Industry

TNFD Adoption an “Exciting Milestone” for Nature

Taskforce urges organisations to get started on nature-related disclosures, as development of public data facility continues. 

The Taskforce on Nature-related Financial Disclosures (TNFD) has named the 320 organisations that have become the first to commit to its recommendations. 

Companies featuring on the TNFD Early Adopters list represent a total US$4 trillion in market capitalisation and are spread across 46 countries. More than 100 of them are financial institutions, including some of the world’s largest asset owners and managers, with a combined US$14 trillion in AUM. 

“It’s an exciting milestone for nature and for the TNFD, and it’s a real milestone for corporate reporting,” said Tony Goldner, CEO of TNFD.   

The TNFD released its final recommendations for nature-related risk management and disclosures last September. The recommendations are meant to serve as a key tool in meeting the Kunming-Montreal Global Biodiversity Framework’s (GBF) Target 15, which specifically calls for corporate disclosures on nature-related issues.  

Reporting companies are expected to start their disclosures as part of financial reporting packages either this financial year, or in the financial year 2024 or 2025.   

“We have been told by a number of organisations that they are already working on making natural-related disclosures for the current financial year, which is a pleasant surprise,” said Goldner. 

Some noteworthy adopters of the recommendations include Norges Bank Investment Management, the world’s largest sovereign wealth fund, UBS, Japan’s Mitsubishi UFJ Financial Group, and Storebrand Asset Management.  

“We are excited to play a part in redirection of global financial flows towards more nature-positive outcomes,” said Michael Bushnell, Managing Director at investment management group and early adopter Cardano. “Historically, sustainability concerns, particularly those related to nature, have not have been a top priority for pension scheme trustees. The increasing adoption of frameworks like TNFD and enhanced disclosure practices means trustees will have access to more streamlined information on nature-related issues.”

A recent report from UBS showed that 60% of global GDP is either moderately or highly dependent on nature. The report also stated that biodiversity and climate were intrinsically linked, and that “failing on one means failing on both”.  

“We fully respect that it’s a journey, and it’s great to see 320 [entities] taking that first step,” Goldner said. “I’m sure their actions are going to inspire and encourage others in their sectors to accelerate their plans to get started.”   

The TNFD is now set to move on to the second phase of its development, which will focus on driving and scaling voluntary adoption, and supporting market participants through capability building. The taskforce is due to disclose a second set of adopters during the next UN Biodiversity Conference, which will take place in Columbia between 21 October and 1 November. 

“This announcement will be reinforced by other initiatives, including Nature Action 100’s forthcoming stewardship agenda,” said Goldner.

The European Financial Reporting Advisory Group and the TNFD recently jointly committed to enhancing corporate transparency related to biodiversity and ecosystems. In addition, the TNFD’s 14 recommended disclosures were addressed as part of the European Sustainability Reporting Standards, adopted by the European Commission in July last year.  

Nurturing nature data

Published earlier this week, the UBS report called for complementary government action to mobilise capital towards nature-focused initiatives. One way in which the government could help would be to mainstream better data and methodologies by supporting uptake of the TNFD in the private sector, as well as creating a public TNFD data facility.  

The TNFD is currently developing an equivalent of the Net Zero Data Public Utility project for nature.  

“We have secured funding from a number of governments specifically to support the advancement of a TNFD nature data facility,” said Goldner. During COP28, the UK followed in Germany’s footsteps and announced that it would provide further funding to the taskforce, with part of it earmarked for the project.  

Other governments are currently in talks with the TNFD on this matter, as well as some philanthropic foundations that are “very interested in seeing the initiative move forward”, Goldner added. 

According to the UBS report, 70% of investors believe that lack of data is a key barrier to investing in nature-focused projects. Demand for nature-related data is currently “surging”, the report further noted.  

“We have heard plenty of concerns about data availability and quality,” said Goldner, adding that over half of the TNFD 14 recommendations are qualitative in nature and that companies should get started on disclosures despite data challenges.

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