Biodiversity loss and environmental degradation can have material impact on sovereign creditworthiness. Current methodologies published and applied by leading credit rating agencies (CRAs) do not explicitly incorporate biodiversity and nature-related risks. Omitting them may ultimately undermine market stability.
Building on cutting-edge World Bank research (2021) and using the most advanced AI methodology and models, this report examines how biodiversity loss – more specifically, a reduction in marine fisheries, tropical timber, and wild pollination services - would affect sovereign debt markets in 26 nations.
Results include implications for sovereigns in the case of a partial collapse of ecosystem services as well as of a gradual nature loss at current rates under a business as-usual scenario.
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