The Green Scorpion - the MacroCriticality of Nature for Finance - Foundations for scenario-based analysis of complex and cascading physical nature-related financial risks

Oct 5, 2026

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NGFS Occasional Paper The Green Scorpion develops foundations for scenario-based analysis of complex, cascading physical nature-related financial risks. It links nature risk science and economics to analytics, building a scenario framework for financial institutions and presenting a preliminary set of physical nature-climate scenarios. The work outlines transmission channels, a typology of shocks using historical analogues, and scenario building blocks. It also proposes a preliminary risk screening and assessment approach for identifying key country material risks, including risk quantification methods and ecosystem hazard-vulnerability indices.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages98

Reading Time4 h 7 min

AccessFree to download

Executive Summary

1. Introduction

2. Characterising Nature-Related Risks and the Implications for Analytics and Scenarios

2.1 The science and economics of nature-related risks

2.2. Toward a scenario framework for nature-related financial risks

2.2.1 Review of existing risk and scenario analyses and frameworks

2.2.2 Foundations to Scenario Development for Financial Institutions

2.2.3 Proposed approach to scenario development

3. A Preliminary Set of Physical Nature-Climate Scenarios

3.1 Transmission channels for nature-related (physical) financial risks

3.2 Typology of Nature-Climate Shocks: Analyses of Historical Analogues

3.3 Scenario Building Blocks

4. Preliminary Risk Screening and Assessment Approach to Identify Key Material Risks to a Country

4.1 Conceptual framing

4.2. Risk quantification approach: methods

4.3. Ecosystem hazard-vulnerability indices

4.4 Nature-Related Value at Risk

NGFS Occasional Paper The Green Scorpion: the MacroCriticality of Nature for Finance Foundations for scenario-based analysis of complex and cascading physical nature-related financial risks Nicola Ranger, Jimena Alvarez, Anna Freeman, Thomas Harwood, Michael Obersteiner, Estelle Paulus and Juan Sabuco 13 December 2023 Citation Ranger, N., Alvarez J., Freeman, A., Harwood, T., Obersteiner, M., Paulus, E. and Sabuco, J. (2023) . The Green Scorpion: the Macro-Criticality of Nature for Finance – Foundations for scenario-based analysis of complex and cascading physical nature-related risks. Oxford: Environmental Change Institute, University of Oxford. Acknowledgements This work was co-funded by INSPIRE, the NERC Integrating Finance and Biodiversity for a Nature Positive Future programme (Integrating Nature Climate Scenarios and Analytics for Financial Decisionmaking project, INCAF) and the Oxford Martin Systemic Resilience Programme, and benefitted from nature risk analytics supported by Climate Arc as part of the Resilient Planet Finance Lab at the Environmental Change Institute. The work was commissioned as a contribution to the work of the Task force on biodiversity loss and nature-related risks (Task force Nature) of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) . We express our sincere thanks to Romain Svartzman*, Jeffrey Althouse* and Marie Gabet * of the Banque de France and Serafín Martínez Jaramillo, Banco de Mexico, and all the members of the NGFS Task force Nature for their guidance and inputs on this research, and Akaraseth Puranasamriddhi and Emma O’Donnell of the Environmental Change Institute for research assistance. We also express gratitude for the wider ongoing collaborations and discussions as part of the NERC-funded INCAF project that this research has benefitted from, including the University of Reading (Tom Oliver, Anne Verhoef, Rowan Sutton and Helen Killick) and UK Centre for Ecology and Hydrology (Paula Harrison, Mike Perring *, James Bullock, HyeJin Kim), the Green Finance Institute (Helen Avery, Ingrid Holmes and Rhian-Mari Thomas), National Institute for Social and Economic Research (Ian Hurst, Iana Ladze, Stephen Millard and Patricia Sanchez Juanino), TNFD (David Craig, Emily McKenzie, Tony Goldner, James d’Ath and therest of TNFD Secretariat), Defra (Neha Dutt, Louise Baker and Saad Qayyum), UNEP WCMC (Joanna Wolstenholme, Sebastian Bekker and James Vause), the Bank of England* (Theresa Löber, Chris Faint, David Swallow, Danae Kyriakopoulou, David Gayle, Maria Flatman, Ines de Sousa Almeida and Annabel Williamson), Financial Conduct Authority (Carlos Martin Tornero), the members of the UK Climate Financial Risk Forum (including Billy Suid, Liam McNamara and Sandy Trust*) and Elena Almeida (now London School of Economics and Political Science) . Thank you in particular to those colleagues who kindly provided review comments on this draft [*] . This INSPIRE (research, publication, project, website, report, etc. ) is funded by the Gordon and Betty Moore Foundation through The Finance Hub, which was created to advance sustainable finance. The views expressed represent those of the authors. Photo by Leon Pauleikhoff on Unsplash. The ’Green Scorpion’ naming reflects the ‘sting in the tail’ of nature-related financial risks, the need to explore cascading and tail-risks and the risk amplification of climate change by nature. This paper is published as an NGFS-Oxford Occasional Paper alongside NGFS (2023a) available at: [https://www.ngfs.net/en/the-green-scorpion-macro-criticality-nature-for-finance](https://www.ngfs.net/en/the-green-scorpion-macro-criticality-nature-for-finance) Funders Contents Contents ........................................................................................................................... 3 Executive Summary ...................................................................................................

FAQs

What does The Green Scorpion paper focus on?

It provides foundations for scenario-based analysis of complex and cascading physical nature-related financial risks.

How does the paper develop its scenario framework?

It connects the science and economics of nature-related risks to analytics and then lays out steps for scenario development for financial institutions.

What is included in the proposed preliminary risk screening approach?

It presents a conceptual framing and risk quantification methods, including ecosystem hazard-vulnerability indices and approaches related to nature-related value at risk.

Oct 5, 2026

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