From coral reefs to beautiful rainforests, protecting Australia’s unique natural wonders is essential for protecting our way of life.
But this hasn’t been the case in recent years, with the value of nature often ignored and exploited beyond its ability to regenerate.
The effects are widespread, with more than 2,200 plants and animals now sitting on our national threatened species list and many more struggling from the impacts of widespread habitat destruction.
There are also flow-on effects to society more broadly, with impacts to the water, air and soil we all depend on for our health and survival.
These effects extend to our economy, having major implications for our banks and super funds. If we don’t have a thriving natural world, these other systems also crumble.
We don’t often consider banks and super funds as vital nature protectors, but financial institutions can play a key role in protecting the nature we love because they finance industries that have the most impact on it.
Banks can protect and restore nature: put the laggards on notice
The second iteration of our nature risk survey and report was released this week: Risky Business: How Australian financial institutions are managing nature-related risks and opportunities.
The 2024 progress report looks at the same 10 banks and 10 super funds, representing a combined loan book value of $2.3 trillion and a combined $1.2 trillion in assets respectively.
The table below compares our recommended next steps from the 2022 report with our key findings from the 2024 progress report.
| 2022 Next Steps | 2024 Key Findings |
| Evaluate nature related impacts, dependencies, risk and opportunities. |
Banks and super funds have made clear progress, with more institutions having performed nature-related assessments in 2024, compared to 2022. In 2022, 40% of respondents had performed nature-related assessments of either impacts, dependencies, risks or opportunities. This year, that percentage has increased to 60% (see figure below). |
| 2022 Next Steps | 2024 Key Findings |
| Set time-bound targets and science-based policies to protect and restore nature across all relevant dimensions. |
Progress on nature-related target setting is slow. Results show that only 20% of financial institutions have a nature-related target or commitment in place. |
|
Identify priority companies to actively engage with. and Engage with customers or investee firms to reduce facilitated impacts on nature. |
The majority of banks and super funds are already engaging companies on nature-related issues, whilst a small, but significant number of financial institutions have not and do not have plans to engage companies on these issues. We find that 60% of banks and 50% of super funds are engaging companies on nature-related issues. |
Overall, we found that Australian banks and super funds are increasing their awareness of how nature intersects with business, but they still have a way to go to manage their impact on nature. As priority actions we expect all banks and super funds to:
- Set science-based targets for nature, covering the most material financed issues. Super funds should complement these targets by setting public expectations of the companies they invest in.
- Transparently disclose nature-related impact and dependency assessments, using a double materiality approach. This should be expanded on to understand how identified impacts and dependencies give rise to nature-related risks and opportunities.
- Have a clear nature-related risk management process in place that integrates the assessment and identification of nature-related issues into the development of management strategies and monitoring.
As the nature crisis worsens, financial institutions will become more vulnerable if they do not acknowledge their role in protecting and restoring nature. The financial system has a power to help reverse the nature crisis because it finances industries that have the most impact on nature.
