Assessing economic exposure to nature-related risks

The accelerated degradation of biodiversity exposes economic and financial activities to systemic risks comparable to those associated with climate change. We propose a method for assessing the socio-economic exposure of most of the world's countries to both physical and transition risks, using free, open databases. An example of application to assess the exposure of the South African economy is provided. There is room for improvement in this method. It is not sufficient for country risk ratings or capital allocation or financing decisions, but it provides a preliminary assessment that can guide further due diligence and more informed financing decisions. It can help a wide range of stakeholders, public decisionmakers, market regulators, companies and financial institutions to meet the objectives of improving the monitoring, evaluation and transparent disclosure of the risks, dependencies and impacts on biodiversity of economic players. In this way, it can contribute to achieving Target 15 of the Kunming- Montreal Global Biodiversity Framework, or to implementing the recommendations of the Task-Force on Nature-related Financial Disclosure (TNFD) or the European Corporate Sustainability Reporting Directive (CSRD).