Natural Capital Finance Alliance

Natural Capital Finance Alliance

Red Eyed Treefrog on a leaf

The Natural Capital Finance Alliance (NCFA) seeks to increase awareness of the natural capital risks to which financial institutions expose themselves through loans and investments, and to provide them with tools to assess and negate such risks. It also aims to help institutions recognise the opportunities presented by the transition to a greener economy. It is a joint project of GCP and the UNEP Finance Initiative, and the Natural Capital Declaration (NCD) has been signed by the CEOs of over 40 leading financial institutions.

The NCD defines natural capital as the stock of ecosystems yielding a renewable flow of goods and services that underpin the economy and benefit businesses and society. Companies that use natural capital unsustainably expose themselves to legal, reputational, and operational risks. Financial institutions that invest in such companies expose themselves to the same risks. The NCFA seeks to enable financial institutions to evaluate and avoid risks related to natural capital, improving investment security.

The NCFA is developing and testing quantitative and analytical methods to directly link natural capital risks and opportunities to core financial metrics. From here, it will work towards an accounting framework that includes natural capital within the wider definition of resources and relationships key to an organisation’s success. Additionally, a disclosure and integrated reporting platform will enable financial institutions to understand how they are positioned for natural resource risks and opportunities.

Working Groups:

  1. Understanding
  2. Integrating
  3. Accounting
  4. Disclosing and Reporting

To find out more about the NCFA and all the latest tools and methodologies click here.