In a keynote speech at COP17 Finance and Biodiversity Day, Frank Elderson, European Central Bank (ECB) Executive Board member and Supervisory Board vice chair, stressed the economic and financial risks of nature degradation and called for greater investment to protect and restore natural capital. These risks already affect central banking: extreme heatwaves and droughts can push up food prices, and nature risks have featured explicitly in recent monetary policy assessments and communications. Banks are already expected to identify and manage material nature risks alongside climate risks, but their management of nature risks remains less developed. ECB analysis shows that 75% of euro area corporate lending goes to companies highly dependent on at least one ecosystem service. Yet two-thirds of supervised banks do not systematically link their nature risk materiality assessments to a risk management response. Few have defined key risk indicators for nature, and those that have often use them only for monitoring, without limits or thresholds that trigger management action. Protecting and restoring natural capital requires substantially greater private capital flows alongside public finance. The financing challenges include turning opportunities that are not yet commercially viable into investments capable of attracting capital, and funding projects that generate public goods without direct revenue. Elderson also urged keeping nature risks on the international financial agenda, including at the Basel Committee, the Financial Stability Board and the International Monetary Fund.

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