Around 80% of the 1,100 members of the Taskforce on Nature-related Financial Disclosures (TNFD) forum said they would adopt the taskforce’s recommendations by 2026, the co-chair of the taskforce has said.
The forum members said they could see themselves adopting its forthcoming framework in a recent survey conducted by TNFD, David Craig, co-chair of TNFD said during a session at Reuters Impact conference in London on Thursday.
“There are thousands of companies and financial institutions out there. The [forum] is rather a self-selecting group, but this group is saying: ‘We can see us adopting this in the next few years.’ That’s fantastic,” Craig said.
“The financial industry has gone from curiosity around nature, to a little bit of denial, and maybe it’s wishful thinking but I now see the financial industry moving into a ‘how do I start to address this now [attitude]’.”
Many of the forum members are integrating nature into their climate assessments, he said.
The TNFD Forum is composed of a range of corporates, financial organisations and public sector institutions. The taskforce is due to publish its long-awaited final recommendations for nature-related disclosures in 12 days following four draft publications.
One of the “surprises” in the final publication will be the TNFD splitting Scope 3 nature-related risks into upstream, downstream and direct financing, learning from the lessons of the Task Force on Climate-Related Financial Disclosures, Craig said in response to a question from Carbon Pulse.
“If you’re a financial institution, we’re talking about financed nature risks. If you’re a corporation, you may have upstream nature risks, impacts or dependencies from your suppliers, or you might have downstream nature risks where you’re distributing products that are harmful to the environment,” Craig said.
Further defining Scope 3 in nature risks will be a “really helpful” distinction because people are using the term without “getting underneath” what it really means, Craig said.
The launch of the final recommendations is taking place at the New York Stock Exchange, during the city’s climate week, to underline their importance for the market, Craig said.
“We’ve addressed the issues that the market said were too difficult to address, not enough or too many metrics, etc. We’ve created something that is global, that is integrated and standard and the market will start adopting it,” he said.
A challenge companies will face in complying with the forthcoming recommendations will be understanding the physical locations of their operations, Craig said. ‘Location’ is the first element of TNFD’s LEAP approach to assessing nature-related risks.
“One of our members, a big food manufacturer, spent three years mapping out its locations in the supply chain. This is not easy. It’s not like you can ring up a data provider.”
“Financial markets tend to be quite lazy. They want a Bloomberg or Refinitiv screen to pop up and tell them: ‘Here’s the nature exposure to the portfolio.’ And of course, it’s more nuanced, it’s less mature than that, you have to do some work to go and find the data – but there’s plenty of it out there.”
Nevertheless, Craig said he has been “surprised” by how many financial institutions are now hiring heads of nature while recognising the external risks to their portfolios.
By Thomas Cox – t.cox@carbon-pulse.com
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