Case study: using ENCORE to assess nature-related risk at a major Colombian bank

Case study: using ENCORE to assess nature-related risk at a major Colombian bank

This case study is also available in Spanish.

Company name: Banco Davivienda
Headquartered: Bogotá, Colombia
Date: 2025

Banco Davivienda is one of Colombia’s largest banks. It operates in six countries, offering consumer, corporate and agricultural financing, and has a total portfolio of COP 145 trillion (Colombian pesos), approximately USD 37 billion.

To help manage nature risk, Davivienda uses ENCORE to assess how its financial portfolio depends on and impacts nature. This case study explores how ENCORE and other tools supported the bank’s first nature-related risk assessment using the Taskforce for Nature-Related Financial Disclosures’ (TNFD) LEAP (Locate, Evaluate, Assess, and Prepare) approach and how the bank is managing nature-related financial risk.

Findings from Davivienda’s risk assessment help guide the bank’s nature strategy. They are integrated into credit risk management, sustainable bond design, and implementation of Davivienda’s Environmental and Social Risk Management System. As of June 2025, the bank’s sustainable portfolio reached COP 27.3 trillion (equivalent to 18.8% of its total portfolio), with a goal to achieve 30% by 2030.

Davivienda is a signatory of the UN Principles for Responsible Banking (PRB) and is represented on the UNEP FI Global Steering Committee.

The case for assessing nature

Davivienda recognizes that all businesses depend on and impact nature, and this can create risks for the institutions that finance them. Colombia, where Davivienda holds the majority of its operations and assets, is one of the most biodiverse regions in the world, home to over 48 million hectares of Amazon rainforest and other unique ecosystems. However, many of these biomes are threatened by deforestation, mining, land-use change, climate change, and illegal activities.

Davivienda recently updated its strategy for managing nature-related risk in its policy El Mundo es Nuestra Casa (Our World is Our Home), an integrated approach that addresses climate, nature and human rights. To strengthen its oversight and management of nature-related risk, the bank operates the Colombian banking association’s (Asobancaria) Environmental and Social Risk Management System (SARAS). Davivienda is also a TNFD adopter, and is committed to making disclosures aligned with the TNFD’s recommendations and guidance, which provide an integrated framework that enables businesses to assess, report and act on their nature-related dependencies, impacts, risks and opportunities.

Challenges for banks assessing nature risk

Davivienda’s environmental and social risk team identified three main challenges it has experienced assessing nature-related financial risk:

• Strengthening knowledge of how different economic activities depend and impact on nature.
• Accessing credible, standardized data to compare nature issues across different asset classes.
• Developing internal expertise to assess the materiality of nature-related risks and opportunities.

To help address these challenges, Davivienda uses ENCORE, which is a useful entry-point for nature-related financial risk assessments. The tool and knowledge base set out how 271 economic activities depend on ecosystem services and exert pressures, which can lead to impacts on ecosystem components. Assessing these dependencies and pressures can help institutions identify where nature-related financial risks are likely to show up in a portfolio.

Davivienda first piloted ENCORE in 2018, focusing on pressures and dependencies linked to its financing of palm oil, coffee and cattle producers in Colombia. It recently expanded the analysis to cover its entire portfolio as part of its risk assessment applying the TNFD’s LEAP approach.

Davivienda’s approach to assessing nature risk

Davivienda’s nature-related risk assessment focuses on the Locate and Evaluate phases of the TNFD’s LEAP (Locate, Evaluate, Assess, Prepare) approach.

The assessment begins with a heatmapping exercise that combines ENCORE’s data with data from the bank’s portfolio of Colombian assets to identify the sectors Davivienda finances with the most significant dependencies and impacts on nature. First, Davivienda mapped sectors in its portfolio to the International Standard Industrial Classification of All Economic Activities (ISIC) used by ENCORE. These holdings were then mapped against the materiality ratings in the ENCORE knowledge base to identify how they depend on ecosystem services and exert pressures on ecosystem components.

To prioritize sectors for further evaluation, Davivienda created a scoring system based on ENCORE’s materiality ratings and data from the Science Based Target Network’s High Impact Commodity List. Davivienda’s financial exposure to each sector was not taken into account at this stage.

Seven sectors were identified as priorities (Figure 1): basic mining, thermal coal mining, metallurgical coal mining, rice production, avocado production, coffee production, and fish farming. The seven prioritized activities represent 5,516 clients and nearly COP 1 trillion (USD 3.9 billion) in financial exposure.

Figure 1. A heatmap from Davivienda’s annual report shows materiality scores for Davivienda’s seven prioritized sectors based on ENCORE dependency and pressure (referred to above as impacts) materiality ratings and the SBTN’s list of high impact commodities. VH: Very high, M: Medium

Next, clients in prioritized sectors were assessed for exposure to sensitive locations, where natural capital might be protected or at risk. Geolocation data was obtained for 3,407 clients, each of which was screened for overlap with the National Registry of Protected Areas (RUNAP) to assess potential transition risks, such as reputational and regulatory risks that might arise from the clients’ impacts on nature. Five clients were identified within protected areas but were found to be compliant with national regulations. None were located within national parks or Indigenous and Afro-descendant territories.

Finally, Davivienda conducted a deforestation risk assessment using Asobancaria’s Deforestation Risk Management Guide. Initial analysis found low exposure to high-risk sectors and geographies. Davivienda plans to carry out further analysis on specific high-risk zones.

How Davivienda’s risk assessment is guiding nature strategy

ENCORE supports Davivienda’s management of nature-related risks, and alignment with prudential guidance and frameworks, including the following initiatives.

Integrating nature into risk management – At the transaction level, Davivienda is integrating findings from its nature risk assessment to guide credit-risk analysis and decisions about future lending, including for its agricultural and housing portfolios. The next step is to integrate nature into other risk systems, following the approach Davivienda has established with climate risk.

Colombia’s first biodiversity bond – As part of its sustainable financing strategy, Davivienda, together with the International Finance Corporation (IFC), issued a biodiversity bond worth USD 50 million, which finances projects focused on biodiversity conservation, agricultural development, water management, sustainable production, circular economy, and sustainable energy. The bank relied on its nature risk assessment to develop criteria and identify potential clients eligible for the bond.

Engaging key stakeholders on nature-related risk – Davivienda’s Sustainability and Environmental and Social Risk teams share findings from its assessment across the bank to build capacity on biodiversity risks. An overview of its LEAP assessment is published in Davivienda’s 2024 Annual Report to inform investors and stakeholders how environmental and social risk management are integrated into its environmental strategy.

Expanding Davivienda’s sustainable taxonomy – Davivienda’s Sustainable Taxonomy provides a framework for the bank’s sustainable financing. The taxonomy covers 118 economic activities with social and environmental benefits. Using this taxonomy, the bank aims to identify new financing opportunities for sustainable economic activities and support clients to improve sustainability across their businesses.

SINBA – Davivienda is contributing to Asobancaria’s National System of Biodiversity and Adaptation (SINBA), an initiative to develop innovative financial instruments for projects that promote ecosystem restoration and resilience.

Compliance with EU deforestation-free products regulation (EUDR) – Davivienda is expanding its approach on deforestation, following an explicit request from the credit division to assess risk exposure to the EUDR.

Next steps for assessing nature risk

Davivienda is in the early stages of assessing nature-related financial risk and is taking further steps to assess and address risks and opportunities across its portfolio, including:

Expanding the scope of its risk assessment – to include more granular data, with deeper analysis on additional sectors, geographies and nature-related impacts and dependencies.

Improving access to data – Davivienda has identified some information gaps and challenges in the accuracy and traceability of its asset-level data. To address them, it is engaging with portfolio managers and clients to improve the quality, availability and consistency of data that supports climate and nature risk assessment.

Assessing risks and opportunities – Davivienda’s assessment has so far focused on the Locate and Evaluate phase of the LEAP approach. The next steps are aimed at identifying specific nature-related risks and opportunities and determining their materiality.

Disclosing metrics and setting targets – In line with its approach to climate, Davivienda aims to disclose key metrics relating to its impacts and dependencies on nature and set measurable targets to strengthen the bank’s resilience to nature risk.

Davivienda is one of hundreds of organisations using ENCORE to help assess and address nature-related financial risks. ENCORE was developed by Global Canopy, UNEP FI and UNEP-WCMC (the ENCORE partnership) and can be accessed here.

Many thanks to Sandra Mónica Delgadillo and Sandra Rodríguez Nieto from Davivienda’s Environmental, Social and Climate Risk team for their support with this case study. All quotes are taken from their interview with Global Canopy.

Alejandra Díaz Agudelo, Chief Sustainability Officer at Banco Davivienda and Seguros Bolívar in Colombia, serves as a member of the UNEP FI Global Steering Committee and sits on the Board of the UNEP FI Principles for Sustainable Insurance.