The voluntary biodiversity credits market has reached a “tipping point” following the launch of the final recommendations by Taskforce on Nature-related Financial Disclosures (TNFD), according to a report led by an Australian law firm.
The TNFD release should catalyse the market by providing the baseline information that investors, issuers, and businesses need, Clayton Utz said in the report, which was released in partnership with consultants the Action Exchange.
“It is a tipping point in the development of transparent and functional voluntary biodiversity credit markets that finance nature positive gains,” the report said.
On Monday, TNFD launched its long-awaited final framework with the aim of helping businesses and financial organisations in reporting on their dependencies and impacts on nature.
Claire Smith, environment and planning partner at Clayton Utz, said the launch was a “significant step” towards the development of a nature credit market in Australia.
“The disclosure and risk management data it enables will be a vital foundation upon which a high-integrity nature credit market can grow in Australia, and a critical tool for companies to reduce their nature risk,” Smith said.
Australia is drawing up a framework for a national voluntary biodiversity scheme, though it is uncertain whether the Labor government will get it passed, as it currently does not have the required support of the Greens party or the conservative Coalition.
Supported in the right way, the nascent market could “grow quickly”, the Clayton Utz report said.
“The TNFD is highly relevant for Australia. As a large, developed, megadiverse country with a robust legal system and financial services sector, Australia is uniquely positioned to capitalise on any nature credit market growth,” it said.
Camille Goldstone-Henry, CEO of Xylo Systems, a company that measures biodiversity impacts, said in an interview with the report authors that the TNFD made biodiversity action achievable for companies in Australia.
Australian companies need to act fast, the report recommended. “Those that move quickly to integrate climate and nature reporting will have a first-mover advantage,” it said.
“When the biodiversity market develops into something meaningful, then I’m going to want to be part of it,” said Luke Donovan, partner, global carbon markets at Apostle Funds Management.
“It makes sense for me to engage as much as I can in its development because ultimately then I’ll hopefully have an edge over others if and when it reaches that point.”
Meanwhile, Andrew Saunders, head of nature climate solutions at government-owned Queensland Investment Corporation, said the development of a nature market “is going to sneak up quite quickly”.
Key nature credit projects in Australia are underway from companies including GreenCollar, Terrain NRM, South Pole, and Wilderlands.
In addition, the Australian central bank is developing a digital exchange for the nation’s emerging biodiversity market using blockchain technology.
However, for the TNFD to be fully effective, it needs to be mandated, according to Xylo’s Goldstone-Henry. Market structures like a taxonomy of sustainable activities – which Australia is moving on – would also help, the report added.
By Thomas Cox – t.cox@carbon-pulse.com
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