The recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD) are more consistent than the European Sustainability Reporting Standards (ESRS) requirements, the lead of an EU-established group has said.
The ESRS is “full” of optional biodiversity-linked disclosures, despite having an image of demanding mandatory requirements, according to Johan Lammerant, lead of a workstream within the EU Business and Biodiversity Platform that is focused on measurements.
“It’s mandatory for certain elements, but … it’s also partly voluntary. It’s not very consistent in the way it’s structured, if you compare it with the Taskforce on Nature-related Financial Disclosures (TNFD),” Lammerant told Carbon Pulse.
“TNFD had much more resources. European Financial Reporting Advisory Group (EFRAG) had very low budgets, the people in charge of the biodiversity standards had a hard job. I don’t blame anyone, but … TNFD is much more solid.”
EFRAG is an independent advisory body, majority funded by the EU, who submitted the first draft of ESRS to the EU Commission. Alongside biodiversity, the standards that will be used by companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD) starting next year, cover 11 other sustainability subjects.
“I would advise companies who are really serious with their biodiversity strategy not only to look to the CSRD, because that will really be a ticking the box exercise, but [also] the TNFD, which really has a good approach,” Lammerant said.
The only prominent mandatory biodiversity-related requirements for companies is on their direct operations, such as the distance from protected areas, rather than their supply chains, Lammerant said.
“We already know distance to protected areas doesn’t mean anything,” he claimed.
He was unsure whether more biodiversity-related criteria would become mandatory under ESRS in the future due to lobbying.
“ESRS biodiversity standards … are a political compromise.”
Lammerant’s EU Business and Biodiversity Platform workstream is developing a report comparing nature-related disclosure requirements and metrics from CSRD, TNFD, CDP, and Global Reporting Initiative that should be launched before the end of this year.
The EU Commission established the workstream but it is run by contractors. Lammerant is also lead expert of natural capital and biodiversity at engineering firm Arcadis.
ARTICLE 29 ‘HAS NOT WORKED’
More mandatory action is required from the supervisors of financial institutions, Lammerant said.
“People don’t realise that the deadline of 2050 is pretty close by, it’s only one generation away, 27 years, it’s nothing. Transformative change needs some time, so you should start now. I don’t see this urgency.”
He proposed requiring the integration of nature into climate transition plans by 2025. “If they impose that, then the financial institutions will not come up with any more excuses.”
Lammerant told delegates at the EU Business and Nature Summit in Milan during a panel that supervisors need to be “less kind”.
Deepshikha Singh, head of stewardship at asset manager La Francaise, responded by saying that biodiversity disclosure requirements in France, under Article 29 legislation, have made no difference to corporate disclosure since their introduction last year.
“I have not seen a single company in my portfolio report on biodiversity, it has not worked,” except for metrics they already considered like water usage, Singh said.
Anita de Horde, executive director at Finance for Biodiversity foundation, responded by suggesting the Nature Action 100 investor engagement initiative could pressure corporations to address nature, after it released its long-awaited list of 100 target companies last month.
By Thomas Cox – t.cox@carbon-pulse.com
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