A visualisation of the classification system
A new environmental classification system is the first to fully categorise both the renewable and non-renewable resources that provide benefits to people and the economy. This depth of information will provide a consistent ‘language’ for decision makers at all levels in the public and private sectors to consistently manage nature, as well as the services it provides.
The developers of this new system, described in an open access paper published in the journal Ecosystem Services, harmonised existing approaches to create a system that is practical for decision makers across public and private sectors. They then took it a step further, adding a new hierarchy of specificity so that it is appropriate for decision-making at multiple scales, from national to site-level assessments, depending on the level of complexity required and the amount of data available.
This system is central to ENCORE, a financial risk tool launched late last year. Developed by the Natural Capital Finance Alliance in partnership with UNEP-WCMC, ENCORE helps financial institutions screen investments for natural capital-related risk, and incorporate this into existing risk management processes.
Banks and other financial institutions need to understand how environmental degradation can disrupt businesses that they lend to or invest in. For example, a degraded coastline could make the infrastructure sector particularly vulnerable to flooding, but by measuring and monitoring the aspects of nature that provide protection, such as mangroves and corals, banks can take potential disruption into account and prevent financial losses.
Katie Leach, Senior Programme Officer in UNEP-WCMC’s Business and Biodiversity team and lead author of this paper, commented: “We’re very excited about this new classification system, and the potential it provides for a consistent ‘language’ to include nature in decision-making.”
“Before this there was no single system for classifying all aspects of nature - so everyone was reporting it in different ways. Now both the public and the private sector can use the same language, ultimately leading to more consistent and holistic decision-making.”
Anders Nordheim, Programme Leader - Ecosystems and Sustainable Land Use, UN Environment Finance Initiative, added: "'The new natural capital asset classification is a critical advancement in the ability of financial institutions to evaluate environmental risks and opportunities, by providing a standardised taxonomy for analysis."