The Emerging Regulatory Agenda – Improving Transparency of Nature-related Risks in Africa

The Emerging Regulatory Agenda – Improving Transparency of Nature-related Risks in Africa

Financial regulators around the world are recognising that the depletion of nature poses major risks to financial and economic stability: these are additional to climate change risks.

• They have the opportunity to act on nature-related risks because doing so ensures that they fulfill their core mandate to maintain financial stability.
• Transparency is the cornerstone of strong risk management.
• Regulatory momentum regarding disclosure of nature-related risks has been increasing globally.
• African regulators, in particular, will see the benefit of acting with urgency because the continent is disproportionately exposed to nature-related risks.
• African regulators can engage with this new agenda by following a set of no-regret moves as a key first step in developing a roadmap to incorporate nature-related risks into financial disclosure.
• These no-regret actions include aligning with a government agenda, understanding requirements, determining availability of capacity, and engaging with existing nature alliances.

Introduction

Degradation of our natural ecosystems poses a significant risk to our financial and economic stability. A significant portion of our global economic product relies on nature and natural systems. As human activity and climate change continue to deplete these systems, we need to create a regulatory agenda to better manage nature-related risks and the harms they can create. This paper offers up next steps for this regulatory agenda, specifically in the context of Africa, illustrating the urgency to do so for African economies, why transparency should be an important component of any regulatory agenda, and what African regulators can do to support stable nature-positive economies.