Building on Cambridge Institute for Sustainability Leadership (CISL)’s Nature-related financial risks workstream, ClimateWise has developed this primer on the financial materiality of Nature-based Solutions as half of the re/insurers surveyed believe that nature-related risks are material for their underwriting business. However, nature-related risks are not currently being assessed in underwriting by the majority of re/insurance industry participants. Nature-related risks are also challenging to measure as there are multiple interrelations between nature, society and the global economy that amplify uncertainties.

Building a nature-positive insurance industry

There are at least four different approaches that insurers can adopt to reduce the impact on nature or contribute to its restoration:

• Incentivising nature-positive behaviours with clients and customers
• Innovating in asset protection
• Facilitating capital flows
• Collaborating with governments

The re/insurance industry has an opportunity to revisit and redefine its role in society to support risk management through proactive nature-positive measures and contribute to the protection and restoration of nature, and not simply by reactively responding to claims following a disaster or loss.

Further action

All financial firms are vulnerable to nature-related financial risks; and the financial materiality of nature loss evidenced constitutes an urgent call to action. CISL calls on the financial community to start identifying nature-related financial risks. The sooner we begin the journey to embedding nature into financial decision-making, the sooner we rewire our economy to protect and restore our natural world.