European central banks are among the leaders in tackling climate-related financial risks, but key drivers of nature-related risk remain insufficiently addressed in financial regulation and supervision, according to a new WWF assessment.
With only five years to deliver on global 2030 climate, nature, and development goals, decisive regulatory action is essential to guide the financial sector toward a net-zero, nature-positive, and socially equitable future.
The fifth edition of WWF´s Sustainable Financial Regulations and Central Bank Activities Assessment 2025 (SUSREG 2025) evaluates how climate, nature and social risks are being integrated into central banking, financial regulation and supervision.
Siti Kholifatul Rizkiah, WWF SUSREG Lead, said: “We must take a genuinely precautionary approach to climate and nature risks. The consequences of inaction will far outweigh the costs of early intervention. The financial system can no longer pretend that environmentally harmful assets are low risk when the evidence proves otherwise. Taking decisive action now is not only a strategic business imperative but also a key to unlocking the emerging green opportunities and safeguarding future economic prosperity.”
SUSREG 2025 clearly demonstrates that progress is possible and already happening. In Europe, some central banks and financial regulators are leading examples of strong supervisory follow-up and notable progress in aligning industries with their expectations.
“With a 59% alignment score on the climate assessment, the EU stands out, thanks to the ECB’s new progressive initiatives, such as the introduction of the climate factor in its collateral framework. In addition, within the last year, the ECB published its first-ever nature loss indicator in its financial disclosures. These are critical steps towards addressing systemic risks,” said Dominyka Nachajute, Sustainable Finance Policy Officer at WWF European Policy Office.
The Hungarian Central Bank (MNB) has also expanded its climate-related financial disclosures to cover ecosystem and biodiversity risks, using the WWF’s Risk Filter Suite to assess such risks.
The report also identifies several important areas where further action is needed. Major drivers of nature risk, such as land, freshwater and sea use change; climate change; and the direct exploitation and pollution of terrestrial, freshwater and marine ecosystems, remain largely absent from financial regulation, leaving systemic vulnerabilities unaddressed. Integration of climate and nature risks into both monetary and macroprudential frameworks remains weak.
To address these gaps, the report outlines clear, actionable steps for financial authorities:
- Strengthen the integration of nature into central banking and financial supervision by embedding it in monetary policy tools and setting concrete expectations for financial institutions;
- Deploy the macro-prudential toolkit, including stress tests, capital buffers and exposure limits to prevent and monitor system-wide climate and nature risks;
- Reinforce disclosure and transition plans for companies and financial institutions to ensure transparency and accountability;
- Make environmentally harmful assets more expensive in capital rules to reflect their true risks;
- Mobilise green and transition finance, framing sustainable finance as a core opportunity for the financial sector; and
- Improve national and international coordination by creating green finance committees and cross-border platforms for knowledge-sharing and capacity-building.
