Global Biodiversity Framework will be a “lighthouse”, steering approaches to managing nature-related risks.
Companies and investors need to take an integrated approach to the measurement and management of climate and nature-related financial risks, according to panellists speaking at the City Week financial services symposium in London this week.
“Climate and nature cannot be considered individually because they are two parts of the same system,” said David Craig, Co-Chair of the Task Force on Nature-related Financial Disclosures (TNFD). “Net zero cannot be achieved unless you are also nature positive.”
The world is not decarbonising fast enough to limit global warming, he warned, adding that many companies are turning to carbon offsetting in a bid to meet their decarbonisation targets – which is an example of the interplay between climate and nature, Craig said.
Offsetting typically depends on investment in nature-based solutions (NbS), such as reforestation projects, to cancel out a percentage of emissions produced by companies. The practice is sometimes viewed with scepticism due to the varying quality and transparency of some schemes, as well concerns that their use may slow down necessary decarbonisation of business processes.
However, a number of investment institutions are using offsets as part of efforts to address climate and nature risks in tandem, as demonstrated by the Canada Pension Plan Investment Board’s (CPP Investments) partnership with Conservation International. Such schemes are injecting capital into the development of high-quality NbS in voluntary carbon markets (VCMs) to ensure that offsetting can be a credible and effective interim solution on the way to absolute emissions reductions.
However, Craig called for investors and companies to better integrate their assessments of nature and climate-related financial risks in their reporting and subsequent transition to more sustainable practices. For example, companies involved in deforestation are both contributing to the destruction of ecosystems and the removal of a key natural safeguard against carbon emissions and should therefore disclose the risks relating to both, he noted.
Building climate and nature into TNFD
The TNFD reporting framework, which is due to be finalised next year, aims to leverage the knowledge and tools used to formulate the existing Task Force on Climate-related Financial Disclosure (TCFD) so there is maximum cohesion and alignment, Craig said.
The finalised framework will deliver an “integrated approach to managing and disclosing on climate, nature and biodiversity risks,” he said.
In March, TNFD published its beta framework, which has three components: key science-based concepts and definitions, disclosure recommendations, and guidance on nature-related risk and opportunity analysis for companies and investors.
TNFD previously published a discussion paper outlining available data platforms and sources that can inform TNFD-aligned disclosures.
Also on the panel, Elizabeth Maruma Mrema, fellow TNFD Co-Chair and Executive Secretary of the UN Convention on Biological Diversity, told the symposium that TNFD will also align with the Global Biodiversity Framework (GBF), which is still being developed and finalised.
“The journey to complete the GBF continues,” Mrema said, noting that governments will convene again in August to finalise the global frameworks goals ahead of the COP15 biodiversity summit in Kunming, China, later this year.
The GBF, once in place, will “act as a lighthouse for the collective response of society, not only governments, to work together towards a 2050 vision of living in harmony with nature”, she added.
Reflecting the lack of progress at recent pre-COP15 talks in Geneva, TNFD’s Craig said governments are continuing to wrestle with the fact that the wide scope of nature-related risks cannot be boiled down into one metric, as has been the case with the Paris Agreement’s 1.5°C by 2050 target.
“There won’t be a simple figure like 1.5°C for nature, but rather a set of metrics to be reported on. It’s important that nature-related risks and impacts are targeted holistically,” he said.