A market-led initiative to help businesses assess emerging nature-related risks and opportunities launched Friday with backing from global money managers, banks and governments.
The Taskforce on Nature-related Financial Disclosures aims by 2023 to create a framework for use by organizations in reporting and acting on nature-related risks. The framework will help to support a shift in global financial flows toward nature-positive outcomes and give firms an overall picture of their nature-related risks.
The task force is led by co-chairmen David Craig, CEO of Refinitiv and group leader of London Stock Exchange group's data and analytics division, and Elizabeth Maruma Mrema, executive secretary of the United Nations Convention on Biological Diversity.
More than half of the world's economic output, equivalent to $44 trillion, is moderately or highly dependent on nature, a news release announcing the initiative said. Therefore, 83% of wild mammals and 50% of plants becoming extinct "represents significant risk to corporate and financial stability," while on the opportunities side, transitioning toward "nature-positive outcomes" could generate up to $10.1 trillion in annual business value and the create 395 million jobs by 2030.
The task force will build on the Task Force on Climate-related Financial Disclosures, which sets out recommendations for companies and financial institutions in terms of disclosing environmental risks.
However, the new nature-focused initiative faces challenges in particular on data, metrics and methodologies, a letter signed by Mr. Craig and Ms. Mrema said.
"Measuring and disclosing nature-related risks is an even more complex challenge than it is for climate-related risks," the letter said. A key challenge for nature is that, unlike for climate, it is not just about what companies' activities are but where they are that matters, meaning there is a need for more location-specific data from corporations.
The task force consists of about 30 members, with equal representation of financial firms, corporations, and data and service providers in developed and emerging markets.
Entities endorsing the initiative include Wells Fargo Asset Management, BNP Paribas, AXA Group, KPMG International and Credit Suisse.