Environmental challenges such as climate change, pollution, and biodiversity loss are reshaping the global economy, presenting significant new risks to banks and insurers. In response, the Swiss Financial Market Supervisory Authority has introduced Circular 26/1, with mandatory requirements to identify, assess and manage nature-related financial risks. Set to take effect gradually from January 2026, this circular encourages financial institutions to proactively adapt their strategies to address these challenges and seize opportunities for resilience and sustainable growth. Banks and insurance companies must begin compliance efforts now to ensure timely and effective adaptation. Nature-related financial risks can impact asset valuation, disrupt supply chains, and alter market dynamics, necessitating robust approaches for identifying, assessing, and managing these risks. Establishing a comprehensive governance and risk management framework, integrated with risk quantification and stress testing capabilities, is essential for effectively managing these risks. While the importance of nature-related risks is widely acknowledged, their impacts are not yet fully understood or measured.

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– Author: Christian Jung, Director, Sustainable Finance, Deloitte

– This contribution is brought to you by Deloitte, a valued silver event partner of Building Bridges 2025