In last year’s report Indebted to Nature, we showed that Dutch financial institutions alone have over half a trillion euros in exposures to companies with high or very high dependency on a well-functioning ecosystem. Companies whose business may be at risk due to biodiversity loss and other forms of environmental degradation. Financial institutions also run transition risks.
In this sense, banks may be very liquid but they cannot and should not chase every credit option that comes their way. In other words, in building their portfolios, banks must not sacrifice their credit underwriting standards. For users of funds, therefore, the capital market should present a real alternative. Second, bank balance sheets have been under intense global scrutiny.