Why the rapid loss of nature is becoming a real estate and financial risk issue

NRK published a major story in early October on new European data showing how quickly nature is disappearing across the continent - primarily due to human activity. Norway is one of the worst performers, and behind the environmental story lies a financial one that real estate owners, insurer and lenders can’t afford to ignore.

‍

What the European mapping actually shows

The analysis brings together satellite observations, land-use registries, and national mapping data in an extensive cross-European investigation. It shows a clear pattern: Europe’s natural environments are being built down at a speed not seen before - and the decline is primarily caused by human land-use decisions.

A few key findings stand out:

• Nature is shrinking - fast. Natural environments are being converted at a historic pace.
• Norway is one of the worst performers. Despite having abundant land, Norway ranks near the top in how quickly natural environments are being developed.
• Cabins and housing are major drivers. The Norwegian cabin boom is a central contributor.
• Loss of nature amplifies climate risk. When forests and wetlands disappear, flood risk is increasing. Landslide risk is increasing. Causing the cost of extreme weather to shoot up.

This combination — land-use change + rising physical climate risk - is becoming a material factor in lending, insurance pricing, and long-term asset strategies.

‍

Why this matters for real estate and finance

From a sustainability perspective, the conclusion is straightforward. The financial implications, although they may not be as obvious, are equally significant.

‍

1. We are building in places that are becoming riskier

When natural buffers disappear, the ground becomes more vulnerable:

• more frequent and severe flooding
• higher probability of landslides
• heavier runoff during extreme rainfall

Storm Hans was an early signal - and those that followed reinforced how rapidly the pattern is changing. As risk increases, so do insurance premiums, and in some areas, insurability may eventually disappear altogether.

2. Municipalities approve developments without full risk insight

NRK highlights how local governments continue approving construction in exposed areas. Many lack updated climate data or the tools to use it effectively.

For banks and insurers, this creates a disconnect:

Developers get approval to build - but financial institutions are left carrying the long-term risk.

3. The value of nature is becoming a financial variable

For years, nature was treated as an environmental concern. Today, it directly affects financial stability.

• EU regulations increasingly link land-use decisions to ESG risk.
• Through CRD6 and EBA expectations, banks must consider forward-looking physical risk in credit assessments.
• Investors are already pricing in exposure to high-risk zones.

Building down nature doesn’t just remove biodiversity. It removes protective "infrastructure" - and that alters the risk profile of assets.

‍

What this means for real estate owners and developers

This shift is reshaping expectations across the industry.

1. A shift in lending assessments

Banks are tightening their climate-risk reviews. Real estate owners can expect more questions about physical exposure, documentation, improvement plans, and long-term resilience outlooks — especially as CRD6 and EBA guidelines push banks toward more structured sustainability-risk assessments.

2. Expect more scrutiny on where and how you build

Developing in high-risk zones may become more expensive, harder to insure, or - over time - restricted entirely. The Norwegian governement is currently evaluating limitations on building in wetlands, which could influence utilisation rates and available buildable areas in several municipalities.

3. Nature-aware development is becoming an advantage

Projects that avoid unnecessary intervention with important ecosystems or that preserve natural buffers are already viewed more favourably by lenders and insurers. As high-quality exposure data becomes more accessible, these factors will play an even larger role in perceived investment risk and long-term value.

‍

The bigger picture: Norway can’t build its way out of climate risk

The NRK story is a clear signal.

Norway has had the tendancy to treat nature as an endless resource - something that can be converted into cabins, roads, or infrastructure without major consequences. But each new intervention pushes us into a pattern where we see rising:

• risk
• costs
• maintenance needs
• and public/private spending to repair damage that could have been avoided

Nature is not a barrier to development. It actively reduces risk when intact - and amplifies it when removed.

When we remove it, the bill eventually returns to the system - and the financial sector will be the first receiver.

‍

Where Telescope fits in

This is exactly why climate-risk insights matter.

Nature loss, built-down areas, local exposure, and shifting hazard patterns all feed into one question:

What will this asset be worth in the future - and what risks will it carry?

Banks, insurers, and real estate owners need a forward-looking, credible view of physical climate risk tied to the specific properties and portfolios they manage.

That’s what we help deliver.

Because building resilient communities - and a resilient financial system - requires understanding not only how the climate is changing, but how our land-use decisions are accelerating those changes.

‍