First Sentier Investors, a global investment manager, has launched a guide designed to help institutional investors identify and assess nature and biodiversity risk in portfolio companies in light of the final framework outlined by the Taskforce on Nature-Related Financial Disclosures (TNFD), which is due to be published imminently.
The guide, titled ‘Investors Can Assess Nature Now’ (ICANN) and published Thursday, is to be used by investors to undertake nature-related company assessments and develop approaches to tackle biodiversity risks.
Focusing principally on water and forests, ICANN aims to bridge the gap between the work carried out by the TNFD and the practicalities of navigating the often complex data available on nature and biodiversity.
“There is growing global momentum to address nature and biodiversity risks, however the topic is still relatively new for many investors. While there is a data challenge, knowing what tools are available and when to use them can also be a roadblock,” said Kate Turner, global head of responsible investment at First Sentier Investors.
“This guide provides an outline of the available resources for assessments, including raising alternate ways to navigate data issues.”
ICANN focuses on three main areas: the identification of sector exposures and understanding of material nature pressure areas; prioritisation and assessments of companies, including due diligence, metrics to look out for and country-level assessment; and company engagement, outlining how to interpret the data and questions to ask.
The questions posed in the company engagement framework can also provide helpful insights for companies to better measure and disclose their nature-related risks, opportunities, dependencies and impacts, and to develop their own policy or position on nature.
Following the signature of the Global Biodiversity Framework at the UN biodiversity COP15 summit in Montreal, the private sector has been given a call to action, many experts have said, with several of the targets agreed on by the near-200 countries last December, explicitly referring to the need to scale private capital.
The final TNFD recommendations are to be launched in September and the co-chair of the body has suggested he expects the final nature reporting recommendations will remain similar to the draft.
By Roy Manuell – roy@carbon-pulse.com
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