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Embedded in Nature: Nature-Related Economic and Financial Risks and Policy Considerations
Author:
Charlotte Gardes-Landolfini
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William Oman https://isni.org/isni/0000000404811396 International Monetary Fund

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Jamie Fraser
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Mariza Montes de Oca Leon
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Bella Yao
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Series:
Staff Climate Notes
Volume/Issue:
Volume 2024: Issue 002
Language:
English
Publication Date:
03 Oct 2024
DOI:
https://doi.org/10.5089/9798400288548.066
ISBN:
9798400288548
ISSN:
2789-0600
Pages:
75
Keywords:
nature; environment; macroeconomics; macroeconomic policies; financial stability; banks; nature-related risks; financial regulation; financial supervision; Minsky moment; ecosystem services; planetary boundaries.; IMF staff climate note; ecosystem service; biodiversity loss; biodiversity conservation; biodiversity hotspot; Environmental policy; Climate change; Financial sector policy; Natural resources; Global
Legal-disclaimer:
The IMF Notes Series aims to quickly disseminate succinct IMF analysis on critical economic issues to member countries and the broader policy community. The IMF Staff Climate Notes provide analysis related to the impact of climate change on macroeconomic and financial stability, including on mitigation, adaptation, and transition. The views expressed in IMF Staff Climate Notes are those of the author(s), although they do not necessarily represent the views of the IMF, or its Executive Board, or its management.
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The economy is embedded in, and dependent on, nature. Yet economic activity is degrading nature at an unprecedented pace. Interacting with climate change, nature loss and transformation generates significant threats to the global economy and financial system. However, work on the implications of nature-related risks for macroeconomic and financial sector policies remains at an early stage. This note seeks to contribute to this emerging policy space in three main ways: (i) it proposes a conceptual framework for understanding nature-related risks by mapping out macroeconomic transmission channels, emphasizing their impact on the economy and financial systems through “double materiality;” (ii) it conducts empirical analysis, finding that nearly 38 percent of bank loans of the 100 largest global banks are to harmful subsidies-dependent sectors and 44 percent are exposed to conservation areas under the Global Biodiversity Framework, and that industries most exposed to nature degradation are not well prepared to manage these risks; and (iii) it discusses takeaways for macroeconomic and financial sector policies and frameworks.
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Cover Staff Climate Notes
Staff Climate Notes
Publisher:
International Monetary Fund