The Finance-Nature-Climate nexus

Lone deer in a forest

The climate and ecological crises are among the biggest challenges facing humanity. Both biodiversity loss and climate change are already having profound impacts on societies around the world.  Both challenges are deeply connected, but some strategies to tackle climate change might not be compatible with supporting biodiversity, and vice versa. The Taskforce on Nature-related Financial Disclosures (TNFD) recommends that transition scenarios incorporate climate- and nature-related risks. However, scenarios that assess climate and nature in an integrated approach are rare. Analyses of this finance-nature-climate nexus are even rarer.

The Finance-Nature-Climate nexus in the context of Sustainable Development

Researchers at the Grantham Institute and Imperial College Business School are undertaking a research project, the FiNaClim-SD project, that aims to fill this gap by drawing on existing climate transition risk frameworks and extending them to include broader nature and biodiversity components, as well as  broader societal objectives, such as those defined by the Sustainable Development Goals (SDGs). It covers questions including:

  • What is meant by “nature-positive” investments in the context of a “net-zero” transition?
  • What does a net-zero and nature-positive scenario look like?
  • Can existing scenarios provide insights into new risks emerging from jointly considering climate and nature?

Who why for who

Who?

FiNaClim-SD is a research project carried out by the Grantham Institute, in partnership with the Centre for Climate Finance and Investment (CCFI) from the Imperial College Business School.

The project is led by Dr Joeri Rogelj, Director of Research at the Grantham Institute and Reader in Climate Science and Policy at the Centre for Environmental Policy at Imperial College London, and Dr Alexandre Koberle, Advanced Research Fellow at the Grantham Institute. This project is funded by the Natural Environment Research Council (NERC) and Finance for Biodiversity.

How?

The FiNaClim-SD project draws on the experiences of climate transition risk frameworks and extends them to include broader nature and biodiversity components. It aims to synthesise and translate the literature and science behind modelled scenarios and integrated assessment models (IAMs) to explore how nature is represented, depicted, and described in climate-sustainability transition scenarios. The aim is to inform financial actors about the use and applicability of such scenarios, as well as how they can help in identifying possible transition risk channels to financial institutions.

For who?

Outputs of this project will help integrate scientific knowledge into financial institutions’ strategies, enabling them to anticipate, assess and manage risks related to nature and climate, while also considering sustainable development objectives. The project will help financial institutions, regulators, funding organisations and policymakers understand the nature-climate exposure of the financial sector; how net-zero, nature-positive transitions could impact their immediate financial performance; and the long-term financial risks associated with how their own activities or those in their supply chain may impact nature.

Find out more

To learn more about the project, and find out how to get involved in future events, please contact Ivana Popovic: i.popovic@imperial.ac.uk