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How are central banks engaging with biodiversity loss risks? : current initiatives, gaps and challenges
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1830-1541
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EUI; RSC; Policy Paper; 2025/12; Florence School of Banking and Finance
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SANDOVAL VELASCO, María Del Carmen, FALCHI, Giorgio, How are central banks engaging with biodiversity loss risks? : current initiatives, gaps and challenges, EUI, RSC, Policy Paper, 2025/12, Florence School of Banking and Finance - https://hdl.handle.net/1814/92854
Abstract
This policy paper explores the emerging engagement of central banks and financial supervisors with the risks posed by biodiversity loss to financial stability. While climate-related risks have become a key focus in central banking, the complex and systemic nature of biodiversity loss remains insufficiently addressed. Drawing on recent reports, policy studies and initiatives by different institutions and the NGFS, the paper provides a conceptual framework linking nature, biodiversity, and climate change. It presents current efforts by central banks to integrate biodiversity-related financial risks (BRFR) into their mandates and risk management practices, identifies some of the methodological tools being used, and highlights the challenges in developing standardised metrics, scenarios, and coordinated strategies. The paper argues that despite growing recognition, biodiversity risks remain still unknown and poorly integrated into financial policy. It concludes with recommendations for improving coordination, data frameworks and interdisciplinary collaboration between finance and the natural sciences, as well as the need to increase outreach efforts of current initiatives to better address these risks and their integration into central banking activities.