Ravi Menon: Bending the curve of nature loss Keynote remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chair of the Network for Greening the Financial System, at the COP15 Finance and Biodiversity Day, Montreal, 14 December 2022. *** Ladies and gentlemen, I am honoured and delighted to be able to address you on this important occasion of COP15 of the Convention on Biological Diversity. The world is getting painfully acquainted with the impending climate crisis. There are promising efforts at mitigating this crisis, though far from what is necessary to avert disaster. But the planet faces a second crisis –– nature and biodiversity loss. The nature crisis is no less threatening than the climate crisis. But it is much less appreciated and much less is being done to mitigate it. We assiduously measure and seek to grow our physical and human capital. We speak of the importance of social and political capital. But we fail to appreciate let alone measure natural capital – the world's stock of natural resources, comprising soils, air, water, plants, animals, and minerals. These are assets that sustain our food supplies, underpin our economy and society, and enable human life. We are collectively depleting our natural capital and degrading the ecosystems that support it. We are consuming more resources than the Earth can produce in a year. At current rates of consumption, we use up 1.6 Earths' worth of resources. By 2050, our annual resource use will rise to 2 Earths' worth.

The NGFS was founded five years ago on the recognition that climate-related risk is a threat to the financial system and that the financial sector can play a role in enabling the transition to a low-carbon economy. We number 140 members and observers now, comprising central banks, financial supervisors, and international financial institutions from across the world. Nature-related risks have material macroeconomic, macroprudential, and microprudential consequences. Central banks and supervisors therefore cannot afford to ignore nature and biodiversity loss. The NGFS has produced three research papers on biodiversity and financial stability, together with the International Network for Sustainable Financial Policy Insights, Research, and Exchange, or INSPIRE. The research shows that nature-related shocks can transmit to the financial system. Corporate dependencies on natural capital pose market and credit risks to individual financial institutions' portfolios, which can potentially aggregate into systemic financial exposures. The NGFS has thus created aTaskforce for Biodiversity Loss and Nature-related Risks, to help mainstream nature-related financial risks across our work on supervision, financial stability oversight, and monetary policy. The Taskforce will develop a comprehensive framework to identify the transmission channels from nature-related risks to central banking and supervisory activities. For its part, the Monetary Authority of Singapore has published environmental risk management guidelines for banks, asset managers, and insurers operating in Singapore. The Guidelines set out the expectation that financial institutions should manage environmental risks such as those arising from biodiversity loss. Finance can be a powerful force for helping to bend the curve of nature degradation.