ETD

• banking
• biodiversity
• esrs
• sustainability

This thesis investigates the integration of biodiversity considerations into the European banking sector by combining a comprehensive theoretical framework with empirical analysis. It is grounded in the recognition that biodiversity loss represents one of the most critical and systemic environmental challenges of the 21st century, with far-reaching implications for economic stability and financial systems. Unlike climate change, biodiversity loss is largely irreversible and characterized by complex, non-linear dynamics, making its assessment and integration into financial decision-making particularly challenging.
The study begins by establishing the ecological and economic foundations of biodiversity. It conceptualizes biodiversity not merely as a stock of natural assets, but as a functional system property that underpins ecosystem services such as pollination, water regulation, and climate stability. By introducing the concept of natural capital, the thesis highlights the structural dependence of economic activity on ecological systems and critically examines the limitations of conventional economic metrics, particularly the inability of GDP to capture the depletion of natural assets. It further identifies key barriers to implementation, including valuation challenges, data gaps, and misaligned incentives.
Building on this foundation, the thesis analyses how biodiversity loss translates into risks for the real economy. At the microeconomic level, firms are exposed through their dependence on ecosystem services, leading to operational disruptions, rising costs, and declining resilience. At the macroeconomic level, these effects aggregate into systemic risks through sectoral amplification, reduced production potential, inflationary pressures, and employment impacts. The analysis emphasizes the non-linearity of ecological systems, highlighting the role of tipping points and irreversible regime shifts that can abruptly alter economic conditions.
The thesis then examines the transmission of these risks to the financial sector, focusing on European banks. It demonstrates that financial institutions are indirectly but significantly exposed to biodiversity-related risks through their lending, investment, and collateral structures. These risks materialize within established financial risk categories—credit, market, liquidity, operational, and strategic risk—while also exhibiting distinctive features such as multidimensionality, uncertainty, and feedback loops. The study argues that biodiversity risks have the potential to become systemic, particularly when ecological thresholds are crossed and economic impacts propagate through interconnected financial networks.
In parallel, the thesis provides a detailed overview of the evolving institutional and regulatory landscape. It analyzes international initiatives such as the TNFD and SEEA, as well as the European Union’s sustainable finance framework, including the Taxonomy Regulation, SFDR, and the Corporate Sustainability Reporting Directive (CSRD) with its associated European Sustainability Reporting Standards (ESRS). Particular attention is given to ESRS E4 on biodiversity, which serves as the primary operational interface for integrating biodiversity into corporate and banking practices. Despite significant progress in regulatory design, the study identifies ongoing tensions between ambition and feasibility, especially regarding standardization, comparability, and practical implementation.
The empirical component of the thesis evaluates the extent to which European commercial banks have begun to integrate biodiversity considerations into their strategic orientation and reporting practices. Using a structured analysis of ESRS-aligned disclosures, the study assesses banks across multiple dimensions, including strategy, policies, actions, targets, metrics, and anticipated financial impacts. The results indicate that biodiversity integration is still at an early and uneven stage. While many institutions acknowledge biodiversity as a material issue, disclosures often remain qualitative, lack methodological consistency, and show limited integration into core risk management and business processes. A gap persists between regulatory expectations and actual implementation, reflecting both conceptual complexity and operational constraints.
The thesis concludes that, although awareness and regulatory pressure are increasing, biodiversity integration in the European banking sector remains incomplete. Structural challenges—such as the multidimensional nature of biodiversity, insufficient data and metrics, and the inherent difficulty of translating ecological complexity into financial models—continue to hinder progress. Addressing these challenges will require further development of measurement frameworks, improved data availability, and a deeper integration of ecological considerations into financial decision-making. Ultimately, the study underscores the need for a paradigm shift in how financial institutions perceive and manage nature-related risks, positioning biodiversity not as an externality but as a fundamental determinant of long-term economic and financial stability.