The presentation will make the case for the importance of Africa’s natural capital, and the vital role of financial institutions (FIs) in protecting the continent’s vast natural assets. We argue it is critical African FIs and the actuarial community consider nature- and climate-related risks and opportunities in parallel. We consider:

Africa’s (and South Africa’s) economic health is reliant on its environmental health

– Half of global GDP is dependent on the health of natural ecosystems and biodiversity. Africa’s reliance is more extreme – over 60% of GDP is attributable.

– However, economic growth demands on Africa’s forests, land and marine areas threaten to further accelerate erosion of natural assets.  We are breaching safe planetary boundaries.

– Natural ecosystem processes are non-linear – destabilisation can quickly occur once a tipping point is reached.

Climate and nature are distinct but inextricably linked

– The climate crisis in Africa is unfixable without adequate focus on nature. Nature risks amplify climate risks and vice versa.

– All net-zero pathways require large-scale GHG removal. Natural assets appear the most affordable and immediately available solution and increase resilience to extreme weather events.

FIs face significant nature-related risks and opportunities and hence are critical in ensuring a nature-positive future

– Company performance, financial assets and the ‘real’ economy is intertwined with nature. Nature is material: by 2050, nature-related impacts on primary commodities could see aggregate agricultural profits for FIs drop by 40%.

– Significant physical, transition and systemic risks exist, especially in agricultural and secondary sectors.  Biodiversity loss is one of the most severe risks for the next decade. Nature-related risks cascade – wider risks to tax revenues and supply chains will greatly amplify the impact to FIs.

– However, opportunities – shifting demand, nature-positive products and competitive advantage in responding to policy & regulatory changes offer substantial upside.

– FIs must direct capital towards nature-positive activities. Clients must be influenced to measure, report and act. The financial sector must further push for nature-related risk to be disclosed and measured.

TNFD is being embraced by Africa’s financiers and being actively piloted

– A global, market-led initiative shifting financial flows toward nature-positive outcomes, the TNFD delivers a standard framework of nature-related risk management and disclosure.

– We will share our emerging TNFD pilot results from leading African FIs including FirstRand/Sanlam

-Further opportunities for engagement on nature and biodiversity exist to financiers, including through the African Natural Capital Alliance.