Quantitative easing and nature loss: Exploring nature-related financial risks and impacts in the European Central Bank’s corporate bond portfolio

UCL (2021)

The ongoing degradation of nature, ecosystems and planetary biodiversity poses major economic and financial risks (Dasgupta, 2021; CBD, 2021). Businesses are embedded within the environment via their dependencies and impacts upon the resources provided by nature. Through their lending, advisory and investing activities, financial institutions are exposed to business dependencies and responsible for facilitating negative impacts by those firms. In the financial sphere, several voluntary initiatives aiming to incorporate biodiversity considerations into financial institution decision-making have emerged (Finance for Biodiversity, 2021). Central banks are also beginning to examine how to address the impacts of biodiversity loss on financial stability, building on previous research on climate change (NGFS 2021b).