Final recommendations for companies and asset managers to manage and disclose nature-related risks were released Sept. 19 by The Taskforce on Nature-related Financial Disclosures, along with guidance on how to get started.
The move was broadly welcomed by investors, with reservations that focused on the voluntary guidelines' lack of data standardization.
Two years in the making, the recommendations build on existing ones from the Task Force on Climate-related Financial Disclosures and are consistent with global sustainability standards from the International Sustainability Standards Board. They were also designed to work with Global Reporting Initiative materiality standards and new European Sustainability Reporting Standards.
The TNFD recommendations "aim to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes and the goals of the Kunming-Montreal Global Biodiversity Framework," a TNFD release said.
For pension fund trustees, the recommendations are "a key step forward" for integrating nature-related considerations in investments, with nature and climate change inherently linked, said Charlotte Cartwright, a partner at U.K. pension consultancy Eversheds Sutherland, in an email. But she cautioned that in the context of trustees' legal duties, "the relative lack of decision-useful data — compared to climate change more generally — remains a key hurdle that the industry is working hard to overcome."
Emma Latham-Jones, senior manager at shareholder advocacy group ShareAction, in a separate email praised the new framework for being scientifically robust and comprehensive, with guidance tailored to specific environments and sectors, and for recognizing the climate link. Yet for the new framework to become the gold standard for protecting the natural world, a chief concern "is the lack of data standardization that would allow information about biodiversity to be compared effectively between financial institutions," Latham-Jones said.
Data released Sept. 20 by sustainability data services provider S&P Global Sustainable1 quantifies the dependency of the global economy on nature and biodiversity, and shows the extent to which the world's largest companies' assets are in key biodiversity areas susceptible to reputational and regulatory risks.
"The global economy's reliance on nature reveals the critical importance of greater transparency of the nature-related risks facing companies and the need for new and advanced datasets measuring impact and dependency on nature," said Steve Bullock, managing director and global head of research and methodology for S&P Global Sustainable1, in a release.
