European central banks are among the frontrunners in addressing climate-related financial risks, but key drivers of nature-related risk remain insufficiently covered by financial regulation and supervision, according to a new assessment by WWF.
With five years remaining to meet global 2030 climate, nature and development targets, the report says stronger regulatory action is needed to steer the financial system towards a net-zero, nature-positive and socially equitable pathway.
The findings are set out in the fifth edition of WWF’s Sustainable Financial Regulations and Central Bank Activities Assessment 2025 (SUSREG 2025), which examines how climate, nature and social risks are being integrated into central banking, financial regulation and supervision.
Siti Kholifatul Rizkiah, WWF SUSREG Lead, said: “We must take a genuinely precautionary approach to climate and nature risks. The consequences of inaction will far outweigh the costs of early intervention. The financial system can no longer pretend that environmentally harmful assets are low risk when the evidence proves otherwise. Taking decisive action now is not only a strategic business imperative but also a key to unlocking the emerging green opportunities and safeguarding future economic prosperity.”
According to the assessment, progress is already visible in parts of Europe, where some central banks and financial regulators are showing stronger supervisory follow-up and clearer alignment of industry practices with regulatory expectations.
“With a 59% alignment score on the climate assessment, the EU stands out, thanks to the ECB’s new progressive initiatives, such as the introduction of the climate factor in its collateral framework,” said Dominyka Nachajute, Sustainable Finance Policy Officer at WWF European Policy Office. “In addition, within the last year, the ECB published its first-ever nature loss indicator in its financial disclosures. These are critical steps towards addressing systemic risks.”
The report also highlights actions taken by the Hungarian Central Bank, which has expanded its climate-related financial disclosures to include ecosystem and biodiversity risks, using WWF’s Risk Filter Suite to assess exposures.
However, SUSREG 2025 identifies significant gaps. Major drivers of nature-related risk — including land, freshwater and sea-use change, climate change, and the exploitation and pollution of terrestrial, freshwater and marine ecosystems — are still largely absent from financial regulation. The integration of climate and nature risks into monetary policy and macroprudential frameworks also remains limited, the report says.
To address these shortcomings, WWF calls on financial authorities to strengthen the integration of nature-related risks into central banking and supervision, expand the use of macroprudential tools such as stress tests and capital buffers, reinforce disclosure and transition planning, and adjust capital rules to reflect the risks of environmentally harmful assets. The report also recommends scaling up green and transition finance and improving national and international coordination through dedicated platforms for knowledge-sharing and capacity-building.
