Nature Positive Corporate Assessment Guide for Financial Institutions 2025

Executive summary The state of nature has been declining rapidly, with wildlife populations having decreased by an average of 73% over the past 50 years.3 Human activity has already severely altered three-quarters of Earth’s land surface. This represents not only an environmental crisis but also a significant risk to economic stability,4 as over half of the world’s gross domestic product (GDP) is highly or moderately dependent on nature.5,6 Acknowledging this challenge, 196 countries adopted the Kunming-Montreal Global Biodiversity Framework (GBF) in 2022. The GBF charted a path for biodiversity that resembles the trajectory established for climate change by the 2015 Paris Agreement and proposed that nature would follow a similar developmental course. Financial institutions proactively acting on nature are more likely to be better positioned to assess nature- related risks comprehensively and capitalize on emerging opportunities. The time to act is now. There is a pressing need to increase investment in business activities that reduce and prevent negative impacts on nature along the entire value chain. Financial institutions – banks, investors and insurers – have a critical role to play as providers of finance and de-riskers of investment. Firstly they need to develop practical approaches on how to evaluate corporates on their nature impacts. Guidelines are being developed to direct companies and financial institutions in the creation of their own nature transition plans. Leading frameworks include those from the Taskforce on Nature-related Financial Disclosure (TNFD), the Glasgow Financial Alliance for Net Zero (GFANZ) and the World Wide Fund for Nature (WWF). However, less attention has been given to how financial institutions can start assessing portfolio companies’ alignment with institutional ambitions for nature. This report outlines how financial institutions can start to assess company efforts to align strategies with the protection and restoration of nature. When establishing practices for nature, financial institutions should build on existing capabilities, frameworks and structures for climate. This report used climate transition plan assessment approaches as a starting point, which were then supplemented with a series of interviews with financial institutions and leading non-governmental organizations (NGOs). In the end, 11 indicators across three key dimensions of information were deemed relevant for financial institutions assessing their corporate clients’ and portfolio companies’ progress and forward planning on nature: 1. Company starting point: Financial institutions are eager to form a view on where companies stand on nature and how they are exposed to nature-related risk. Many begin by assessing impacts and dependencies, as well as associated risks and opportunities, and determining materiality of nature-related issues. 2. Company ambition and targets: For material nature-related issues, financial institutions would like their portfolio companies and clients to develop and articulate ambitions and, over time, set targets. 3. Transition credibility and achievability: Financial institutions would like to see proof points demonstrating that nature ambitions and targets are being embedded into a company’s activities. Financial institutions can act now to assess companies on nature and integrate nature- related data into business-as-usual activities. Nature Positive: Corporate Assessment Guide for Financial Institutions 5