Nature and financial institutions in Africa: A first assessment of opportunities and risks

The fast pace at which nature is degrading and the severe consequence of environmental tipping points make ambitious global consumer and policy action to address the nature crisis more likely. In the scenario of ambitious policy action, nature-related impacts are material, especially for the agriculture and extractives sectors and thus require immediate attention.

In this collaborative report with Vivid Economics by McKinsey, we underline the importance for financial institutions to unlock the potential benefits of investing in businesses that protect and grow nature.

Applying a first-of-its-kind analysis to three private banks and the financial systems of Zambia, Egypt, Ghana, Mauritius, Kenya, and South Africa, the report shows that for the most exposed lending portfolios, nature-related risks in agriculture and extractives could almost double expected losses by 2030.

Given the materiality of nature-related risks that the report demonstrates, African financial institutions are encouraged to engage with global standards for managing and disclosing nature-related financial risks, such as the Taskforce on Nature-related Financial Disclosures (TNFD).