Over the past several years, the financial services industry has made great strides to account for the symbiotic relationship between economic activities and nature, mirroring the political, corporate, and societal efforts to address environmental challenges. One of the many ways in which this progress has manifested itself is through the launch of the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations and additional guidance in September 2023.
Among the plethora of widely used financial instruments, sovereign debt stands out as the bedrock upon which market participants depend for a reference interest rate. The importance of this asset class for the functioning of the global economy and capital markets cannot be overstated, as well as for being a conduit for capital to flow from advanced economies (AEs) to emerging and developing economies (EMDEs).
For these reasons, building on the TNFD’s recommendations and additional guidance, NatureFinance has developed tailored guidance for financial institutions regarding the identification and assessment of nature-related dependencies, impacts, risks, and opportunities emanating from their sovereign debt exposures.