• Natural Capital Declaration
  • Natural Capital Declaration
  • Natural Capital Declaration
  • Natural Capital Declaration
  • Natural Capital Declaration
  • Natural Capital Declaration

Why sign the NCD? The particular case by FI type

 

Institutional investors / investment banks

  1. Understand how the value of bonds, equities and other assets are exposed to financial risk from natural capital issues.
  2. Manage exposure to stranded assets and unanticipated falls in the value of securities due to environmental challenges.
  3. Enhance due diligence in capital allocations in line with fiduciary duties.
  4. Universal Owners can develop capabilities to address risk of a net loss from cumulative portfolio-wide systemic environmental risk.
  5. Prepare for more uncertain, rapidly changing conditions in capital markets driven by depleted natural capital.
  6. Reducing environmental impacts and dependencies of portfolio companies is in the interests of beneficiaries.
  7. Develop expertise to assess fund managers on their ability to manage the risk of lower dividends due to reduced cash flows for companies exposed to or causing damage.
  8. Create an enabling environment for asset managers to take account of environmental information and improve market efficiency.
  9. Provide a signal to investment managers and consultants to incentivise capacity building for responsible investment on environmental factors.

 

Fund managers

  1. Prepare for mandates with criteria on environment management.
  2. Develop products and services that build natural capital resilience into capital allocations in order to reduce risk and protect future fund returns.
  3. Keep ahead of ratings agencies in understanding how natural capital factors are material for different types of securities and different sectors.
  4. Build knowledge and expertise to prepare for ratings methodologies that incorporate environmental risk into credit risk assessments.
  5. Work with peers across financial sub-sectors to develop expertise around policies, systems and practices to overcome market failures.
  6. Develop metrics and apply tools in line with peer-reviewed methodologies to integrate natural capital factors into risk management and securities valuations.
  7. Provide your organization with access to resources that can help meet responsible investment commitments.
  8. Engage with peers to develop resources that support management, monitoring and reporting on environmental, social and governance (ESG) issues.
  9. Build capacity to integrate environmental issues into investment analysis and decision-making, including engagement or proxy voting activities under initiatives such as the UN-backed Principles for Responsible Investment (PRI).

 

Commercial banks 

  1. Address credit risks from businesses and projects that are at risk from lower cash flows and loss of license to operate due to resource-intensive or polluting activities in operations or supply chains.
  2. Reduce exposure to unanticipated risk and cash flow fluctuations from underlying resource scarcity, commodity price volatility, and loss of market share.
  3. Manage reputational risks from financing sub-optimal corporate environmental performance and damaging practices.
  4. Access a global knowledge base and emerging good practice to develop more secure credit finance.
  5. Enable your organization to work with peers to build an understanding of sector-specific corporate exposure to risks in operations and soft commodities supply chains to create more resilient loan books.
  6. Access a platform to develop accepted methodologies to underpin new financial products and services designed for long-term value creation.
  7. Build stronger client relationships and more sustainable business.
  8. Gain market share in financing of companies that are well positioned to withstand the negative side-effects of macro-trends such as growing resource demand, urbanisation and industrialisation.
  9. Enhance transparency and develop evidence-based environmental credentials.

 

 

Development banks/Multilateral financial institutions

  1. Enable your organization to collaborate with international peers to integrate natural resource and pollution issues into financial instruments, policies, practices and evaluations.
  2. Build capabilities to help implement national commitments under the Rio+20 “The Future We Want” Outcome document that recognises the need to prioritise sustainable development in capital allocations.
  3. Explore and use new partnerships and innovative sources of financing to play a role in developing sustainable finance.
  4. Prepare to finance the delivery of international Sustainable Development Goals around integrating environmental and water issues into policies, plans and actions from 2015 onwards.
  5. Mobilise capital allocations that support the biodiversity and ecosystem services goals of agreements under the Convention on Biological Diversity.
  6. Finance the maintenance of stock of ecosystems that yield a renewable flow of environmental goods and services that underpin your economy and trade.
  7. Strengthen your organisation’s role in financing changes in extraction, production and infrastructure to support society’s need for access to clean air, water, land, energy, affordable food and climate security.
  8. Build capabilities to help implement national and regional policies and initiatives. E.g., Environmental policies, environmental markets and resource security.
  9. Help address the financial sector’s systemic exposure to the hidden and external costs of business and decrease their exposure to environmental liability and potential losses.
  10. Contribute to the development of tools, frameworks and guidance to strengthen due diligence and mechanisms to manage the exposure of customers to environmental challenges.
  11. Demonstrate international leadership by helping to develop innovative products and services that contribute to green growth.
  12. Build capabilities to evaluate your own institutional risks from natural resource constraints.
  13. Strengthen accountability and transparency through tools and frameworks that support environmental accounting and reporting across value chains.

 

Non-life insurers and reinsurers

  1. Develop capacity to meet the Principles for Sustainable Insurance.
  2. Enable your organization to learn from peers across the financial sector.
  3. Contribute to the development of frameworks, tools and methodologies to align risk processes in investment management with due diligence in insurance product pricing policies.
  4. Collaborate to strengthen environmental risk management in underwriting and investment practices.
  5. Develop understanding of implications of resource constraints and climate change impacts for actuarial analysis and catastrophe modelling.
  6. Strengthen the resilience of products and services to position your business for growing environmental pressures.
  7. Access a platform that encompasses a range of financial sub-sectors to inform your organisation’s understanding and management of environmental factors in capital markets.
  8. Collaborate to build products that enable investors to deliver on NCD commitments.
  9. Create benchmarks that reduce systemic market risk from water and other natural resource constraints.
  10. Enable clients to reduce exposure to market volatility driven by environmental factors.
  11. Develop capacities to incorporate material environmental information into indices and create more stable and efficient financial markets

Securities and Commodities Exchanges

  1. Access a platform that encompasses a range of financial sub-sectors to inform your organisation’s understanding and management of environmental factors in capital markets.
  2. Collaborate to build products that enable investors to deliver on NCD commitments.
  3. Create benchmarks that reduce systemic market risk from water and other natural resource constraints.
  4. Enable clients to reduce exposure to market volatility driven by environmental factors.
  5. Develop capacities to incorporate material environmental information into indices and create more stable and efficient financial markets.