SMEs will not want to implement the recommendations of Taskforce on Nature-related Financial Disclosures (TNFD) unless they are “defogged”, a construction company has said.
The impact of the TNFD framework on the involvement of Morgan Sindall Group in nature finance was “three out of five”, due to the firm’s reliance on small- and medium-sized businesses (SMEs), Graham Edgell, director of procurement and sustainability, said.
“Our supply chain is 90% SMEs, they don’t understand what they’ve been asked for. They know there’s a problem, they know there’s an issue … but they’re unable to react to the issue,” Edgell told a panel at the Nature Finance UK conference in London.
“For the big corporates where they’ve got to respond there will be lots of cracking disclosures, but in the short term, it’s not great news for me.”
The TNFD called for companies to adopt its recommendations following its long-awaited final framework launch last week. It is preparing additional sector-specific guidance.
Edgell said: “You’ve got to defog it. I hate to say this but put it in a box, so that we can understand what the box looks like.” His London-headquartered firm had almost £2 billion in revenue in the six months up to the end of June.
Matthew Ryan, regeneration lead of Nestle UK & Ireland, said his company expected to do “heavy lifting” in the early stages by helping its suppliers implement TNFD.
“There’s a recognition that we need to be doing a lot of work in getting our suppliers up to where they need to be,” Ryan said.
However, practices such as making farms more resilient to nature-related risks are “good for business”, while fulfilling Nestle’s “major financial commitments” to regenerative agriculture, he said. The world’s largest food and beverage company has committed CHF1.2 bln (€1.2 bln) to the area by 2025.
Edgell responded to Ryan, saying the challenge with construction was the mobility of its supply chain. “You can create a spark, but unless you stay there, you can’t keep that spark alive,” he said.
Georgie Nelson, head of ESG in real estate for Scotland-headquartered asset manager Abrdn, which managed £496 billion in assets at the end of June, said the UK Green Building Council was attempting to map out the ecological impact of projects but it was “at the very early stages”.
David Craig, co-chair of TNFD, spoke during a separate session at the London conference about how the “real work starts now”.
“The focus is on adoption and additional extensions. We’ve got to build this momentum,” Craig said.
Companies who have declared intent to adopt TNFD include MS&AD Insurance in Japan, Mirova in France, Rabobank in the Netherlands, Sanlam Investments in South Africa, and United Utilities in the UK, he said in a post on LinkedIn.
Furthermore, asset managers including BlackRock, Norges Bank Investment Management, and Aviva have asked their investees to adopt TNFD, he said.
By Thomas Cox – t.cox@carbon-pulse.com
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