Nature is no longer a distant concern; it is the bedrock of our economies. The IUCN highlights that over half of global GDP is at risk due to nature loss, a stark reminder that economic prosperity and environmental health are inextricably linked. As businesses grapple with this reality, even robust financial institutions are facing a reality check, as seen in the recent performance of Five Star Business Finance.

Nature’s Economic Imperative

The IUCN report underscores a critical point: economic development cannot come at nature’s expense. Businesses, irrespective of size, depend on natural resources and healthy ecosystems. From the air we breathe to the water we drink and the soil that sustains agriculture, nature provides essential services. Ignoring nature’s value has led to a situation where our economies are actively harming the natural world. The solution lies in creating financial incentives to protect, restore and conserve nature at scale, integrating nature into every economic decision.

Five Star’s Financial Forecast

Meanwhile, closer to home, Five Star Business Finance, a non-banking finance company (NBFC), experienced a significant stock price drop. Shares plummeted after the company revised its assets under management (AUM) growth forecast downwards from 30% to 25% for FY25. This correction, coupled with a reduction in lending rates, has led to brokerage downgrades. CNBCTV18 reported a further slide in shares extending Wednesday’s losses, despite a healthy growth in net total income and AUM year-on-year for the September quarter. While analysts acknowledge the company’s strong business model and profitability, the market reaction indicates a sensitivity to growth projections and potential margin pressures.

Can Finance Embrace Green?

These two seemingly disparate news items are connected. The global economy, and by extension the Indian economy, cannot thrive if nature continues to degrade. Financial institutions, like Five Star Business Finance, operate within this larger economic landscape. While Five Star’s immediate challenges relate to growth forecasts and market corrections, the larger, more pertinent question is about the role of finance in fostering a nature-positive future. Can NBFCs and the broader financial sector in India actively contribute to environmental conservation while maintaining profitability? The IUCN suggests that the private sector is increasingly becoming part of the solution, identifying opportunities in responsible behaviour and nature-positive investments. For Indian finance, this presents both a challenge and an opportunity: to realign financial flows towards activities that not only generate returns but also safeguard the natural capital that underpins long-term economic stability.

What does this mean for Indian businesses and investors? Ignoring nature is no longer a viable strategy. The future of finance lies in recognising and investing in nature’s economy, ensuring that growth and sustainability go hand-in-hand. The companies that embrace this shift will not only be resilient but also lead the way in a world where nature’s value is finally, and rightly, recognised.