Financial institutions should not hide behind the lack of data and start looking immediately for external data providers to assess the impacts on nature across their value chain, a Taskforce on Nature-related Financial Disclosures (TNFD) executive has said.

Nathalie Borgeaud, TNFD lead of financial markets stakeholder engagement, called on financial institutions to take action during a conference on sustainable finance, hosted by the German Ministry for the Environment.

“If you are a financial institution and lend money to a company, you must understand where it has an impact on nature, and if there are some sensitive locations out there,” Borgeaud said.

“You’re encouraged to use these data providers, they’re evolving, they’re improving. And to anyone that tells me there is no data: ‘That’s not true’. I advise you to go shop for a data provider.”

Corporates adopting the TNFD framework to assess their risks and dependencies on nature are required to disclose the locations where biodiversity is being negatively impacted, including the upstream and downstream value chain.

Under the TNFD, financial institutions should therefore look at where they invest, and assess whether this impacts sensitive locations when it comes to biodiversity, Borgeaud said.

“This is something that needs to be followed, though it may be hard. Financial institutions can ask the companies they lend to, but it’s going to take a couple of years to gather all this information. So you’d better start the process.”

In the meantime, TNFD adopters should rely on external data providers to gather preliminary information, Borgeaud said.

In 2022, TNFD launched the Data Catalyst, comprised of almost 150 providers, in a bid to provide companies and organisations with nature-related data required to apply the framework.

“We’re helping them to put out what is fit for purpose. The purpose for financial institutions might not be the same as for a corporate. But we’re all working on that,” Borgeaud said.

TNFD-aligned disclosures are gathering traction, as 320 companies worldwide announced their commitment to adopting the recommendations within the next two years, the task force announced in mid-January at the annual World Economic Forum (WEF) meeting in Davos.

By Sergio Colombo – sergio@carbon-pulse.com

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