Biodiversity-related Financial Risks - why it matters and how can we measure them?

Elene Pantsulaia () and Salome Tvalodze ()
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Elene Pantsulaia: Sustainable Finance Division, National Bank of Georgia
Salome Tvalodze: Head of Sustainable Finance Division, National Bank of Georgia

No 02/2023, NBG Working Papers from National Bank of Georgia

Abstract: The potential consequences of biodiversity and ecosystem services loss can have a significant impact on the stability of economies and financial systems. The following research paper contributes to a growing body of literature that seeks to analyze the connections between biodiversity loss and financial stability. The study focuses on the assessment of biodiversity-related financial risks (BRFR) in Georgia and provides quantitative estimates of the dependencies and impacts of the financial system on biodiversity and ecosystem services. The findings reveal that around 46 percent of Georgian commercial banks' lending portfolio to legal entities could be exposed to biodiversity-related physical risk, being moderately or highly/very highly dependent on one or more ecosystem services. Additionally, around 54 percent of Georgian banks’ business lending portfolio could be exposed to sectors that strongly impact ecosystem services and, thus, may face a high transition risk.

Keywords: Biodiversity; Biodiversity-related Financial Risks; Ecosystem Services, ENCORE (search for similar items in EconPapers)
JEL-codes: E58 G21 Q01 Q57 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2023-07
New Economics Papers: this item is included in nep-env, nep-rmg and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:aez:wpaper:2023-02

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