77 trillion dollars at risk due to nature-related financial crises

(CONNECT) A new United Nations Environment Programme report explained how the linear “take-make-waste” economy is hurting the environment as well as the global economy. Entitled Circular Solutions to Achieve Nature Targets, the report estimates that 44 trillion dollars in economic activity, or half of the planet’s global domestic product, is dependent on well-operating natural ecosystems while 77 billion dollars in banking assets are exposed to risk due to natural events, according to a September 10 statement.

The report concludes that circular economic businesses and systems could avert financial losses due to the degradation of nature. “By reducing resource extraction, waste and pollution while supporting the regeneration of natural systems, circular solutions can contribute to positive outcomes for nature, climate and long-term economic resilience,” said the statement.

Addressing commercial banks that have signed onto Principles for Responsible Banking, a UN-sponsored set of standards to foster sustainability, the report focuses on ocean and marine, freshwater, and land-based ecosystems. Integrating circular economy considerations into governance, public and private policies and processes, risk management, sector strategies, client engagement, financing decisions, and stakeholder relationships are among the topics covered. The report also includes guidance to help banks achieve its goals, including how to encourage clients to incorporate circularity into their plans and operations and how lending and investment policies can take and nature-related strategies into consideration. ce/jd