Towards including natural resource risks in cost of capital

Published November 2015

Towards including natural resource risks in cost of capital

The scoping study explores the rationale for the financial industry to map and integrate natural capital risk into credit risk management and assesses the current state of global knowledge to inform the project’s implementation.
Part 1 of this Working Paper provides a business case for both banks and asset managers to incorporate natural capital factors in their lending and investment decision-making processes. It reviews the current multi-stakeholder understanding of natural capital and illustrates its economic and financial market risks.
Part 2 of the study provides an independent assessment of existing capabilities to manage natural capital risk in order to inform the research and development phase of the NCD project to map financial sector risks from natural capital dependencies and impacts. It provides the results of a survey of 36 financial institutions on their current approaches to natural capital and an assessment of the current capabilities of 26 service providers and consultancies to offer relevant natural capital data, modelling skills and other services to financial institutions.
Part 3 provides recommendations for implementation of the further stages of the project to develop effective natural capital adjusted financial risk assessments.
News release
Published: 2015 | by: NCD

Towards including natural resource risks in cost of capital (6.3 MB | 54 pages)