Publication Type
Report
Version
publishedVersion
Publication Date
1-2025
Abstract
It is increasingly recognised that financial institutions have significant impacts and dependencies on natural capital – defined as the stock of the world’s renewable and non-renewable natural resources and ecosystems that yield flows of environmental goods and services, which directly and indirectly underpin the global economy and human wellbeing. Historically, many of these impacts and dependencies have been overlooked. The value of goods and services that nature provides ‘for free’ has often been ignored, and resources have typically been priced at their cost of extraction, rather than the cost of their replacement or substitution, which would promote more sustainable long-term use. Despite its importance, natural capital rarely appears on the balance sheets of corporations and is seldom taken into account in financial decision-making. These practices can ultimately translate into unpriced material risks for financial institutions that may emerge at either local or systemic levels. For example, natural capital risks may result in higher loan defaults or lower returns on equity than are currently priced into loan interest rates or equity valuations.
Discipline
Environmental Sciences | Finance and Financial Management
Research Areas
Integrative Research Areas
First Page
1
Last Page
37
Citation
ASCUI, Francisco and COJOIANU, Theodor Florian.
Natural capital credit risk assessment in agricultural lending: An approach based on the Natural Capital Protocol. (2025). 1-37.
Available at: https://ink.library.smu.edu.sg/cis_research/389
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.