China and EU Enhance Nature-Related Banking Regulations

• •China and the EU are implementing nature-related banking regulations.
• •Estimated economic costs of nature degradation could reach $2.15 trillion over five years.
• •New regulations focus on environmental policy, corporate regulation, and prudential supervision.

China and the European Union are advancing regulations to address nature-related risks in the banking sector. A new UNEP Finance Initiative policy brief estimates that the economic costs of nature degradation could reach $2.15 trillion over five years if left unchecked. The regulations aim to incorporate environmental considerations into banking practices, focusing on three main areas: environmental policy, corporate regulation, and prudential supervision. Both regions are committed to implementing the Kunming–Montreal Global Biodiversity Framework. As nature-related risks become more prominent, banks are expected to adapt to new regulatory expectations and disclosure requirements. The complexity of nature-related risks is noted to be greater than climate-related risks, posing challenges for financial institutions. The ongoing developments in regulatory frameworks are crucial for financial sector practitioners and policymakers.