Zambia launches first study on Nature-Related Financial risks

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The United Nations Development Programme (UNDP) in partnership with the Ministry of Green Economy and Environment has launched a groundbreaking study assessing Zambia’s financial sector exposure to nature-related risks.

The study, supported by the British High Commission Climate and Environment team, aims to understand how sectors such as banking, insurance, pensions, and capital markets are vulnerable to environmental degradation and biodiversity loss.

Speaking during the launch, UNDP Zambia Economic Advisor Ojijo Odhiambo, representing Resident Representative James Wakiaga, described the report as a milestone for Zambia and the region.

"This study positions Zambia among the first countries in Africa to systematically assess how the financial sector depends on and is exposed to risks linked to the loss of biodiversity and ecosystem degradation," Mr. Odhiambo said.

He has emphasized the crucial role of natural systems in economic stability, noting that forests, wetlands, and pollinators are vital for climate regulation, water purification, and food security.

The study, conducted by Genesis Analytics with support from the Green Finance Mainstreaming Working Group, not only identifies risks but also provides practical recommendations tailored to Zambia’s financial environment.

According to Mr. Odhiambo, aligning Zambia’s financial sector with global standards such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Kunming-Montreal Global Biodiversity Framework will strengthen the country’s ability to manage financial risks and promote sustainable growth.

And Permanent Secretary in the Ministry of Green Economy and Environment, Douty Chibamba, officially launched the study and thanked the UNDP and the United Kingdom’s Department for Environment, Food and Rural Affairs (DEFRA) for their support.

Mr. Chibamba has reiterated Zambia’s heavy dependence on its natural capital, stating that forests, water resources, wetlands, and biodiversity are not only critical for livelihoods but also underpin key sectors like agriculture, tourism, and energy.

He has warned that climate change, unsustainable land use, and biodiversity loss pose significant threats to these resources, which in turn could destabilize the financial sector.

"This study provides Zambia’s first comprehensive assessment of financial sector exposure to nature-related risks," Mr. Chibamba said. "It marks an important step toward greening our financial system and increasing the resilience of our economy."

The Permanent Secretary also highlighted ongoing initiatives, including, a Green Finance Taxonomy and Tagging System to classify and track green financial flows; a Green Finance Strategy and Implementation Plan to embed sustainability principles into financial decision-making and Green Bond Market Development to mobilize long-term capital for environmentally beneficial projects.

Both Mr. Odhiambo and Mr. Chibamba agreed that Zambia’s leadership in assessing and addressing nature-related financial risks sets a model for other African countries.

"As the world moves to integrate nature into financial systems, Zambia is not just participating but leading the way," Mr. Odhiambo said.

The study’s findings are expected to guide policymakers, financial institutions, and investors in adopting nature-positive strategies that balance economic growth with environmental protection.

Ends…………………………….

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