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With increasing attention on the role of nature in the economy and society, financial institutions need a common framework that provides a clear introduction to natural capital issues, and a structured process to identify, measure and value their direct and indirect impacts and dependencies on natural capital.
A variety of initiatives and methodologies are being developed to enable financial institutions to better understand the natural capital risks and opportunities associated with their direct operations, and their investment, lending and insurance portfolios.
Examples include the tools and methodologies developed by the Natural Capital Finance Alliance (formerly Natural Capital Declaration) and the Dutch Association of Investors for Sustainable Development (VBDO).
To provide the clear and unified guidance needed, the leading organizations in this space have agreed to build upon the framework of the Natural Capital Protocol. This Finance Sector Supplement to the Natural Capital Protocol will provide guidance to help financial institutions incorporate the consideration of natural capital impacts and dependencies into their lending, investment and insurance practices and processes.
