Insights | | Sustainable Finance Roundup December 2025: Nature, Regulation, and the Hardening of Risk

Sustainable Finance Roundup December 2025: Nature, Regulation, and the Hardening of Risk

29 December 2025

This month’s sustainable finance roundup traces the shift from ambition to enforcement, as climate and nature risks become financial, regulatory and legal realities. It covers Australia’s environmental law reforms, the embedding of climate and nature risk through prudential supervision, disclosure and shareholder pressure, and insurer warnings on the limits of insurability. It also highlights how markets are responding to deforestation and biodiversity risk, and how litigation and regulation are reshaping governance and long-term financial resilience.

Each month, we gather standout sustainable finance articles from our favourite writers. This curated selection brings together the most engaging ideas, timely analyses, and fresh perspectives published over the past month, so you can catch up on what mattered most.

Photo by Fabian Kleiser on Unsplash

Top 10 Sustainability Markers – December 2025

 

By Terence Jeyaretnam

In his latest monthly analysis, Terence Jeyaretnam highlights how environmental, climate and sustainability issues are rapidly hardening into enforceable financial, regulatory and litigation risks. Key developments include Australia’s landmark overhaul of the EPBC Act, which introduces a new independent regulator and legally binding National Environmental Standards alongside escalating warnings from Allianz that physical climate impacts threaten the insurability underpinning modern capitalism. The piece tracks the continued mainstreaming of sustainability as a growth driver (via HSBC survey data), the expansion of nature-related financial disclosure through TNFD-aligned reporting, and rising investor pressure on deforestation risk, evidenced by record AGM votes at major Australian banks. Regulatory clarity is also increasing, with updated ACCC guidance enabling sustainability collaboration and the UK PRA reinforcing climate risk as a core prudential concern.

Taken together, the BHP dam ruling and the scrutiny of corporate-backed climate education show how quickly environmental and nature risks are crystallising into real accountability, forcing boards and investors to treat them as core drivers of financial stability and not optional sustainability overlays.

Healthcare Intervention or Tech Moonshot? – A Few Thoughts on Sustainability…

 

By Simon Rebbechi

In his latest roundup, Simon Rebbechi surveys a rapidly hardening climate and political landscape, arguing that sustainable finance must adapt to realism rather than idealism. The piece highlights regulatory volatility under a renewed Trump administration, such as rolled-back fuel economy standards and the politicisation of climate risk disclosure in housing markets, showing how policy whiplash and information suppression ultimately shift financial risk. Against this backdrop, Rebbechi points to constructive developments: pragmatic reform in Europe via SFDR 2.0’s disclosure-first approach, strategic public investment to secure critical minerals amid geopolitical tension with China, and accelerating climate tech advances across low-carbon materials, geothermal energy, batteries, and autonomous EVs. He contends that the failure to constrain fossil fuel production makes overshoot of 1.5°C unavoidable, elevating adaptation spending, climate resilience, and even geoengineering from taboo to necessity, albeit with serious governance risks.

At its core, the article makes clear that capital allocation, risk assessment, and stewardship strategies must now be grounded in geopolitical realism, physical climate impacts, and scalable technologies, rather than assumptions of smooth policy alignment or rapid decarbonisation.

Relevant library resources

Advancing resilient nature positive insurance in Australia

Insurance Council of Australia
This report highlights the essential role of nature in supporting the global economy, underscoring the insurance sector's crucial function in managing financial and economic risks linked to nature loss. This encompasses integrating nature-related considerations into underwriting and investment activities and advancing nature-positive insurance practices.
Research
3 October 2024

Insuring a low carbon future: A practical guide for insurers on managing climate-related risks and opportunities

ShareAction
This report explores how climate awareness is being integrated into underwriting, investment, and group-wide risk management practices in the insurance industry. It identifies common barriers and presents a practical framework of eight building blocks relevant for insurers introducing and developing climate strategies. Based on interviews with 14 proactive insurers.
Research
11 September 2019

Putting TNFD to work: Insights from early adopters

ISS
This report analyses how early adopters are implementing the TNFD framework, highlighting integration with climate disclosures, flexible use of the LEAP approach, and application of data tools. Insights show how businesses align nature-related risks with strategy and reporting, with regional uptake led by Asia Pacific and Europe.
Research
13 May 2025

Deforestation tools assessment and gap analysis: How investors can manage deforestation risk

Hindsight Consultancy
This report explores investor deforestation initiatives. It assesses existing tools and datasets, identifies gaps, and offers recommendations. The report highlights the importance of managing deforestation risk while acknowledging the complexity of supply chains and information gaps.
Research
13 August 2020

Due diligence towards Deforestation-Free Finance: Guidance for financial institutions

Global Canopy
This guide provides detailed instructions for conducting due diligence in relation to deforestation-free supply chains. It offers practical steps and tools for businesses to identify, assess, and mitigate deforestation risks in their supply chains, promoting sustainable and responsible sourcing practices.
Research
25 April 2023

Bankrolling extinction: The banking sector's role in the global biodiversity crisis

Portfolio Earth
This report explores the contribution of the banking sector to the biodiversity crisis and the destruction of nature as of 2019. The report ranks the 50 largest banks globally based on their financing of unethical operations, finding a large impact on deforestation, ecosystem destruction and overfishing.
Research
6 January 2020
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