Integrating Physical Climate and Nature Risks into Credit Decisions

Physical climate and nature risks are becoming increasingly material to financial institutions, yet they remain inadequately reflected in many credit decision-making processes. This report, developed as part of Systemiq’s Nature on the Balance Sheet initiative, examines how banks can better integrate physical climate and nature risks into core credit models to improve risk management while recognising the value of resilience investments. Drawing on insights from leading experts across banking, insurance, regulation and development finance, the report outlines practical recommendations to strengthen data, methodologies and regulatory frameworks, helping financial institutions build more resilient lending portfolios in a rapidly changing risk landscape.