Insurers and the Global Biodiversity Framework: Risk Management and Financial Support
Insurance companies are being pulled into an uncomfortable reality. The ecosystems they've long treated as background scenery now sit at the centre of their risk models. Forests, wetlands and coral reefs aren't just nice to have. They're infrastructure. When they fail, claims rise.
A new briefing from the Principles for Sustainable Insurance and the UNDP Insurance and Risk Finance Facility puts this in stark terms. Insurers need to treat biodiversity loss as a core business risk. Moreover, they need to help governments fund and protect the natural systems that reduce exposure to floods, storms and other climate-related damage.
The briefing arrives ahead of CBD COP17, scheduled for October 2026 in Yerevan, Armenia. This will be the first major checkpoint for the Kunming-Montreal Global Biodiversity Framework, adopted in 2022. Governments will assess whether they're meeting biodiversity targets. Consequently, financial institutions will face harder questions about how they're contributing to those goals.
For UK businesses, particularly those in agriculture, construction, property, tourism and supply-chain-heavy sectors, this marks a shift. Biodiversity is moving from an abstract environmental concern to a factor that influences insurance premiums, coverage terms and access to capital.
Why ecosystems matter to commercial insurers
Healthy ecosystems reduce physical risk. Wetlands absorb floodwater. Mangroves buffer storm surges. Forests stabilize soil and regulate water flows. Coral reefs dissipate wave energy before it hits coastal infrastructure. These services have measurable financial value.
When ecosystems degrade, those protections weaken. Flood risk increases. Erosion accelerates. Wildfires spread more easily. Insurers see higher claims and more volatile loss patterns. In some regions, they withdraw coverage altogether.
The briefing describes nature as "critical infrastructure" in a changing climate. This language matters. It reframes biodiversity from a soft concern into a hard asset that affects underwriting, claims management and portfolio performance.
For example, a coastal development backed by healthy mangroves might carry lower flood risk than one on an exposed shoreline. A forestry operation in a biodiverse landscape might face fewer pest outbreaks than a monoculture. A warehouse built on restored floodplain wetlands might be cheaper to insure than one built on drained land.
Insurers are starting to price these differences. As a result, businesses will need to understand how ecosystem condition affects their risk profile. They may also need to demonstrate that their operations protect or restore natural systems if they want competitive premiums.
What happens at CBD COP17 in October 2026
The conference runs from 19 to 30 October 2026 in Yerevan, Armenia. An opening ceremony is scheduled for 18 October. A high-level ministerial segment will take place on 27 and 28 October, when senior government representatives are expected to focus on implementation and political momentum.
This is not just another international summit. COP17 represents the first comprehensive review of progress toward the Kunming-Montreal Global Biodiversity Framework. Governments committed to 23 targets by 2030, covering everything from protected areas to sustainable agriculture and nature-based finance.
The conference will run alongside two related meetings. The 12th meeting of the Parties to the Cartagena Protocol on Biosafety will address genetically modified organisms and biotechnology. The sixth meeting of the Parties to the Nagoya Protocol will cover access to genetic resources and benefit-sharing arrangements.
Together, these meetings create a moment of accountability. Governments and financial institutions will be asked to show how biodiversity targets translate into national policy, investment decisions and measurable outcomes. Insurance will be part of that conversation.
Connecting insurance to biodiversity finance
The PSI-IRFF briefing identifies insurance as a missing piece of biodiversity finance. Traditionally, biodiversity funding has relied on grants, conservation budgets and development aid. Insurance brings something different. It manages financial uncertainty and makes resilience projects more investable.
Risk-based pricing can steer capital away from harmful activities and toward nature-positive development. Underwriting standards can require ecosystem protection as a condition of coverage. Parametric insurance can pay out when specific ecosystem thresholds are crossed, such as coral bleaching events or flood levels. Public-private risk pools can protect vulnerable communities and public infrastructure without exhausting government budgets.
Several applications are emerging. Parametric products linked to ecosystem health are being tested in coral reef protection and watershed management. Insurance-linked finance is being used to support conservation bonds and restoration projects. Guarantees and risk-transfer mechanisms are being designed to attract private investment into nature-based solutions.
The briefing argues that biodiversity finance should not be limited to conservation funding. Insurance can reduce the financial uncertainty that stops private investors from backing restoration projects. It can protect investments in green infrastructure. It can also help governments manage fiscal exposure to climate and nature-related disasters.
For UK businesses, this creates both opportunity and pressure. Companies that invest in ecosystem restoration or sustainable land use may find new insurance products that reduce their cost of risk. However, those that depend on degraded ecosystems or contribute to biodiversity loss may face higher premiums, stricter terms or reduced coverage.
New tools for nature-aware underwriting
One of the challenges for insurers is practical. Many recognize that biodiversity loss creates material risk. Few have consistent methods for incorporating it into underwriting decisions.
The briefing highlights the PSI Climate-Nature Nexus Atlas, which is scheduled to launch at COP17 as part of the Nature-Aware Underwriting Toolkit. The Atlas was developed by the PSI Working Group for Nature, involving more than 50 insurers, reinsurers and brokers with technical support from expert partners.
The toolkit aims to help insurance professionals translate relationships between climate, nature and physical risk into day-to-day processes. It provides methods for identifying ecosystem dependencies, assessing nature-related physical risks, evaluating sector and geographic exposure, and integrating biodiversity factors into underwriting.
This could change how insurers assess commercial property, agriculture, forestry, infrastructure and coastal development. Instead of relying only on historical loss data and engineered defenses, underwriters might also account for the condition of surrounding ecosystems and the services they provide.
For businesses, this means new disclosure expectations. Insurers may ask how your operations depend on ecosystem services. They may want to know whether you're contributing to habitat loss, water stress or soil degradation. They may also ask what steps you're taking to protect or restore natural systems.
The toolkit could also support the development of nature-positive insurance products. These might reward companies that invest in ecosystem restoration with lower premiums. They might link coverage terms to biodiversity performance. They might also enable new forms of insurance for conservation projects, green infrastructure and nature-based adaptation.
Policy signals and regulatory pressure
The briefing calls for clear policy signals, supportive regulation, practical methodologies and public-private collaboration. It's aimed at a wide group of stakeholders, including governments, environment and finance ministries, insurance supervisors, development banks, biodiversity-finance providers, insurers, reinsurers, brokers and public risk carriers.
This broad audience reflects the complexity of the task. Nature-aware insurance requires action from multiple directions. Governments need to provide data, standards, incentives and risk-sharing mechanisms. Regulators need to set expectations for how insurers assess and disclose nature-related risks. Insurers need to develop new products and underwriting methods. Development banks need to support pilot projects and capacity building.
In the UK, this is already starting to happen. The Prudential Regulation Authority expects firms to consider climate-related financial risks, including those linked to ecosystem degradation. The government's net zero strategy includes nature-based solutions as part of the transition. Public procurement increasingly requires biodiversity net gain and environmental impact assessments.
As a result, UK businesses will face growing pressure to demonstrate how they manage nature-related risks. This will affect access to insurance, cost of capital and eligibility for public contracts. Companies that can show credible biodiversity action will be better positioned. Those that ignore it may find themselves priced out.
Commercial risks and opportunities for UK businesses
The shift toward nature-aware insurance carries several implications for UK SMEs and mid-market companies. Risk assessment will change. Insurers may increasingly evaluate ecosystem degradation as a contributor to physical and financial risk, rather than treating biodiversity as a separate environmental issue.
Underwriting will tighten for activities that depend heavily on ecosystems or contribute to their degradation. Agriculture, forestry, mining, infrastructure, real estate, tourism and coastal development will face greater scrutiny. Companies in these sectors may need to provide evidence of biodiversity management, habitat protection or restoration commitments.
Investment patterns will shift. Insurers control significant capital. They may direct more of it toward ecosystem restoration, adaptation and projects that strengthen natural resilience, particularly where public policy reduces investment risk. This could create new opportunities for businesses involved in green infrastructure, nature-based solutions and sustainable land management.
Public policy will evolve. Governments may provide data, standards, incentives and risk-sharing mechanisms that allow private insurers to participate without compromising affordability or solvency. This could include parametric insurance schemes, public-private risk pools and guarantees for conservation bonds.
Vulnerable communities may gain access to new insurance and risk-finance mechanisms, although affordability and equitable access will remain essential. Insurance cannot substitute for emissions reductions, ecosystem protection or public investment in adaptation. However, it can help close protection gaps and make resilience investments more viable.
Key details about CBD COP17 and the insurance briefing
- The 17th meeting of the Conference of the Parties to the Convention on Biological Diversity takes place in Yerevan, Armenia, from 19 to 30 October 2026, with an opening ceremony on 18 October.
- The high-level segment is scheduled for 27 and 28 October 2026, when ministers and senior government representatives will focus on building political momentum for implementation.
- COP17 represents the first global review of collective progress toward implementing the Kunming-Montreal Global Biodiversity Framework, adopted in 2022.
- The briefing was prepared by the Principles for Sustainable Insurance and the UNDP Insurance and Risk Finance Facility to guide governments, regulators and insurers on integrating biodiversity into risk management and finance.
- The PSI Climate-Nature Nexus Atlas, part of the Nature-Aware Underwriting Toolkit, is scheduled to launch at COP17 and was developed by more than 50 insurers, reinsurers and brokers.
- The briefing calls for insurance and risk transfer to be incorporated into biodiversity-finance strategies and national implementation of the Global Biodiversity Framework.
- The conference will run alongside the 12th meeting of the Parties to the Cartagena Protocol on Biosafety and the sixth meeting of the Parties to the Nagoya Protocol on access to genetic resources.
Challenges and limitations of nature-aware insurance
Developing nature-aware insurance is not straightforward. Biodiversity is complex, geographically specific and difficult to measure using a single metric. Ecosystem services change over time. This makes it hard to establish clear triggers for claims or reliable relationships between ecosystem condition and financial loss.
Data availability is a major constraint. High-quality, location-specific nature data is scarce. Standardized methodologies are still being developed. Liability and transition risks remain uncertain. Affordability pressures could intensify in high-risk regions.
Assigning monetary values to ecosystem services is inherently difficult. There's also a risk of excluding communities or sectors that cannot afford new coverage requirements. Insurers will need to distinguish credible nature-positive activity from greenwashing. This requires transparent standards and independent verification.
These challenges reinforce the need for collaboration. Governments, regulators, insurers, development institutions and conservation specialists must develop shared standards and practical tools. Isolated commitments won't work. The system needs common language, reliable data and consistent expectations.
For UK businesses, this means uncertainty in the short term. Standards are still emerging. Methodologies are evolving. Regulatory expectations are not yet clear. However, waiting for perfect clarity is risky. Early movers will shape the standards and gain competitive advantage.
What UK businesses should consider now
Biodiversity risk is moving from the margins to the mainstream. Insurers are building it into their risk models. Regulators are setting expectations for disclosure. Investors are asking harder questions. Supply chains are requiring biodiversity commitments. Public procurement is linking contracts to environmental performance.
Businesses should start by understanding their dependencies and impacts. Where do your operations rely on ecosystem services such as water regulation, pollination, flood protection or soil fertility? Where do your activities contribute to habitat loss, pollution or resource depletion?
Next, assess your exposure. Are you operating in regions where ecosystem degradation is increasing physical risk? Are you in sectors likely to face higher insurance premiums or stricter underwriting? Are your supply chains vulnerable to biodiversity-related disruption?
Then, consider action. Can you invest in ecosystem restoration or protection? Can you shift to more sustainable land use or resource management? Can you work with suppliers to reduce biodiversity impacts? Can you build nature-based solutions into your operations or infrastructure?
Finally, prepare for disclosure. Insurers, investors and regulators will ask for evidence of biodiversity management. You'll need data, metrics and credible commitments. This takes time to develop. Starting now gives you an advantage.
At SBS, we support businesses with environmental compliance and sustainability reporting that meets emerging expectations. We also help companies develop net-zero strategies that integrate nature-based solutions and ecosystem protection. The transition to nature-aware business models is complex. However, it's also becoming unavoidable.
Where to find authoritative guidance and updates
The Convention on Biological Diversity website provides official information on COP17, the Kunming-Montreal Global Biodiversity Framework, and national biodiversity strategies. It's the primary source for policy developments and implementation guidance.
The Principles for Sustainable Insurance, hosted by the UN Environment Programme Finance Initiative, offers resources for insurers and businesses on integrating environmental and social risks into insurance and risk management. The PSI Climate-Nature Nexus Atlas and Nature-Aware Underwriting Toolkit will be available through this platform following the COP17 launch.
The UK government's Environmental Improvement Plan sets out domestic commitments on biodiversity, including biodiversity net gain requirements, protected area targets and nature-based solutions for climate adaptation. This is essential reading for understanding UK regulatory direction.
The Prudential Regulation Authority provides supervisory guidance on climate-related financial risks, including nature-related dependencies and impacts. Financial institutions regulated by the PRA are expected to assess and disclose these risks.
For businesses involved in public sector supply chains, the government's Procurement Policy Note on carbon reduction plans offers context on how environmental commitments are being integrated into contract awards. Similar expectations are emerging for biodiversity.