The European Commission’s DG Environment “Science for Environment Policy” News Alert Service has summarised a peer‑reviewed study estimating how much the 10 largest European banks’ equity holding portfolios depend on ecosystem services. Using end‑2020 data, the researchers calculate that USD 0.26 of every USD 1 of equity held is “highly dependent” on ecosystem services, equivalent to about USD 335 billion (EUR 317 billion), or 26.8% of equity holdings assessed. The study replicates a methodology previously applied to De Nederlandsche Bank and uses the ENCORE tool (Natural Capital Finance Alliance) to map ecosystem‑service dependency by industry, classifying holdings as “highly dependent” when they fall in the top 33% of dependency ratings. In absolute terms, UBS Group AG (USD 87 billion, EUR 82 billion) and Deutsche Bank AG (USD 69 billion, EUR 65 billion) had the largest ecosystem‑service‑dependent equity exposures, while Société Générale showed the highest relative “nature‑associated value at risk” (33.7%; USD 20 billion, EUR 19 billion) and Barclays the lowest (21%; USD 8.6 billion, EUR 8 billion). The largest dependencies were linked to mass stabilisation and erosion control (USD 40 billion, EUR 38 billion), surface water (USD 34 billion, EUR 32 billion), groundwater (USD 34 billion, EUR 32 billion) and flood and storm protection (USD 33 billion, EUR 31 billion), with the researchers flagging water‑related dependencies and soil‑erosion risks as potential areas of concern for equity portfolio managers; they also note limitations including the narrow scope (equity only), geography‑specific dependencies and exclusion of secondary production dependencies. The researchers recommend clearer definitions of ecosystem‑service risks and dependency factors, stronger bank disclosure and risk‑management approaches supported by supervisory guidance and assessment frameworks, and more robust data, including via the EU Corporate Sustainability Reporting Directive. They also point to the need for new stress‑testing methodologies and scenarios, and suggest central banks could publish their own ecosystem‑service dependency assessments. The News Alert notes the research summary does not necessarily reflect the European Commission’s position.
European Commission 2025-02-10
European Commission research alert finds 26% of equity holdings at Europe’s 10 largest banks highly dependent on ecosystem services
The European Commission’s DG Environment summarized a study estimating that 26.8% of the equity portfolios of the 10 largest European banks, totaling approximately USD 335 billion (EUR 317 billion), are highly dependent on ecosystem services. UBS Group AG and Deutsche Bank AG have the largest exposures. Researchers recommend enhanced risk management, clearer definitions, improved data, and stress-testing methodologies, while noting the study's limitations and the need for supervisory guidance.