The co-chair of the Taskforce on Nature-related Financial Disclosures (TNFD) has said that he does not expect the final recommendations on nature-related financial disclosures to substantially change from the draft published at the end of March, with firms already starting to implement the guidelines.
David Craig, a former board member at financial industry body TheCityUK, told a virtual biodiversity event Wednesday that the current version was robust and there was not a great deal of momentum behind significant changes to it.
“Our goal is to deliver in September and I’m actually quite confident that not that much will change between the current recommendations and draft September recommendations,” he said during the conference organised by investment news outlet IPE.
According to the TNFD, more than 200 companies are already piloting aspects of the framework across various sectors and regions.
“Many companies are actually starting to implement this now and I think that’s really about building the knowledge and expertise to build a team,” he added, referring to the need for firms to increase capacity to deal with the disclosure framework.
“You can’t just jump to disclosures. You have to actually have gone through your investments or your business operations to have full assessment of where penalties and impacts on nature are in your system, and identify how they translate into risks and opportunities.”
TNFD RECOMMENDATIONS
The TNFD released its long-awaited last draft framework last month for managing and reporting risks and opportunities related to nature.
The cross-stakeholder body aims to steer businesses and financial organisations in calculating and reporting their dependencies and impacts on nature.
It has noted that related risks and opportunities should factor into transparency documents and decision-making as the world increasingly recognises the biodiversity crisis caused in large part by global business models.
It was the fourth and final draft of the framework and reflected a representation of the core aspects of what will go into the final version, including examples of additional guidance by sector and biome, as well as a recommended set of disclosure metrics.
The recommendations come in the wake of the historic agreement of the Global Biodiversity Framework (GBF) at the UN’s COP15 biodiversity negotiations in Montreal last December.
Under its Target 15, one of 23, governments are encouraged to mandate large companies and financial institutions to regularly monitor, assess, and transparently disclose their risks, dependencies, and impacts on nature.
The TNFD guidelines set out to help make this easier and more standardised, though the exact metrics and process for this type of reporting is complex for nature.
But Craig said how he saw the pace of progress as much faster than that seen in climate, and carbon, over the past few years.
“Compared to TCFD, we’re moving at about three times the speed,” he told the event, referring to the similar taskforce for climate-related disclosures.
It is hoped that, if widely adopted by global businesses, nature-related financial disclosure could support a shift in the world’s financial flows away from actions detrimental to ecosystems and toward nature-positive outcomes.
This will not happen overnight, Craig stressed.
“5,000 public companies are not going to suddenly adopt the [recommendations] and start reporting next year – that’s not realistic,” he said.
“It’s going to take some time for disclosure to start.”
A final consultation on the draft is ongoing until the start of June.
By Roy Manuell – roy@carbon-pulse.com
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