Biodiversity Finance: The Economic, Operational, and Societal Impacts of Biodiversity Loss

• Title: Biodiversity Finance: The Economic, Operational, and Societal Impacts of Biodiversity Loss.
• Part of the book series: Palgrave Studies in Emerging Risk Management and Sustainable Finance (PSERMSF)
• Authors: Helena Naffa, Corvinus University of Budapest; Thomas Walker, Rajesh Kumar Tharumar, and Simone Donders, Concordia University
• Published by: Palgrave Macmillan, November 2025
• Where to find it: https://link.springer.com/book/10.1007/978-3-032-02029-1

What was once framed as an ecological issue is now an economic one, with significant financial and societal consequences. Biodiversity loss is an issue that’s disrupting industries, economies and financial systems at an alarming rate.

As a result, biodiversity and finance are becoming increasingly intertwined. In their new book, Biodiversity Finance: The Economic, Operational, and Societal Impacts of Biodiversity Loss, Helena Naffa, Associate Professor of Sustainable Finance at Corvinus University of Budapest, and her three co-authors, examine how biodiversity risk is measured, valued and integrated into financial decision-making. The book grounds biodiversity loss – which is often talked about theoretically – in real business examples, allowing readers to see its very real impact. This is all backed up by solutions and practical advice to inspire businesses to make positive change.

Professor Naffa’s academic work sits at the forefront of this field. At Corvinus, her research focuses on biodiversity finance, natural capital valuation, and integrating environmental, social, and economic data to strengthen financial system resilience. She is also the founding director of the Sustainable Finance Research Centre at Corvinus, which focuses on research in climate finance, ESG investing, and nature as an investment asset class.

We sat down with Professor Naffa to find out more about her motivations for writing Biodiversity Finance, and why this topic is becoming increasingly relevant for business leaders.

Can you tell us about the inspiration behind your new book? What motivated you to write it? 

This book grew out of a gap I kept encountering in both academia and practice. Biodiversity loss is widely recognised as an environmental crisis, yet in financial decision-making, it has often remained peripheral, vaguely defined, or treated as a black box ESG issue.

During my work in the finance industry, I saw growing awareness that biodiversity matters for financial stability and long-term resilience, but I also saw a need for specific methodologies and tools to guide the way finance translates ecological impacts into decisions.

The idea of developing this into a book was encouraged by my co-editor Thomas Walker, with whom I collaborate on several international research projects. Given his longstanding engagement with sustainable finance and his Palgrave Macmillan series Palgrave Studies in Emerging Risk Management and Sustainable Finance, the project felt like a natural fit. Our aim was not only to advance academic discussion, but to create a common reference point for finance professionals, researchers, and policymakers navigating this fast-evolving field.

What are the key takeaways or main ideas that readers can expect to find in your book? 

There are four core ideas running through the book. First, biodiversity loss is not an abstract environmental concern, rather it is a systemic financial risk. As explored early in the book, ecosystem degradation affects credit risk, market volatility, operational stability, and even the solvency of financial institutions. Biodiversity is deeply embedded in supply chains, asset valuations, and macroeconomic resilience.

Second, biodiversity must be measured differently from traditional ESG issues. The book dedicates a full section to impact measurement, from the contribution of individual species to ecosystem services, to biodiversity metrics and how these influence firm value. Instead of presenting generic sustainability scores, we focus on ecological thresholds, spatial exposure, and non-linear risk.

Third, biodiversity risk needs to be integrated into financial risk management frameworks. We examine how biodiversity can be incorporated into enterprise risk management, credit assessment, regulatory compliance, and due diligence processes, including emerging EU and global legal frameworks and disclosure standards.

Finally, the book shows that finance is not only exposed to biodiversity risk, but it may well be instrumental to the solution. We analyse biodiversity-linked bonds, offsets, credits, blended finance, conservation trust funds, and other mechanisms that can mobilise capital to close the biodiversity funding gap.

Who is the target audience for your book, and how do you believe it will benefit them? 

The book was designed to speak across disciplines. For finance professionals, including banks, asset managers, and insurers, it provides a structured framework for understanding biodiversity as a financially material systemic risk.

For policymakers and regulators, it examines how disclosure, due diligence, and restoration frameworks interact with financial markets. For academics and students, it bridges finance, ecology, law, and spatial analysis into a coherent multidisciplinary perspective.

For conservationists and natural scientists, the book offers a translation mechanism, showing how ecological insights such as ecosystem services and threshold effects can be integrated into financial valuation and risk management.

And for corporate leaders, it clarifies how biodiversity can be operationalised within strategy and governance, rather than treated as a peripheral reporting issue.

What do you think makes this topic particularly relevant or timely in today’s business world, or for the years ahead? 

Biodiversity is no longer confined to environmental policy debates. It has entered the domains of financial supervision, disclosure frameworks, and enterprise risk management.

Global initiatives, including the Taskforce on Nature-related Financial Disclosures (TNFD), the 2022 Kunming-Montreal Global Biodiversity Framework, and the forthcoming 2026 IPBES methodological assessment on business and biodiversity signal a structural shift in the integration of nature-related risks into financial governance. The expectation is no longer voluntary commitment alone, but structured alignment of capital flows with nature protection and restoration, bringing together private finance and public policy to address the biodiversity funding gap.

The discussion has also moved beyond the argument that data are insufficient. Today, the challenge is not scarcity, but structuring, geospatial layering, and then the interpretation of the abundant data. Scientific understanding of biodiversity loss has become more precise, and freely available datasets are expanding. The question is how to translate this abundance of data into financial decisions. This is where we aim to contribute.

The World Economic Forum estimates that nearly half of global GDP is moderately or highly dependent on nature. Agriculture, fisheries, pharmaceuticals, tourism, and infrastructure all rely on functioning natural systems. What makes this moment distinctive is that the financial sector, being the economic intermediary, is being asked to internalise ecological constraints in measurable terms.

Can you share any practical tips or strategies from your book that readers can immediately apply to improve their business or career? 

The book offers a range of practical insights that businesses can draw upon, but I will highlight one in particular.

A key shift is to assess biodiversity risk in a location-specific context rather than relying solely on industry classifications, as many financial institutions currently do. Mapping geographic dependencies on ecosystem services is therefore a critical starting point. This approach goes beyond standard sector-level dependency and impact mappings.

Two companies operating in the same industry may face very different levels of biodiversity risk depending on the condition of the ecosystems where they operate or source their inputs. Ignoring this spatial dimension can lead to a significant underestimation of risk.

For professionals, developing competence at the intersection of finance and ecology will be a significant advantage. Cross-disciplinary fluency is increasingly valuable, and the demand for this expertise is growing faster than the supply. Digital tools can support this process by helping bridge disciplinary boundaries.

Can you discuss any specific case studies or real-world examples from your book that illustrate its principles in action? 

Yes, the book presents several real-world examples. I will highlight two to illustrate how an ecological problem becomes financial material.

One example focuses on the cocoa industry in West Africa. Deforestation and biodiversity loss in key producing regions have contributed to soil degradation and declining yields, creating supply instability for multinational food companies that depend heavily on the region. This has translated into rising input costs, reputational exposure, and increased scrutiny from investors and regulators. In response, these firms have invested in reforestation programmes, sustainable sourcing standards, and enhanced monitoring systems to safeguard long-term supply chain resilience.

Another example highlights the use of biodiversity-related sustainability-linked bond structures where coupon step-up and step-down mechanisms are tied to measurable environmental performance indicators, such as forest conservation or ecosystem restoration targets. These instruments show how capital market tools can incorporate biodiversity outcomes into pricing mechanisms as financial returns are directly linked to ecological performance.

How does your book expand existing discussions on this topic? 

The field initially developed from conservation finance, which focused on funding restoration and protected areas. More recently, scholars, including Andrew Karolyi and Caroline Flammer, framed biodiversity loss as a financial market issue, while financial supervisory institutions as well as the OECD and IPBES highlighted its systemic financial relevance.

This book builds on that shift but moves the discussion further. It translates ecological concepts such as ecosystem services, spatial exposure, and non-linear thresholds into established financial risk categories, including credit, market, operational, and regulatory risk. It links firm-level valuation effects to broader questions of financial stability. And it examines specific financial instruments, from sustainability-linked bonds to biodiversity credits, that embed ecological performance into capital market structures.

Finally, what books written by another author would you recommend as essential reading for your audience and why?  

For readers seeking the broader economic foundations of the topic, The Economics of Biodiversity: The Dasgupta Review is essential. It challenges conventional notions of wealth and national accounting by positioning nature as a foundational asset.

From a business perspective, Nature’s Fortune by Mark Tercek and Jonathan Adams offers a compelling and accessible discussion of how conservation and corporate strategy can align in practice. Looking ahead, we are developing a follow-up volume that further examines biodiversity finance and its evolution within financial systems, building on the themes introduced in this book.

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