* Valuing nature key to saving it - UN
* Banks, insurers, pension funds leading change in thinking
NAGOYA, Japan, Oct 27 (Reuters) - Businesses are starting to factor in the growing risk to investments from the destruction of forests, reefs and wetlands, but more needs to be done to fight damage to nature estimated at trillions of dollars a year, a U.N. report says.
The global economy is underpinned by "natural capital" such as water from rivers and forests, clean air, protection from rising seas by mangroves, pollination of crops by insects and fisheries that rely on coral reefs as spawning grounds.
Many of these benefits are taken for granted, but need to be measured and accounted for if the world is to halt the rapid destruction of nature, according to the report for CEOs by the United Nations Environment Programme's Finance Initiative.
The financial sector was both greatly exposed, but also a key player in changing business practices that took into account the impact on nature, such as mining and agricultural expansion.
The report, released on the sidelines of a U.N. conference on setting new targets to curb the loss of plant and animal species, said banks, insurance companies and asset managers were putting policies in place to manage the risks.
Insurance firms, for instance, were looking at risks associated with floods caused by deforestation as well as new products that reward firms that conserve forests or plant mangroves.
But much more needed to be done and firms needed to take steps to try to prevent disasters such as BP's oil spill in the Gulf of Mexico that caused widespread environmental damage and cost the company billions of dollars in losses.
"The issue of biodiversity and ecosystems is beginning to become visible in terms of the supply chain and reputational risk," the head of UNEP, Achim Steiner, told reporters.
But the financial sector needed to step in to drive new markets to put a value on nature and overhaul business thinking on how it accounts for the impact on the environment.
Better measurement and accounting could lead to the creation of new products that would promote the preservation of nature, such as rainforest or coral reef bonds, said Richard Burrett, co-chair of the finance initiative.
The programme draws in nearly 200 financial institutions such as banks, asset managers, pension funds and insurers to promote environmentally friendly investment principles to help the finance sector change the way it works.
The head of Dutch bank ASN SR.AS has put in place a biodiversity policy to guide its investments, adding it was a "fundamental issue we all have to take responsibility for, banks included".
"This was not a financial or risk-driven decision," the bank's managing director, Ewoud Goudswaard, said in an email.
"It is what we want to do and what both our creditors and debtors expect us to do. We do think that it promotes the awareness amongst our customers about the importance of biodiversity, which we regard as a positive development." (Editing by Ron Popeski)