A Canadian group of risk experts have called on the country’s government, regulators, and business leaders to ensure their climate risk frameworks include nature-related issues.

The Canadian Institute of Actuaries (CIA), a national organisation of risk assessment professionals, published a statement on Tuesday warning of the dangers of excluding nature.

“Nature risk has a significant impact on the Canadian financial system and more effort is required from industries and regulators to understand and address its consequences,” CIA said.

“The CIA urges all climate risk stakeholders to advocate for the inclusion of nature risk in climate risk frameworks.”

Nature-related risk has been absent from the forefront of the Canadian climate risk scenario analysis conversation so far, it added.

Market actors should learn about nature risk and communicate its importance to others, to improve their capabilities, it said. The body defined nature risk as the risk of potential losses related to the loss or erosion of natural capital.

Only by considering nature risks, alongside climate risks, will the Canadian financial system have a complete picture of the challenges facing society, it said.

“As the establishment of a climate scenario analysis framework is currently in the early stages of development among most Canadian financial regulators and institutions, now is the time to strengthen the foundation and include nature risk.”

“Nature risk will remain prevalent for the foreseeable future, and excluding it from the foundation of climate scenario analysis could leave individual financial institutions and the Canadian financial system exposed to unforeseen losses.”

Canada has taken steps to address climate risk, such as its regulator publishing sustainability expectations, but its financial institutions can do more, it said.

More comprehensive risk assessments must include nature-related scenarios in their climate assessments to evaluate the impact of potential future events.

The country hosted the COP15 biodiversity conference in 2022, which led to the Kunming-Montreal Global Biodiversity Framework.

This month, a Canadian financial hub announced it would set up a research centre tasked with developing financing mechanisms to scale investments towards nature protection, including biodiversity credits and biodiversity bonds.

By Thomas Cox – t.cox@carbon-pulse.com

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