The German financial sector is discovering biodiversity as a hard factor. What was only dealt with in a marginal way a few years ago is now moving into the processes of risk, strategy and supervision. This is shown by a survey conducted by the Sustainable Finance Cluster Germany. The survey shows that 72% of the participating credit and development institutions now classify the protection of ecosystems as „material“, but only 40% fulfil all the disclosure requirements of the EU Corporate Sustainability Reporting Directive (CSRD). More than half have decided not to produce a separate biodiversity report for the time being, while 86% cite effort and costs as the biggest hurdles.

„Almost all of the institutions surveyed have identified biodiversity as an important topic,“ says Matthias Hübner, Director at the Sustainable Finance Cluster. According to Hübner, three steps can be recognised in the chronological sequence: „Many institutions start with a comprehensive portfolio analysis, which most of them have already done. This is usually followed by the definition of one or more biodiversity targets. The picture here is currently mixed.“ The final step is a comprehensive biodiversity strategy, which most of them have yet to finalise. According to Hübner, many institutes consider „the effects on land use and environmental pollution as well as the dependence on water availability and quality to be essential.“

The pressure to act is mainly due to regulatory requirements. For the first time, the CSRD places natural capital alongside climate risks, the European Sustainability Reporting Standards (ESRS) formulate reporting points and the Taskforce on Nature-related Financial Disclosures (TNFD) provides a framework for risk management. In its „Climate-related Disclosures“ report in June 2025, the German Bundesbank identified the „mutual amplification of climate and nature-related losses“ as a potential source of credit risk.

Meanwhile, different organisational forms are emerging in the banks. Some are anchoring biodiversity in sustainability and risk departments, while others are forming cross-divisional task forces or reporting the topic directly to the Management Board. The approach is usually pragmatic: first create transparency, then manage it. This is why institutions start with rough screenings of their credit and investment portfolios. Tools such as Encore are widely used, often supplemented by the WWF Biodiversity Risk Filter. These tools localise hotspots, such as large-scale land sealing in project financing or water scarcity in export-oriented supply chains.

Frequently cited risk drivers are land use changes, pollution and climate change; on the dependency side, water availability and quality dominate. Genuinely in-depth risk analyses on the topic of biodiversity that quantify interactions in the business model and translate them into limits remain exceptions for the time being.

Many sustainability reports have some catching up to do when it comes to biodiversity: „The reports appear to fulfil the compliance requirements rather than reporting meaningfully on the sustainability strategy, measures and the desired impact on our silent stakeholder - Mother Nature,“ says Ev Bangemann, ESG specialist at EY. It is precisely this focus that is crucial. „Nature is the foundation for sustainable, resilient and profitable business models.“

„Biodiversity is more complex than climate. It's about value chains, locations and sectoral dependencies, not a simple emissions figure,“ says Christoph Betz, Partner at KPMG specialising in sustainable finance. So far, we have observed „a rather basic initial approach: creating transparency, roughly categorising risks; further-reaching KPIs or transition plans have not yet been included“. Positive effects are also difficult to monetise: „The big business opportunities are still rare and more wishful thinking. Conserving nature has hardly generated any income so far; it remains predominantly development bank business.“

In May, the KfW development bank announced that it would expand its 12.6 billion euro portfolio for environmental and climate financing in future via platforms and funds set up as part of the EU's „Global Gateway“ initiative in order to mobilise private capital for biodiversity investments. Deutsche Bank is using eDNA measurement programmes in wealth management to continuously monitor biodiversity around blue economy investments. Institutions such as Commerzbank are tightening exclusion criteria against deforestation and testing sector guidelines.

It remains to be seen when natural capital indicators will actually seep into banks' pricing models and limit systems. Among other things, there is no single key figure for the carbon footprint; rather, heterogeneous ecosystems, regional characteristics and long impact periods require a complex data architecture. Supervision, science and data providers will have to cooperate even more closely on biodiversity in order to develop robust indicators.

The financial sector is at the beginning of an adjustment process that requires reliable data, uniform standards and sustainable models for natural capital. Progress can only be made if institutions pool their expertise, develop common classifications and test biodiversity-related products. Those who establish reliable systems for assessing natural risks at an early stage can also limit reputational risks.