Building a collective understanding of nature-related financial risks: Dutch Central Bank

Posted on March, 04 2024

De Nederlandsche Bank (DNB) has published a case study to explore nature-related financial risks in its own investment portfolio, diving into electric utilities using coordinates of company assets. During this process, DNB pilotes the LEAP approach of the Taskforce on Nature -related Financial Disclosures (TNFD), and uses the WWF Biodiversity Risk Filter as a screening tool.
Natuture degradation poses serious risks for business, the financial sector and society. Awareness is growing in the financial sector that action is needed. While further work needs to be undertaken on disclosures and data, financial institutions can leverage newly developed nature-risk frameworks to identify, assess and manage their  linkages with nature.  Sharing knowledge and experience is key in this process. 

De Nederlandsche Bank (DNB) has published a case study describing first steps to explore nature-related financial risks in its own investment portfolio, diving into electric utilities using coordinates of company assets.  The case study is a result of DNB’s pilot to apply the TNFD framework to its account investments. During the process, DNB piloted the LEAP approach ((Locate, Evaluate, Assess, Prepare) of the Taskforce on Nature-related Financial Disclosures (TNFD). It has used the WWF Risk Filter Suite as a screening tool to assess, more specifically, biodiversity-related risks with a focus on energy production. The outcomes of the analysis help improve the understanding of nature-related financial risks in DNB´s  own account portfolios and how they can be managed.

The DNB investigated nature-related impacts and dependencies for two of its externally managed global developed markets equity portfolios. These are the DNB passively managed Broad-Market Fund – with an ESG (Environmental, Social & Governance) screening – (BMF) and its actively managed portfolio with a Paris-aligned objective (PAM). Results show that a significant part of the DNB portfolio has a high or very high dependency and impact on nature. Also, improvements to climate risks does not necessarily translate into lower nature-related financial risk. 

WWF´s Biodiversity Risk Filter provides in-depth insight as it combines location-specific information with company sector data. These results can be used by DNB to take targeted action. Whilst data collection remains a challenge and nature-related financial risk analysis is complex, it is possible to conduct analysis including location data which is essential to understand nature risk and impact as the DNB case study demonstrates. 

Large companies or financial institution with investment portfolios can use WWF ´s Risk Filter Suite to better  understand biodiversity and water related risks and opportunities. 

For more information, contact us at:  riskfilter@wwf.de