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Banking on ecosystem services

Mundaca, Luis LU orcid and Heintze, Jan Niklas (2024) In Ecological Economics 224.
Abstract

The COP 15 of the UN Convention on Biological Diversity emphasised the need to monitor, evaluate, and disclose the risks and dependencies of financial institutions on biodiversity. In the light of this context, our paper focuses specifically on banks and is framed by the following overarching question: to what extent have banks identified, integrated, measured, and disclosed their dependency and exposure to ecosystem services (ES)? The literature on finance and biodiversity provides various arguments highlighting the urgency and significance of understanding and disclosing banks' ES risk exposure. Despite numerous public and/or private initiatives, banks have been slow to evaluate and integrate their dependency on ES, and related risks,... (More)

The COP 15 of the UN Convention on Biological Diversity emphasised the need to monitor, evaluate, and disclose the risks and dependencies of financial institutions on biodiversity. In the light of this context, our paper focuses specifically on banks and is framed by the following overarching question: to what extent have banks identified, integrated, measured, and disclosed their dependency and exposure to ecosystem services (ES)? The literature on finance and biodiversity provides various arguments highlighting the urgency and significance of understanding and disclosing banks' ES risk exposure. Despite numerous public and/or private initiatives, banks have been slow to evaluate and integrate their dependency on ES, and related risks, into their operations and performance. Using data from the ten largest European banks, we estimate that for every dollar of equity holding, 26 cents are potentially exposed to high ES dependencies. This figure should be regarded as a lower estimate of the total banks' exposure to ES dependency. To make progress, we argue that banks must become champions of ES to ensure their own resilience and financial sustainability. Governance plays a key role, and we suggest several measures to accelerate this transition.

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author
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organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Dependency, Ecosystems Services, European Banks, Governance, Value at Risk
in
Ecological Economics
volume
224
article number
108284
publisher
Elsevier
external identifiers
  • scopus:85197362768
ISSN
0921-8009
DOI
10.1016/j.ecolecon.2024.108284
language
English
LU publication?
yes
id
81611b4e-9cec-49ef-907f-004079b45d4d
date added to LUP
2024-08-19 10:49:09
date last changed
2024-08-19 12:04:08
@article{81611b4e-9cec-49ef-907f-004079b45d4d,
  abstract     = {{<p>The COP 15 of the UN Convention on Biological Diversity emphasised the need to monitor, evaluate, and disclose the risks and dependencies of financial institutions on biodiversity. In the light of this context, our paper focuses specifically on banks and is framed by the following overarching question: to what extent have banks identified, integrated, measured, and disclosed their dependency and exposure to ecosystem services (ES)? The literature on finance and biodiversity provides various arguments highlighting the urgency and significance of understanding and disclosing banks' ES risk exposure. Despite numerous public and/or private initiatives, banks have been slow to evaluate and integrate their dependency on ES, and related risks, into their operations and performance. Using data from the ten largest European banks, we estimate that for every dollar of equity holding, 26 cents are potentially exposed to high ES dependencies. This figure should be regarded as a lower estimate of the total banks' exposure to ES dependency. To make progress, we argue that banks must become champions of ES to ensure their own resilience and financial sustainability. Governance plays a key role, and we suggest several measures to accelerate this transition.</p>}},
  author       = {{Mundaca, Luis and Heintze, Jan Niklas}},
  issn         = {{0921-8009}},
  keywords     = {{Dependency; Ecosystems Services; European Banks; Governance; Value at Risk}},
  language     = {{eng}},
  publisher    = {{Elsevier}},
  series       = {{Ecological Economics}},
  title        = {{Banking on ecosystem services}},
  url          = {{http://dx.doi.org/10.1016/j.ecolecon.2024.108284}},
  doi          = {{10.1016/j.ecolecon.2024.108284}},
  volume       = {{224}},
  year         = {{2024}},
}