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Oceans “Forgotten” in Nature-related Analyses – UNEP FI  

New research on disclosure frameworks finds different approaches to materiality and less attention to ocean-related risks.  

Nature-related assessment and disclosure frameworks and standards pay insufficient attention to oceans, Romie Goedicke, Co-head of Nature at United Nations Environment Programme – Finance Initiative (UNEP FI) has said, following the release of a comparative study.  

The report found that while most approaches aim to cover all aspects of nature, their disclosure requirements are often developed primarily with consideration of the land and freshwater realms, with less consideration of oceans.  

It comes as new research, published in Advances in Atmospheric Sciences, found that ocean temperatures last year smashed previous heat records, according to data collected by the Institute of Atmospheric Physics at the Chinese Academy of Sciences. Similar data collected by the US National Oceanic and Atmospheric Administration reinforced these findings, according to Mongabay.  

Explaining the rationale behind the UNEP FI report on nature-related assessment and disclosure frameworks and standards, Goedicke said: “We have seen nature move up the agenda of our 500-plus membership [of banks, insurers and investors] in the past couple of years. Around a third are taking action on nature today. Last year, we updated our strategy in the context of the Kunming-Montreal Global Biodiversity Framework.”  

She continued that the “number one question” from members was the different approaches to nature-related disclosures and assessment.  “It [the report] is very much a collaborative effort with the [UNEP] World Conservation Monitoring Centre to give our members a ‘cheat sheet’ to the different approaches and what may be fit-for-purpose for their organisation.  

“It also is giving our members a trend report ahead of the financial reporting season, starting for most organisations at the end of January and February.” 

Materiality divergence  

A key finding in the report was that the definition of materiality differed across the approaches and frameworks reviewed. Some prescribed financial materiality or environmental and social materiality, while others are flexible in their requirements and guidance.  

Commenting on this, Goedicke said UNEP FI defined materiality as “what is relevant and how the reporting on it drove better decision-making”.  

“Using that definition to set the scene,” says Goedicke. “What we’ve seen across these different approaches is that their approach to materiality is really based on purpose.”  

The standards of the International Sustainability Standards Board (ISSB), she said, looked quite narrowly at financial materiality due to being designed primarily for use by investors. Whereas, the Global Reporting Initiative (GRI) and Science Based Targets Network (SBTN) had an “outside-in” or double materiality approach and looked much more into environmental and social impact. The European Sustainability Reporting Standards (ESRS), which underpin the EU’s Corporate Sustainability Reporting Directive or disclosure platform the  CDP had more of a double materiality approach, while the Taskforce on Nature-related Financial Disclosure (TNFD) framework took a flexible approach.   

Oceans missing  

Another key finding in the report was that disclosure requirements and assessment guidance of the nature-related frameworks and standards were developed, with less consideration of the ocean realm.  

“People instantly think about things like deforestation,” said Goedicke. “Also, the impacts on oceans are much less linear, meaning you might have an impact on the ocean thousands of kilometres away. You’re really translating something from a two-dimensional scope to a three-dimensional scope with the ocean.”  

Further complexity was added by issues such as data access and governance, partly due to vast areas of ocean lying outside areas in which a sovereign state has exclusive rights.  

But, Goedicke said the picture was also changing, with greater guidance being offered on assessing and disclosing ocean-related risks. “SBTN is expected to release its method for oceans this year,” she said. “And UNEP FI are part of their advisory group on oceans through our Sustainable Blue Economy Finance Principles. The TNFD has already released guidance for the marine shelf biome, and within ESRS this is covered in standard  E3 which looks at water and marine resources.”  

The increase in sustainability-related reporting requirements and frameworks has led to complaints of “ESG disclosure overload”, notably among UK-based asset owners. On the question of whether there were too many nature-related frameworks, Goedicke said that: “When you see an ecosystem operate, you don’t necessarily know its value of a species within it until it disappears. It’s the same with these different reporting approaches. This is a fast-evolving field.” 

Goedicke contrasted sustainability disclosure frameworks, which have seen consolidation in recent years, with financial accounting approaches which had evolved over at least two centuries.  

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