How planetary risk is transforming world finance

As we enter 2025, the global financial sector stands at a pivotal moment. In the wake of three major UN Conferences of the Parties on biodiversity, climate and desertification, one truth has become indisputable: transforming global finance is no longer optional - it's essential. These conferences have shown how deeply interconnected planetary health and financial stability are, underscoring the urgent need for public and private sectors to respond.

At COP16 on biodiversity in Colombia, COP29 on climate in Azerbaijan, and COP16 on desertification in Saudi Arabia, leading global financial institutions participated in discussions that highlighted the critical role of private capital in tackling interconnected global challenges.

These conferences demonstrated how biodiversity loss, climate change and land degradation threaten financial stability and underscored the urgency of embedding sustainability into investment and risk management frameworks to ensure long-term economic resilience.

The scale of the challenge is immense: according to the UN Environment Programme, global investment in nature must quadruple by 2050, with over US$536 billion needed annually to tackle biodiversity, climate and land degradation crises. As ecosystems collapse and natural resources diminish, the cascading effects threaten everything from commodity prices to sovereign debt ratings.

Frameworks like the Taskforce on Nature-related Financial Disclosures and the Taskforce on Inequality and Social-related Financial Disclosures are essential. However, disclosure alone will not bring the systemic changes needed.

For disclosures to be impactful, the underlying data and internal processes must be robust and high quality. Financial institutions must integrate nature, climate and land risks into business models and decision-making processes. This approach will not only better manage risks but also embed sustainability at the core of financial systems.

Beyond disclosure

Effective impact management is not just about measuring risks - it's about acting on them. At UNDP, we've seen how superficial reporting can create an illusion of progress while deeper systemic risks remain unaddressed. Disclosure frameworks must be paired with robust internal systems that prioritize sustainability. Without this, disclosure becomes a mere box-ticking exercise.