COP27

COP27 Momentum Must Roll on to Montreal – TNFD

An ambitious and robust Global Biodiversity Framework is key to mitigating nature-related risks and capitalising on opportunities.  

Policymakers’ increased focus on accounting for nature-related risks and opportunities when tackling the climate crisis was a welcome aspect of discussions at COP27 in Sharm El Sheikh. It is now vital “momentum is maintained” when finalising the Global Biodiversity Framework (GBF) at COP15 in Montreal next month, Tony Goldner, Executive Director of the Taskforce on Nature-related Financial Disclosures (TNFD), told ESG Investor. 

“Nature was a prevalent part of COP27 discussions,” he said. “Climate and nature not only have to go together, but nature has to play a central role in net zero transition planning and investing. It was encouraging to see a stronger focus on nature-related opportunities, with policymakers considering how they can catalyse investment and finance nature-based solutions (NbS).” 

A number of new nature-focused initiatives were launched at the climate summit. One of the most notable was the Enhancing Nature-based Solutions for an Accelerated Climate Transformation (ENACT) partnership, which aims to facilitate collective action from governments and non-state actors to address the integrated challenges of climate change, nature degradation and biodiversity loss by upscaling NbS.  

The COP27 Presidency further launched Food and Agriculture for Sustainable Transformation (FAST) to improve the quality and quantity of climate finance contributions to sustainable transformation agriculture and food systems by 2030. The Agriculture Innovation Mission for Climate (AIM for Climate) has also received an increased investment of more than US$8 billion (up from US$4 billion at COP26) from over 275 government and non-government partners. The Rockefeller Foundation pledged US$11 million in grants to ten organisations scaling indigenous and regenerative agriculture practices globally.  

Further, the presence of Brazil’s recently-elected President Lula embodied the link between protecting nature and addressing the climate crisis.  

“There’s still some way to go in shifting the overall mindset [around nature], from believing it to be an endless free resource to thinking of it as a key ally in taking effective climate action,” Goldner said.  

“Nature is an asset to be invested in and improved over time, like infrastructure. There’s a whole range of interesting and scalable financing solutions which can attract pensions, sovereign wealth funds and other asset owners. We need to be pulling in the long-term capital.”  

A recent report published by Nature4Climate and Capital for Climate noted that the ‘nature tech’ market – which encompasses any technology that helps to enable, accelerate and upscale NbS – is expected to grow from US$2 billion to US$6 billion by 2030.  

However, global public and private capital flows need to increase four-fold (currently US$133 billion per year) in real terms by 2050 if the world is to meet its climate change, biodiversity and land degradation targets, it said.  

Capitalising on momentum 

The fact the UN Convention on Biological Diversity’s (CBD) COP15 is following hot on the heels of COP27 will ideally “keep the momentum for [nature-related] action rolling”, said Goldner.  

The GBF is often referred to as nature’s Paris Agreement or ‘Paris for plants’, and the final version – due to be signed-off at the Montreal summit – is expected to include a commitment to protect at least 30% of the planet’s land and oceans by 2030, as well as clauses requiring private sector finance flows to support its goals.  

Progress finalising the framework has been slow, but Goldner said he is hopeful progress at COP27 will “keep up the pressure on striking an ambitious GBF”. 

TNFD’s work on nature-related risks and disclosures is linked to the GBF through target 15 of the global framework, which outlines that all businesses must assess, report on and mitigate their dependencies and negative impacts on biodiversity, both locally and globally, while also increasing their positive impacts.  

“The world needs a robust GBF in general, but TNFD would particularly like to see a strong target 15, as we hope TNFD can be the tool the market can utilise in response,” said Goldner.  

Members of TNFD have “made [themselves] available to brief the [GBF] negotiators so that they fully understand how target 15 can be operationalised”, he added. 

Both the global and voluntary framework have been developed with awareness and consideration of the other, largely thanks to TNFD Co-Chair Elizabeth Mrema’s dual role as Executive Secretary of CBD, Goldner said. 

“The TNFD is working to align with the global baseline of standards and policies being established. Having Elizabeth sitting at the intersection between TNFD and the GBF has been an important part of our work. TNFD is part of an ecosystem of initiatives and actions that needs to come together, but the GBF could and should be the anchor.” 

More finetuning 

Following the publication of two previous beta frameworks in March and June, TNFD recently published V0.3 of its guidelines on nature-related risk management and disclosures.  

The latest iteration outlines an adaptive approach for the application of the framework’s disclosure recommendations, accounting for varying materiality and reporting preferences – such as those being finalised by the International Sustainability Standards Board (ISSB).  

The foundations of the TNFD framework draw on the Task Force on Climate-related Financial Disclosure’s (TCFD) four core pillars: governance, strategy, risk management, and metrics and targets. However, parts of the TCFD guidance have needed to be altered to better suit nature-focused disclosures, said Goldner.  

“One area that has been particularly complex relates to the disclosure of Scope 1-3 emissions. What is nature’s equivalent?”  

TNFD has proposed an adaptation to TCFD’s metrics and targets guidance, recommending that organisations “describe the metrics used by the organisation to assess and manage direct, upstream and, if appropriate, downstream dependencies and impacts on nature”. TNFD will now be designing a set of disclosure metrics related to dependencies and impacts on nature, expected to be featured in V0.4. 

V0.3 has also proposed new disclosure recommendations for supply chain traceability and the alignment of organisations’ climate and nature targets, as well as guidance on science-based targets for nature, co-developed by the Science Based Targets Network (SBTN). 

Alongside, V0.3, TNFD published two discussion papers outlining scenarios and societal considerations relevant to nature-focused reporting.   

On the latter, Goldner said: “There’s a sense that we need to move as quickly as we can to an integrated set of sustainability reporting requirements across climate and nature, which needs to account for social themes. TNFD will be making further considerations of societal dimensions following response to the discussion paper.” 

V0.4 is due to be published in March 2023, outlining additional guidance on disclosure metrics, measurement of impacts, dependencies and risks across supply chains, and the sector-specific reporting requirements, including agriculture, aquaculture and mining.   

TNFD’s framework will then be finalised in September 2023.   

“We’ve got a lot of work ahead of us, and are working head to stay as aligned as we can with other standards and any policy initiatives and activities that emerge post-Montreal, too.” 

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