Today, the loss of biodiversity has become a major risk for financial systems. In September 2023, Ravi Menon, Chairman of the NGFS – the network of central banks, financial regulators and financial institutions for the greening of the financial system – warned: "Along with the climate crisis, the degradation of nature is an existential threat facing our planet. Addressing nature-related risks and its broader implications for the financial sector is no longer just prudent – it is an imperative". 

As these risks require rigorous measurement, several frameworks have been proposed. The NGFS has published a conceptual framework for taking into account the risks associated with biodiversity loss. Target 15 of the Kunming Montreal Global Biodiversity Framework also encourages businesses and financial institutions to assess, report on and reduce the risks associated with biodiversity loss and the negative impacts they have by 2030. Lastly, the Task Force on nature-related Financial Disclosure (TNFD) has proposed a reporting framework to help businesses and financial institutions analyse and disclose these risks and impacts, recommending the use of various biodiversity metrics. 

However, as the missions of PDBs focused on achieving the Sustainable Development Goals (SDGs) are very specific within financial institutions, there are few studies to help this type of institution identify the biodiversity metrics best suited to their activities. 

The main objective is to compare six biodiversity metrics to determine which are best suited to the needs of Public Development Banks. By identifying the best practices, this project aims to guide PDBs in their financing decisions, by better integrating biodiversity considerations. This harmonisation of biodiversity measurement practices will improve the environmental impact of the projects financed. 

The research project also seeks to reveal the accessibility costs and the need for training within PDBs so that they can effectively integrate biodiversity considerations into their risk assessments. 

The study, conducted by Biotope and Arcadis, has been carried out in three phases: launch and data collection (briefing, project validation and data collection with recommendations); implementation (summary assessment, then in-depth assessment depending on the data available); consolidation and reporting (analysis of results, comparison of metrics and drafting of summary report). 

Following an preliminary comparative study by The Biodiversity Consultancy, six metrics for assessing biodiversity in PDBs projects were selected:  ENCORE, ABC-map, STAR, CBF, BFFI and GBS. These relevant and scientific metrics cover the main drivers of biodiversity loss. A sample of six varied AFD projects was selected to test these metrics. The projects include initiatives in Africa, Pakistan and Mexico. The European Bank for Reconstruction and Development (EBRD) also tested the same metrics on three of its projects.

The project resulted in three deliverables: 

• A preliminary study proposing several protocols for the use of several metrics in order to compare their results. It also contains information that may be useful to some development banks that simply want to choose a metric and see how they can use it. With this in mind, a decision tree for choosing one of the metrics studied is proposed in Appendix 2 of this preliminary report.
• A policy brief providing synthetic results, a case study and specific recommendations for the integration of these metrics into PDBs financing processes.
• A final research paper. 

To produce a comparative analysis detailing the advantages and limitations of the different biodiversity metrics studied, this research project tested how tools can be applied throughout the investment cycle, from project screening to portfolio reporting. 

Findings show that while tools can deliver meaningful insights, their use is limited by scarce and uneven project data. Time and reporting constraints often force reliance on sectoral averages rather than site-specific inputs, reducing precision. Differences in metrics, units, and classifications complicate comparisons, and some pro-nature impacts (e.g. sustainable agriculture, forestry, anti-poaching) are poorly captured. 

Despite these limits, tools are valuable for early risk screening and aligning finance with nature-positive goals. No single tool meets all needs, but a combined, tiered approach—tailored to project type, data, and disclosure requirements—can add value. 

Present in Armenia since 2013, the AFD group finances projects that contribute to the fight against climate change and work for just and inclusive transitions. We support the sustainable management and preservation of natural resources, energy transition, public finance management and urban services.

Produced by AFD's team of country-risk economists, macroeconomic country assessments provide an analysis of development processes in countries in which AFD operates. They also characterize their growth trajectory, and detect economic, social, political and financial vulnerabilities associated with these trajectories. AFD Group is thus in a position to properly measure the challenges and monitor the risks associated with each of its investments.

Emphasis is placed on developing countries, particularly in Africa, for which macroeconomic analyses are rare or infrequent. AFD seeks to complement existing production on the global economic situation, more focused on advanced economies and major emerging countries.

Find out more: Macroeconomic Analyses at AFD

Country-risk analysis is based on a close follow-up over a long period of time and rooted in a fine knowledge of local contexts. Cyclical trends, often highlighted in the news, are always examined in the light of structural trends and of the regional context in which they take place. The aim is to highlight country-specific macroeconomic issues while assessing risks against comparable time- and space-based trajectories.

Country-risk economists place the study of socio-political vulnerabilities, the growth model, the viability of public debt, external balances and the soundness of the financial system at the heart of their assessment, and give specific attention to countries' exposure to climate risks.

This small land-locked economy of 2.8 million inhabitants has derived positive economic benefit from the inflows of Russian migrants and capital since the outbreak of the war in Ukraine. Economic growth was robust in 2022 (12.6%) and 2023 (8.7%), the external accounts were strengthened, and public finances were consolidated. However, the country’s historically volatile economic performance remain exposed to the growing (geo)political risks in the region. The government of Nikol Pashinyan is responding to the pressure through precaution, and is seeking to secure Western support in the conflict with Azerbaijan. However, on the domestic front, it faces sharp criticism over the concessions it would grant to its neighbor in the context of the border demarcation following Baku’s military takeover of Nagorno-Karabakh in September 2023. Given the country’s vulnerability to a turnaround in financial inflows, the IMF urges caution and recommends building up additional fiscal and external buffers. This will especially be necessary because Armenia must internally manage the arrival and economic and social integration of the 100,000 refugees from Nagorno-Karabakh.

Download our publications on the macroeconomic situation of Armenia:

• “Armenia: Economic momentum faced with geopolitical tensions”, in MacroDev Semestrial Panorama #57 (July 2024)

A major player on the regional scene, Türkiye has experienced rapid development and transformations in recent decades, creating new opportunities, but also major imbalances. Its challenge today: to combine macro-financial stability and sustainable growth with fair and sustainable development. AFD Group and its local partners in Turkey are working for more balanced and sustainable growth, as well as a transition to a lower carbon economy.

Produced by AFD's team of risk-country economists, country assessments provide an analysis of development processes in countries in which AFD operates. They also characterize their growth trajectory, and detect economic, social, political and financial vulnerabilities associated with these trajectories. AFD Group is thus in a position to properly measure the challenges and monitor the risks associated with each of its investments.

The third decade of the Erdoğan-AKP era, which is beginning at the same time as the second centenary of Türkiye, needs to place the economy, prosperity and national cohesion at the heart of priorities. The return to a credible and effective monetary policy, led by an independent Central Bank and taken up by a relatively sound banking sector per se, should be followed by fiscal consolidation from 2025 onwards, after the slippage in 2023-2024, partly due to exceptional expenditures for post-earthquake reconstruction. Reforms are also expected to improve the business environment, support non-price competitiveness, productivity, attractiveness to investors, the external position, economic growth potential, and the green transition.