Yet, how risk exposures at the firm level can cascade towards systemic macroeconomic and financial (‘macrofinancial’) risks remains poorly understood. Key channels include ecological feedback loops such as tipping points, cascades through global supply chains, compounding interactions between physical and transition risks, and amplification via existing macroeconomic and financial fragilities like currency risk and indebtedness. Excluding these macro-financial dynamics from biodiversity risk scenarios may result in underestimated impacts, leaving economic policymakers such as central banks and ministries of finance with major blind spots affecting risk management and nature transition planning.
Targeted at academics and policymakers, this session will present cutting-edge research on the macrofinancial risks of biodiversity loss and transition policies. In scope are policy-relevant empirical contributions focusing on the feedback effects between ecological, economic, and/or financial dynamics. Led by UCL IIPP, this session welcomes both quantitative and qualitative approaches, with a special focus on showcasing diverse approaches to macroeconomic modelling. We especially welcome contributions from policymakers.
The Global Biodiversity Framework’s ‘30x30 targets’ aim to restore and conserve 30% of degraded ecosystems by 2030, as part of broader efforts to halt and reverse nature loss. Despite representing a rapid transformation in land use, the few studies exploring the potential effects of constraining land use for nature conservation have estimated relatively minor economic impacts. This study presents a novel stylised ecological stock-flow consistent input-output (E-SFC-IO) model for the global economy, which accounts for land use by the agricultural sector, and the effects of land availability on land rents. Our results first show that implementing the 30x30 targets generates cost-push inflationary dynamics that feedback to affect the functional distribution of income. In contrast to other studies, we find that capital investment in the agricultural sector does not automatically increase to offset higher relative scarcity in land input. Instead, lower profit rates disincentivise capital investment and depress productivity growth. We next explore different combinations of policies to encourage agricultural sector investment, and how this transition in capital stock interacts with the inflationary backdrop. We find that taxing rents earned by landowners can mitigate some of the stagflationary consequences of the baseline scenario, but that agricultural investment is unlikely to increase without financial regulatory policies to counteract credit rationing by banks. Finally, we test how agricultural sector investment is affected by two environmental shocks: the first capturing the effects of chronic soil degradation, and the second representing climate damages of different magnitudes. Chronic soil degradation is a long term consequence of the transition to a more intensive form of agriculture, and results in the return of cost-push inflation over time. Climate damages increase the volatility and the cost of the agricultural transition, requiring more supportive policies. Overall, this study provide valuable insights for policymakers seeking to ensure nature conservation policies balance environmental objectives and economic impacts.
How to cite: Kedward, K.: Exploring land constraints relating to nature conservation policies in an ecological macroeconomic model , World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-55, https://doi.org/10.5194/wbf2026-55, 2026.
Nature in Europe is facing a ‘serious and continuing decline’ (EEA, 2025) with less than 40% of its surface bodies achieving ‘good’ ecological status and over 80% habitat assessments achieving ‘poor’ or ‘bad’ conservation status (EEA, 2024). Europe is not on track to meet its targets on water, climate or energy by 2030. Local as well as global environmental degradation pose a risk to the economy given the connection between the global economic system through supply chains and the financial system (Ranger et al., 2024). Nature loss can lead to systemic financial risks through compounding effects, cascading effect and/ or financial contagion (NGFS, 2024).
Following the scenario development methodology in Ranger et al. (2024) - based upon a combination of narrative scenario development coupled with a quantified macroeconomic model - we develop a nature-related risk scenario for Europe driven by domestic environmental degradation to understand the potential impacts of nature degradation on financial stability. The approach for scenario design is consistent with IMF (2019)’s guidance on scenario for stress-testing which focusses on plausible yet extreme shocks and learns from the literature on narrative scenario development as well as robust decision making. First, we develop a Nature-related Risk inventory for Europe (NRRI-EU) —a long- list of over thirty nature-related risks to Europe and assess the likelihood of each risk materialising in the next 5-10 years. We validate the NRRI-EU by liaising with natural sciences’ experts and gathering feedback on both the list of risks included, the classification on the likelihood of these risks materialising in the short-term (5-10 years) as well as the confidence in that assessment. Second, we analyse the interactions between these risks to identify whether some risks could co-occur driven by shared driver/s or feedback processes. Third, we develop a cluster of interrelated risks which enable identifying compounding shocks for the scenario design. Fourth, we develop a narrative domestic scenario including both chronic and acute impacts. Next steps include parametrising the narrative scenario into individual shocks (some of these compounding and, possibly cascading) based on the latest literature to quantify the macroeconomic impacts.
How to cite: Ceglar, A. and Alvarez, J.: Assessing the materiality of nature-related financial risk for the European Union: a narrative-based approach to scenario development, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-115, https://doi.org/10.5194/wbf2026-115, 2026.
Agricultural and timber supply chains are increasingly exposed to a growing constellation of global shocks—including pandemics, armed conflicts, trade disruptions, and extreme weather events. These disturbances propagate through international supply chains, reshaping trade flows and altering related pressures on ecosystems. This study examines whether such shocks create openings for transitions toward lower biodiversity-impact supply chains or, alternatively, reinforce the dominance and structural resilience of high-impact supply chains.
To assess ecological pressure, we leverage a dataset on bilateral trade matrices for agricultural and timber commodities, combined with product specific values of embodied Human Appropriation of Net Primary Production (eHANPP) – a proxy indicator of pressures on ecosystems and biosphere integrity. We develop a formal definition of what constitutes a shock in biomass trade, characterizing shocks as statistically significant, sudden, abrupt deviations from expected trade patterns that exceed normal variability. We explore a suite of statistical and network-analytic approaches, including outlier-based shock detection, structural break analysis, and difference in differences approaches, to detect shocks in biomass trade. We integrate our trade-based shock indicators with an external dataset on polycrisis events, to attribute these shocks to major socio-ecological disruptions. We investigate the resilience of supply chains, i.e. how different supply chains respond to identified shocks. Especially, we assess whether the resilience differs between high-HANPP commodity complexes (e.g., feed–livestock systems) and lower-impact supply chains (e.g., plant-based foods).
By integrating eHANPP with global trade network dynamics and exogenous shock analysis, this work aims to develop new approaches to define, depict, and analyze shocks and resilience in biomass supply chains, and understand how sudden poly-crises events shape the trajectory of biodiversity-relevant supply chain transformations. The findings contribute to understanding whether global shocks act primarily as catalysts for biodiversity transitions or as stabilizers of existing high-impact supply chains, with implications for policy design in an era of escalating systemic risk.
How to cite: Roux, N., Baum, S., Hanel, R., and Haberl, H.: Do Sudden Shocks Foster or Hamper Transitions Toward Low-Biodiversity-Impact Biomass Supply Chains?, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-379, https://doi.org/10.5194/wbf2026-379, 2026.
Intact forests are critical for biodiversity conservation, but large forest ecosystems, such as the Amazon, are increasingly threatened by the rapid expansion of agriculture. Between 2014 and 2023, total financial flows to agriculture firms responsible for land-use change in the Brazilian Amazon amounted ~US$450 billion. Concerns about systemic financial risk arising from biodiversity loss have motivated a framework for greening the financial system. However, recent studies argue that doing so would require transcending finance-based regulatory levers and addressing global imbalances between countries due to geographical transfers of value, in particular profit repatriation. Such transfers constitute both a source of systemic risk for emerging economies, like Brazil, that could propagate through balance sheets to core financial hubs, and a structural impediment for the ‘greening’ of the financial system. Between 2005 and 2020 Transnational Corporations (TNCs) repatriated an average of US $1 trillion per year, equal to 4.2 % of global Foreign Direct Investment (FDI) stock and 1.4 % of world GDP. In many net‑exporting countries, repatriated profits exceed the inward FDI stock.
This study investigates how profit repatriation and FDI positions of TNCs potentially hinder policy interventions and deepens Brazil’s financial vulnerability and global financial systemic risk. We show empirically the correlation between TNCs FDI in the Brazilian soy sector, profit repatriation, and spatially explicit soy-related land-use change. We merge data from the Brazilian Central Bank with corporation’s balance sheets to measure their investment positions in the soy sector as well as their profit repatriations. Moreover, to account for the biodiversity impact of these companies, we link their financial inflows and outflows with their induced deforestation related to soy using subnational supply-use accounts and the Food and Agriculture Biomass Input-Output model (FABIO). We find that close to 60% of all profits repatriated from Brazil had Europe as main destination, and the Netherlands and Luxemburg account for close to 50% of these flows. This detailed connection and balance of FDI, repatriated profits and land-use change of companies can contribute to identify policy coordination and explore a shift from the current risk management approach to a multilateral risk governance approach to greening the financial system.
How to cite: Ortiz, S., Trsek, S., and Giljum, S.: Extracting Value, Exporting Risk: Profit Repatriation and Brazil’s Deforestation Dynamics, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-453, https://doi.org/10.5194/wbf2026-453, 2026.
This paper examines how nature-related financial policies (NRFPs) in the home countries of global banks impact the pricing and terms of cross-border credit to firms that significantly affect biodiversity. Utilizing granular loan-level data from Colombian firms, a "megadiverse" country with high biodiversity risk, the authors analyze the interactions between stricter NRFPs and firm-level exposure to biodiversity loss. The study incorporates a novel, cross-country index of NRFPs, which captures a range of policies, from disclosure requirements to prudential regulations aimed at addressing environmental risks, including biodiversity degradation.
The findings reveal that implementing stricter NRFPs in global banks' home countries leads to notable adjustments in the terms of cross-border loans to firms with high biodiversity exposure. Specifically, global banks charge higher interest rate spreads and offer longer loan maturities to firms with significant biodiversity footprints. The magnitude of these effects is economically significant: a one-standard-deviation increase in the NRFP index leads to an approximate 16 basis-point increase in interest rate spreads and a six-month extension in loan maturities. Importantly, however, the volume of cross-border credit granted remains unaffected, suggesting that banks are adjusting the terms of lending rather than reducing credit supply altogether.
The study distinguishes between different types of NRFPs and finds that the effects are most pronounced for soft regulatory tools, such as voluntary disclosure requirements and principles-based frameworks. This suggests that even non-mandatory policies can influence global financial practices by prompting banks to internalize biodiversity-related risks. The research further explores how banks' risk assessments are shaped not only by current biodiversity degradation but also by potential future risks, indicating that environmental concerns are increasingly factored into lending decisions.
Overall, the study provides the first empirical evidence on the cross-border pricing of biodiversity-related risks in global lending markets. It highlights the role of international regulatory cooperation and the potential for NRFPs to influence financial market behavior, ensuring that environmental risks are priced into credit terms even in the absence of global coordination.
How to cite: D'Orazio, P., Karlström, P., Ossandon Busch, M., and Sarmiento, M.: Pricing nature across borders: Global banks’response to nature-linked financial policies, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-244, https://doi.org/10.5194/wbf2026-244, 2026.
Through the provision of credit and other financial services, banks enable economic activities that affect the states of ecosystems and their biodiversity. Nature degradation is eroding the resilience of ecosystems that are central to human wellbeing, particularly due to climate and land use drivers. Efforts to conserve these ecosystems generate reputational and legal risks to financial institutions exposed to them and can impair the ability of underlying companies to repay their debt. Using a highly granular supervisory dataset, we examine how banks in the Euro area contribute to these dynamics by financing companies linked to negative impacts in several ‘systemically important’ ecosystems – the Amazon rainforest in Brazil, boreal forests in Canada and Russia, and mangroves and peatlands in Indonesia. This granular, location-specific approach moves beyond aggregate biodiversity footprint metrics and provides greater clarity on the channels through which high-income financial systems contribute to ecosystem loss. Our (expected) results show that European banks’ exposures to these ecosystems is primarily through company subsidiaries that would not be flagged as high impact under conventional approaches based on industry classifications. Key ecosystems linked to European banks are the Brazilian Amazon and Canadian boreal forests, with exposures to other ecosystems close to negligible. Exposures are concentrated in a small number of financial institutions headquartered in France and Belgium. Although the dataset underestimates total exposures due to limited cross-border data, individual exposures faced by most European banks are likely to be very small relative to their overall portfolios. These findings can inform supervisory assessments of banks’ management of environmental risks, and underline that a risk-based framing alone is unlikely to create sufficient incentive to redirect commercial financial flows away from activities that degrade ecosystems. Future research could draw on rapidly expanding firm-level data attributing ecosystem impacts further up the supply chain to further characterise indirect exposures.
How to cite: Marsden, L., Ryan-Collins, J., and Ceglar, A.: The exposure of European banks to degradation of systemically important ecosystems, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-301, https://doi.org/10.5194/wbf2026-301, 2026.
Guided by the Network for Greening the Financial System’s (NGFS) classification of environmental risks, this paper investigates the financial materiality of nature-related legal disputes. The NGFS identifies litigation as a key channel through which both physical risks (acute events like oil spills or chronic issues like soil degradation) and transition risks (regulatory shifts) transmit to the financial system. While the market impact of climate litigation is well-documented, the financial consequences arising from lawsuits concerning biodiversity loss, pollution (including PFAS), and ecosystem degradation are often complex due to heterogeneous international legal frameworks and remain significantly underexplored. This study employs a rigorous quantitative approach to analyze whether firms targeted by environmental complaints experience statistically significant declines in their market valuation.
We utilize a novel, hand-collected dataset of 54 lawsuits, encompassing 111 distinct event dates (initial filings and judicial decisions) against 17 major publicly traded companies across North America and key European exchanges over the period 1996–2025. The cases specifically cover major industry sectors involved in PFAS contamination, deforestation, and oil spills, ensuring comprehensive coverage of diverse nature liabilities. We employ a standard event study methodology utilizing the Fama-French three-factor model to calculate Cumulative Abnormal Returns (CAR) over a $[-5, +5]$ day event window, complemented by sector-specific benchmarks (e.g., STOXX Europe 600 indices) for our spillover analysis.
Our empirical results demonstrate a statistically significant decline in corporate valuation following litigation announcements, confirming that markets rapidly price in these emerging risks. Crucially, we observe a divergence between regions: unlike prior US-based literature, our findings indicate a distinct "reputational premium" in Europe, where stock corrections often exceed probable financial penalties due to heightened investor ESG sensitivity. Furthermore, we document robust evidence of sectoral spillover effects, where litigation against a single firm triggers negative contagion across the entire industry. The findings emphasize the necessity for financial institutions to integrate nature-related legal liabilities into their credit risk assessment, capital allocation, and regulatory stress testing frameworks. This study provides timely quantitative evidence essential for supervisors assessing the systemic nature of the climate-nature nexus.
How to cite: Dees, S., Hanoune, E., and Wegner, O.: Jus naturale: the impact of nature-related litigation on corporate valuation, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-327, https://doi.org/10.5194/wbf2026-327, 2026.
Climate change and other anthropogenic pressures are likely to induce tipping points in marine ecosystems, potentially leading to declines in primary productivity and fisheries. Despite increasing attention to nature-related financial risks and opportunities within the ocean economy, the extent to which these tipping points could affect investors has remained largely unexplored. Here we used satellite data to track fishing vessels operating in areas prone to marine regime shifts, and uncovered their corporate beneficial owners and shareholders.
We found that about 30% of the oceans are at risk of regime shifts (extreme marine heat waves and signals of instability in primary productivity).16% of the oceans have shown abrupt declines in primary productivity, while 252 fish stocks resulted in abrupt declines on historical data. The literature already showcase past events with impacts on employment and economic losses on the millions of dollars. So who is at risk today?
We found that 15% (16,878) of the vessels tracked in Global Fishing Watch fish in areas susceptible to marine regime shifts. We find that Norway and China are important actors in hosting many of the vessels and shareholders in our data, but they are not strongly involved on foreign investment. Spain, the UK and France are central countries of origin for foreign investment, while Russia is a hotspot attracting these investments. The likelihood of these financial flows seems to be related to differences in government effectiveness and political stability.
We provided lists of top shareholders and top companies with vessel ownership fishing in areas prone to marine regime shifts, and discussed the limitations of our study mainly related to data transparency. Nonetheless, we hope these lists of companies and shareholders help to identify actors with agency to manage the risk of marine regime shifts. We discussed potential interventions that can reduce regime shifts risks. Redesigning subsidy programs, lobbying company boards to fish in low-risk areas, or supporting the implementation of international agreements that take into account potential range shifts and conflicts are just a few examples of how these actors can incentivise practices that are aligned with long term sustainability values.
How to cite: Rocha, J., Jouffray, J.-B., Bengtsson, F., Voicu, B.-I., Sánchez, P. A., and Galaz, V.: Identifying companies and financial actors exposed to marine tipping points, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-370, https://doi.org/10.5194/wbf2026-370, 2026.
Biodiversity and ecosystem services underpin the global economy, and their degradation poses escalating risks to economic activity and society. Human-nature interactions are partly structured by how the financial system assesses risks, allocates capital, and shapes corporate behavior. Although recent advances have strengthened micro-level assessments of financial institutions’ exposures and impacts, the macro-scale consequences of biodiversity loss remain poorly understood. In a context of globalized supply chains and densely interconnected financial networks, it is essential to examine how nature-related risks propagate across complex socio-economic systems.
Here, we integrate ecological, industrial, and financial data into a three-layer network that maps dependencies and biodiversity impacts driven by supply-chain linkages, and stock ownership structures. Our global sample covers listed companies representing USD 122.7 trillion in market capitalization (≈97% of global market cap), complemented by non-listed subsidiaries, totaling roughly 200,000 firms. For these entities, we identify about 400,000 ultimate shareholders, whose identified portfolio holdings collectively account for USD 55 trillion in market value (≈44% of global market cap). Using network analysis, input–output modelling, and lifecycle assessment, we quantify location-specific biodiversity impacts across four environmental pressures (land use, blue-water consumption, greenhouse-gas emissions, and terrestrial acidification) and assess ecosystem-service dependencies across 21 ecosystem services. This framework enables us to (1) identify systemically important financial actors, (2) pinpoint critical ecosystems whose degradation could trigger cascading risks, and (3) reveal the asymmetric distribution of vulnerability and responsibility across countries and financial institutions.
This information has direct policy relevance. By identifying critical nodes in the network, the analysis can guide targeted interventions that strengthen financial stability while supporting nature conservation, and clarify where responsibility for systemic impacts lies. Furthermore, assigning impact and dependency profiles to financial institutions provides a basis to integrate biodiversity into disclosure practices, portfolio alignment approaches, and risk assessment methodologies.
The analysis is currently ongoing, and the session will provide an opportunity to present final results. We will also outline the next work stream: extending this framework into operational macro-risk assessment by simulating local shocks in vulnerable ecosystems, modelling risk propagation, and deriving systemic-risk indicators under various ecological and economic scenarios.
How to cite: Dingkuhn, P., Kruger Nyasulu, M., Alpizar, F., and Konc, T.: Aligning Finance with Nature: A network analysis of vulnerability, responsibility, and systemic risk, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-91, https://doi.org/10.5194/wbf2026-91, 2026.
This paper outlines the methodology supporting the development of ENCORE Insights: Country Dashboard, an online platform funded under the Horizon programme and scheduled for launch in December 2025. The Dashboard enables users to explore the dependence of the 27 European Union (EU) member states on nature, combining data on economic structure and nature-related dependency to identify critical sectors most exposed to ecosystem degradation. The methodological framework builds on existing approaches that link ENCORE’s nature dependency data with the EXIOBASE global input–output database. At the same time, we establish an alternative, multi-dimensional framework that explicitly differentiates between domestic and imported exposure to nature degradation, a distinction informed by the broader value-added in trade literature (Koopman et al., 2013). This distinction provides a more nuanced understanding of national vulnerabilities and supports the design of targeted regulatory policies.
Our new framework allows us to quantify dependencies based on origin (domestic vs. imported value-added) and final use (gross exports vs. domestic final demand), covering both the production and consumption dimensions of the economy. Furthermore, we incorporate employment and wages data to include the dependency of wider socio-economic factors. This comprehensive decomposition allows the analysis to move beyond simple direct and indirect exposure to nature loss, providing a complete and granular picture of a country's total economic and social exposure via its whole supply chain, distinguishing between domestic and foreign imported components.
As regulation, conservation and restoration initiatives need to be adapted to national contexts, distinguishing between domestic and imported dependence will allow a more targeted policy response. The resulting analysis and visualisations — fully transparent and open-access — will help policymakers, regulators, civil society, and financial institutions identify sectors and supply chains most at risk from nature degradation, thus informing strategies for sustainable economic resilience across the EU. This paper sets out the methodology used to calculate the exposure metrics across our proposed framework.
How to cite: Wilson, N. and Postel-Vinay, N.: Assessing Multi-Dimensional Nature Dependencies in the EU: ENCORE Insights Country Dashboard Methodology, World Biodiversity Forum 2026, Davos, Switzerland, 14–19 Jun 2026, WBF2026-166, https://doi.org/10.5194/wbf2026-166, 2026.
