Finance Sector Supplement

The Finance Supplement provides a framework for financial institutions – including banks, investors and insurers – to measure and value natural capital impacts and dependencies across the entities and portfolios that they finance, invest in or underwrite.

A growing number of financial institutions understand that sustainability or Environmental, Social, and Governance (ESG) issues can create risks for their banking, investment, and insurance outcomes. These institutions are also increasingly recognizing opportunities from active consideration of ESG factors. However, taking action can be perceived as being complex and challenging. The Finance Supplement was developed to connect natural capital and finance, thereby reducing the barriers to sustainable and effective action from financial institutions.

A capitals approach is designed to generate meaningful, robust and relevant information that can be used to inform decisions around operational, market, reputational and societal risks. It can help financial institutions map and limit their exposure to environmental and social variables across global portfolios, while identifying opportunities to invest in resilient projects and organizations. ​ This Supplement builds on the Natural Capital Protocol, providing sector- specific guidance to make the Protocol more applicable and practical for financial institutions. The Finance Supplement has been designed to align with other initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, which can be implemented alongside the Supplement. It builds on existing processes and encourages wider discussion around moving from impact to dependency, from measurement to valuation, from stocks to flows, and from separate issues to a system-wide approach.