The Taskforce on Nature-related Financial Disclosures (TNFD), backed by the G7, will assist companies in assessing their “environmental risks and opportunities”, according to a release, and is aimed at measuring the impact that financial institutions and corporations are having on the natural world.
It will also support a shift in global financial flows away from what it terms 'nature-negative outcomes' and toward 'nature-positive outcomes'.
The TNFD will deliver a framework in 2023 for organisations to report and act on evolving nature-related risks, and says it will build on the Task Force on Climate-related Financial Disclosures (TCFD).
The TCFD, launched in 2015, encourages companies to put details about their environmental risks in the public domain and for investors to disclose the emissions of their portfolios. It has more than 2,000 supporters today.
The new taskforce will be led by two co-chairs, Elizabeth Maruma Mrema, executive secretary of the UN Convention on Biological Diversity (CBD) and David Craig, CEO of Refinitiv and group leader of data & analytics division at London Stock Exchange Group (LSEG).
In a release announcing the launch, the TNDF said that the recorded extinction of 83% of wild mammals and 50% of plants represents significant risk to corporate and financial stability, and that action for nature-positive transitions could generate up to US$10.1 trillion in annual business value and create 395 million jobs by 2030.
Welcoming the endorsement from the G7 at the weekend, Mrema said: “The G7 endorsement should be recognized as vital and a clear signal to global business and governments of the need for urgent action to halt nature loss. Nature is declining at rates unseen in human history, which poses unprecedented risks for corporates and financial institutions, so now is the time for decisive action that can secure a sustainable future.”
Speaking to Bloomberg, Mrema said that rather than coming up with an equivalent for biodiversity of a 2 degrees target, the best approach is to think of moving from nature-negative to nature-positive activities. One example she gives of a nature-negative activity is the food system, where demand for meat is providing an incentive for deforestation, and chemicals used in the production of fruit and vegetables are harming the soil.
Craig also commented at the launch: “Better nature-related data that enables informed decision-making by financial institutions and companies is how we will solve the global ecological crisis. Financial disclosures are essential to a market-based solution to nature loss. A properly functioning, informed market will price in risks appropriately and be empowered to channel investments to more sustainable opportunities.”
In a report laying out the technical scope of the taskforce, the TNDF says it will adopt ‘a four-pillar approach’, structured around how they say organisations operate - governance, strategy, risk management, and metrics and targets - the same structure used by the TCFD framework.
However, it adds that in recognition of the “particular challenges of measuring nature”, broader policy and market developments, and the systemic nature of the risk, the TNFD will incorporate a broader definition of the term ‘risks and opportunities’ into each pillar.