How the finance industry can connect with nature

The financial service sector plays a big role in shaping global economies. However, when it comes to the environment, its connection with nature often seems abstract, distant and difficult to quantify. 

While industries such as agriculture, energy and construction have direct, tangible interactions with natural ecosystems, the finance industry is often removed from the physical impacts of deforestation, biodiversity loss and climate change 

In recent years, the finance industry has recognised a growing need to address its environmental footprint. For example, a 

2020 report from EY

found that

52% of banks see both climate change and environmental issues as emerging risks

in the next five years, up from 37% in 2019. 

And now, financiers around the world are embracing their role, stepping up their own sustainability initiatives while also helping their customers decarbonise and accelerate their paths to net zero.

Finance is intricately intertwined with the fate of the natural world. Yet, the sector often struggles with two key challenges: tracking its impact on biodiversity and identifying actionable ways to make a positive contribution to nature restoration.

According to the

World Economic Forum report in 2023

,

failure to mitigate climate change ranks as the most critical global risk

, followed closely by the inability to adapt to climate change, natural disasters and extreme weather and biodiversity loss.

One of the main difficulties financial institutions face in their sustainability journey is measuring their ecological footprint. Unlike industrial sectors, where emissions, water use or habitat destruction are visibly linked to activities, the financial sector's impacts manifest indirectly, primarily through investments. 

Investments in industries that drive deforestation, pollution, or over-exploitation of resources often go unnoticed under traditional financial metrics. Biodiversity risks remain invisible until crises emerge, whether it’s degraded ecosystems, species extinctions, or ecosystem service failures like water filtration and carbon sequestration.

Moreover, even institutions committed to Environmental, Social, and Governance (ESG) practices may find it challenging to pinpoint their influence on nature. Tracking emissions tied to loan portfolios, for instance, is more complex than calculating the emissions of an office building. The data gap is significant, and without clear frameworks for evaluating the intersection of capital and nature, finance remains in the dark about the harm it may perpetuate.

There are many opportunities for the finance industry to make a positive difference. It will take bold, sustainability leadership for clear climate-leaders to emerge.

Financial institutions can integrate biodiversity into their ESG criteria by adopting nature-positive frameworks. The Taskforce on Nature-related Financial Disclosures (TNFD) is one initiative helping businesses understand and manage the risks they pose to natural ecosystems. By aligning their investment portfolios with TNFD guidelines, financial institutions can reduce their negative impact on biodiversity.

Moving capital toward green investment funds and bonds specifically designed to support conservation efforts can have a tangible effect. These funds invest in projects such as reforestation, wetland restoration, and sustainable agriculture that help restore ecosystems. 

Green bonds, for example, allow institutions to direct capital toward projects that support biodiversity while delivering financial returns.

Biodiversity projects are now offering verified biodiversity credit programs that highlight how a company’s financial support is helping to protect, sustainably manage, or restore natural ecosystems. Financial institutions can partner with organisations, such as Earthly, to support projects that not only enhance biodiversity, but also sequester carbon and support local livelihoods. 

Projects that restore forests, wetlands, and grasslands, for example, help to rebuild wildlife habitats and create resilient ecosystems, all while delivering benefits to businesses in terms of risk management and sustainable growth.

Financial organisations can support carbon removal projects through carbon credits and compensate for unavoidable environmental impacts. This is done by calculating an organisation’s carbon footprint and ensuring equivalent (or more) carbon is removed or avoided elsewhere.

Purchasing carbon credits through nature-based solutions means that you are not only offsetting residual carbon emissions, but you are doing it in a way that supports and restores ecosystems, biodiversity and communities in the region.

Biodiversity loss presents both financial risks and opportunities. Institutions that factor nature into their risk assessments are more likely to secure long-term returns and protect against environmental risks such as disease, drought, flooding and declining crop yields. 

Embedding biodiversity into financial risk assessments will allow institutions to foresee potential impacts and avoid investing in projects that may cause long-term harm to nature.

Finance can also play an indirect but crucial role in nature protection by requiring sustainability standards from the businesses they fund. 

By linking capital access to commitments on deforestation-free supply chains or nature-positive agricultural practices, financial institutions can encourage industries to adopt more sustainable models. 

This could mean that loans are only extended to companies that have transparent, traceable supply chains that don’t contribute to habitat destruction.

No industry has the potential to drive more positive impact than financial services. Even small banks and lenders can drive massive changes by enabling their customers' sustainability efforts. 

Integrating Earthly’s services

into your financial products or services enables your business and your clients to increase business value and build competitive advantages by embedding climate action into every transaction.

For example, financial service providers like

Caixa Bank partnered with Earthly

to integrate nature and engage their customers in accelerating their climate journey. Through our API, they embedded nature-based solutions into their offerings automatically, and strengthened customer engagement

Earthly can help support your financial services business in a variety of ways:

Reporting

: If you have yet to calculate your business's carbon emissions, Earthly can connect you with one of our carbon accounting partners to do so. Accurate emissions tracking is the first step toward understanding and mitigating your impact on nature. Once you’re an Eartly customer, use the data on your impact dashboard for annual ESG reports.

Nature-based solutions:

As you work towards decarbonisation,

Earthly's nature-based solutions

can complement your reduction strategies or assist with beyond-value chain mitigation. Our team can help you find the right solution to balance unavoidable emissions such as business travel, and secure fixed forward pricing to protect against inflationary risks on your path to net-zero.

Sustainable services:

By integrating Earthly into your website, app, or point of purchase through our secure API, you can align your sustainability goals with business growth. Companies like CaixaBank have increased customer engagement by as much as 46% with automated investments in nature-based solutions.

Climate journey engagement:

Engaging employees, customers and partners is critical for long-term success. Earthly provides storytelling and communication resources to demonstrate the real-world impact of your nature-positive investments. Financial service providers who share these stories build trust and foster greater climate action support.

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The financial industry has an opportunity to act as a catalyst for environmental restoration and help others reconnect with the natural world and become stewards of its restoration.

By working with Earthly

, businesses in the finance industry not only reduce their own risks but also open up new opportunities for sustainable growth and long-term profitability.