NGFS Occasional Paper- Central banking and supervision in the biosphere: An agenda for action on biodiversity loss, financial risk and system stability


Biodiversity is a major factor in the regulation of the Earth system, whose destabilisation could threaten the planet’s habitability. As a result of the biosphere’s continuous interactions with the non-living compartments that comprise the Earth system (the atmosphere, cryosphere, hydrosphere and lithosphere), biodiversity loss could contribute to destabilising this system. Critically, the stability of the Earth system over the past 10,000 years has enabled the development of modern societies. Biosphere integrity and four other planetary boundaries – the environmental limits within which science assesses that humanity can safely operate – have been crossed, implying that the stability of the Earth system is at risk.

As with climate change and in interaction with it, the extent and severity of the threats to sustainable development posed by biodiversity loss are subject to uncertainty. However, despite uncertainty about the scale and magnitude of these threats, there is sufficient evidence to suggest that the problem could be systemic, and mitigation requires urgent ‘transformative changes’ in our socioeconomic and financial systems. This requires policymakers and regulators, including central bankers and financial supervisors, to develop comprehensive strategies to manage nature-related financial risks. These risks include those related to the interactions between climate change and biodiversity loss, and to biodiversity loss resulting from other human pressures such as habitat degradation and over-exploitation.

This is the final report from the Joint NGFS-INSPIRE Study Group on Biodiversity and Financial Stability, which was established to help central banks and financial supervisors fulfil their mandates of price and financial stability in the face of financial risks stemming from biodiversity loss, or ‘biodiversity-related risk’. The report is designed to help central banks and financial supervisors understand the issues in the context of existing science, theory, policy and practice, and to recommend steps that could begin to address biodiversity-related risks in financial systems.

Source:The Network for Greening the Financial System (NGFS)


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