A cohort of 320 organisations with $4 trillion in market capitalisation has committed to adopting recommendations on nature-related financial disclosures within the next two years, in a sign of growing efforts to understand biodiversity risks.
The early adopters of the Task Force on Nature-related Financial Disclosures (TNFD) recommendations include listed companies and industries based in 46 developed and emerging economies, the task force announced on Tuesday on the sidelines of the World Economic Forum annual meeting in Davos.
Among them are 100 financial institutions, including asset owners and managers with $14 trillion in assets under management.
The group marks the first large batch of companies to commit to the long-awaited final TNFD framework, which many are calling to make mandatory for firms around the world, in a sign that they believe the disclosures are achievable.
Securing commitments from 320 firms in four months is a “significant statement”, although with the accelerating nature crisis, uptake “can’t be fast enough”, Tony Goldner, executive director at the taskforce, said in response to a question from Carbon Pulse.
TNFD’s support for nature will be reinforced by actions from other initiatives in the coming months, from bodies like Nature Action 100 and hopefully the International Sustainability Standards Board, Goldner said.
BIG NAMES
The initial TNFD adopter list includes a number of very big corporations and financial institutions.
“We are committed to leveraging this tool to deepen our understanding of our portfolio’s nature-related impacts and dependencies, further reinforcing our responsible investment efforts in this important area,” said Carine Smith Ihenacho, chief governance and compliance officer at the world’s biggest sovereign wealth fund, Norges Bank Investment Management.
KCB Group, East Africa’s largest bank by assets and another early adopter, said it plans to have a quarter of its loans dedicated to green projects by 2025.
“Our credit process is designed to minimise environmental and social impact in financial projects,” the bank’s CEO Paul Russo said in the statement. “We actively support projects that contribute to environmental preservation, foster economic growth, and enhance social wellbeing.”
Other big names include banks Standard Chartered, UBS, and Mitsubishi UFG, pharmaceutical companies Astrazeneca and Novo Nordisk, miner Anglo American, trading house Marubeni, and Ikea.
The organisations have committed to begin disclosing the financial risks posed by biodiversity loss in fiscal year 2024 or fiscal year 2025, in line with the 14 recommendations for dependencies, impacts, risks, and opportunities the TNFD launched in September.
This means they will start disclosing some risks, but are unlikely to be able to follow all 14 recommendations from the outset, Goldner told journalists.
A piloting phase of the recommendations showed that there are still gaps in the data needed to make all the disclosures – although the focus is on qualitative data, rather than quantitative.
“Companies are finding it easier than expected,” Goldner said, adding that the data quality will improve as disclosures develop.
The recommendations are designed to help fulfil the Kunming-Montreal Global Biodiversity Framework, which set a goal in 2022 to end and reverse biodiversity loss by 2030. They are also in line with new sustainability reporting standards and rules, including in the EU and set out by the International Sustainability Standards Board.
Around 43% of early adopters are based in Europe, where the EU’s new Corporate Sustainability Reporting Directive took effect a year ago.
The group follows companies announcing their intention to adopt the recommendations in September including Colombian petroleum refiner Ecopetrol, Hong Kong developer Swire Properties, and GSK.
The task force plans to announce a second wave of adopters at the COP16 biodiversity summit in October.
DATA FACILITY PROGRESSING
Next, the TNFD is moving ahead with developing a nature data facility in the next few months with funding from the UK and German governments, and support from a G20 sustainable finance working group, Goldner said.
“One of our key signature initiatives is going to be the nature data facility initiative. Because we think advancing that is going to be a huge step forward for improving both the quality and the accessibility of data.”
“Our hope is to go back to that [G20] group later this year with a blueprint on how the nature data facility can come together and be operationalised.”
Last August, a TNFD study called for a global nature-related data facility accessible to the public to support governments, businesses, and civil society stakeholders in drawing up policies, setting targets, and making investments.
The taskforce is “no way limited” to any group of biodiversity footprinting metrics, Emily McKenzie, its technical director said in response to a question from Carbon Pulse.
TNFD will consider feedback from its discussion paper on footprints, published at COP28, by the end of March, she said.
By Sara Stefanini and Thomas Cox – sara@carbon-pulse.com
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