Barclays has released a new methodology for assessing nature-related financial risks within large financial portfolios, focusing on the application of the Taskforce on Nature-related Financial Disclosure’s (TNFD) LEAP framework. The publication, titled "Navigating Nature Risk: Applying the TNFD’s LEAP framework," details Barclays’ step-by-step approach and emphasizes the importance of industry-wide collaboration to address data gaps and methodological challenges.
The bank’s analysis examined approximately 250 operational mines associated with about 30 mining companies and around 9,000 power generation facilities linked to roughly 40 European power companies. Using the LEAP framework—which stands for Locate, Evaluate, Assess, and Prepare—a cross-bank team developed bespoke data quality assessment frameworks and designed new scenarios and stress tests related to both physical and transition risks. These included factors such as floods, droughts, policy changes affecting water and air pollution, protected areas, and minerals recycling.
Key findings from Barclays’ research highlight several points. Data availability across industries remains fragmented, requiring intensive resources to conduct analyses. The absence of standardized metrics for nature-related impacts limits both scope and accuracy. However, despite these limitations, Barclays maintains that enough information exists to take meaningful action.
The study also found that nature-related financial risks could be significant over time. Both sectors analyzed showed potential cumulative earnings impacts across modeled scenarios over a five-year period. The degree of risk varied based on sector specifics, production types, and site locations.
Barclays stresses that addressing nature-related risks must go hand in hand with climate considerations due to their interconnectedness. This calls for integrated scenario planning that includes both climate and nature elements.
Collaboration is seen as essential moving forward. Barclays urges industry bodies, policymakers, standard setters, financial institutions, and companies to work together in developing consistent frameworks and guidance.
Marie Freier, Head of Sustainability at Barclays Group, stated: “Nature is as complex as it is fundamental – it underpins the stability of our economies, societies and financial systems. The accelerating loss of biodiversity and degradation of ecosystems are now widely recognised as systemic risks, which are increasingly materialising across our clients’ operations. We hope that in sharing our work we can start an industry conversation that will enable nature considerations to be translated into meaningful and quantifiable insights which can help corporates and financial institutions alike, and ultimately support resilient, sustainable, and prosperous economies.”
Barclays notes that this initial assessment serves primarily to identify challenges and share learnings rather than provide comprehensive forecasts or sector-specific risk evaluations. The methodology is expected to evolve as more data becomes available.