectors, including commodities, that may have a major impact on natural capital either directly or through the supply chain;
c. Systematically consider and value natural capital considerations in core insurance business strategies and operations including risk management, risk underwriting, product and service development, claims management, sales and marketing, and investment management.
3. Work towards building a global consensus for the integration of natural capital into private sector accounting and decision-making; supporting, when appropriate, the related work of The Economics of Ecosystems and Biodiversity (TEEB) for Business Coalition, and other stakeholders.
4. Collaborate, when appropriate, with the International Integrated Reporting Committee and other stakeholders to build a global consensus around the development of Integrated Reporting, which includes natural capital as part of the wider definition of resources and relationships key to an organisation’s success.
Expectations of financial institutions
To help advance the natural capital and finance agenda, financial institutions pay an annual fee and commit time and resources to Working Groups, in line with each organisation’s capacity and strategic priorities.
The initiative does not create binding legal requirements as implementation of the NCD commitments and uptake of guidance and methodologies delivered through the Working Groups are voluntary.
The NCD creates an opportunity and a platform for action to understand, manage, account for and report on risks and opportunities linked to financial exposure to clients’ natural capital impacts and dependence.
As NCD implementation progresses, signatories will have regular opportunities to share progress and demonstrate leadership.