Banking giants join Taskforce on Nature-related Financial Disclosures framework development

Late last week

The Taskforce on Nature-related Financial Disclosures (TNFD) officially launched in June 2021 with an overarching aim to align corporate reporting and financial spending to alleviate nature-related risks.

The initiative was first announced in July 2020, with an informal working group set up two months later comprising of 74 financial institutions, corporates, governments, regulators, multilaterals, NGOs and consortiums, spearheaded by Banorte, BNP Paribas and the Green Finance Institute.

The aim of the TNFD was to compliment the growth of the Task Force on Climate-related Financial Disclosures (TCFD), which is gaining popularity amongst corporates and financial markets in outlining the economic risks associated with the climate crisis. The TNFD follows a similar pattern; it aims to give companies and financial institutions a complete picture of their environmental risks.

Late last week, the TNFD named 30 new additions to help develop the framework. Senior representatives from the likes of Bank of America, BlackRock, BNP Paribas, HSBC, and UBS will all sit on a working group to help develop the new global framework.

The finalised framework is earmarked for release in late 2023. However, the TNFD aims to release a draft version early next year, which will be tested via an open-innovation approach with a selection of market participants.

Each of the 30 new members will sit on at least one of five working groups that will each focus on defining nature-related risks; data availability; landscape of standards and metrics; development of a beta framework; and pilot testing and integration.

More than 100 institutions have also agreed to help the Taskforce through a broader consulting forum.

“The business and financial world’s race towards net-zero emissions will only succeed if they race equally fast towards nature-positivity. While the importance and urgency of our work is clear, so is the complexity of the challenge ahead for the TNFD,” the Taskforce’s co-chairs Elizabeth Mrema and David Craig said.

“The TNFD initiative is by the market for the market. Therefore, development of a practical framework for nature-related risks will only be achievable by bringing together market practitioners and experts in biodiversity, data, metrics and standards, risk management and disclosure frameworks into a unique collaborative endeavour. We are looking forward to immediately starting the work with our Taskforce Members.”

Biodiversity breakdown

Biodiversity, as a corporate and political concept, remains largely undefined. The publication of the Dasgupta Review on the Economics of Biodiversity is the latest major piece of work attempting to explore the role of natural capital in delivering planetary, societal and economic prosperity. However, even as these pieces of work evolve, it is a difficult task for corporates to place biodiversity into decision-making processes if the risks and opportunities remain largely undefined.

The impending TNFD framework is therefore crucial in opening the eyes of the private sector to the opportunities that restoration and regeneration bring. Research has found that improving nature protection and restoration could generate up to $10.1trn in annual business value and create 395 million jobs by 2030.

Of course, what solutions should be utilised to deliver this economic boon also remain undefined. Tree planting is a common tool used by corporates, but research has started to outline the potential benefits of lesser-known natural habitats. A four-fold increase in investment into Nature-based Solutions (NbS) is also touted as critical to reversing the ecological crisis.

Matt Mace

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