Photo: Frida Lannerström / Unsplash
Central banks and regulators must do much more to integrate nature-related risks into financial regulation and supervision, according to a new report by environmental group WWF.
The WWF said major drivers of nature loss such as deforestation, water stress, and ocean degradation remain largely overlooked in financial regulation, noting they are not addressed with the same level of rigor as climate-related risks.
“Central banks and financial supervisors will increasingly need to step up to ensure that climate and nature risks are properly identified, priced and managed. They are crucial players in strengthening the financial system´s ability to build the resilience needed to withstand these accelerating shocks,” said Maud Abdelli, who leads the WWF initiative on greening financial regulation.
Nature risk is just as important as climate risk and business dependency on ecosystems means banks are indirectly exposed, a Banque de France director said in April.
The WWF report – the lastest update of its annual assessment of central banks and financial supervisors – noted that some countries, particularly in Europe and parts of Asia Pacific, are strengthening climate and nature-related regulations while others are loosening standards.
It highlighted advances made by Bank Negara Malaysia and the European Central Bank on supervisory follow up, while the Hungarian Central Bank has expanded its financial disclosure framework to include ecosystem and biodiversity risks. Countries including Colombia, Morocco, Paraguay and Turkey have also issued or strengthened guidance on climate and ESG risk management and disclosure, WWF said.
“Progress is not only possible but underway. The monetary, supervisory and policy instruments needed to close remaining gaps are already available and can be deployed successfully,” the report said.
However, even as climate and nature risks are taken more seriously, regulators need to make enforcement stronger and introduce mandatory disclosures for green taxonomies, WWF said.
WWF called on central banks to use stress tests, capital buffers and exposure limits to prevent and monitor climate and nature risks, while also making environmentally harmful assets more expensive in capital rules to reflect their true risks.
Regulators should also frame sustainable finance as a growth opportunity for the financial sector and improve national and international coordination by creating green finance committees to coordinate on transition plans.
“Taking decisive action now is not only a strategic business imperative but also a key to unlocking the emerging green opportunities and safeguarding future economic growth,” said Siti Kholifatul Rizkiah, who led the WWF’s assessment.
This page was last updated December 16, 2025
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
