An additional 96 organisations have pledged to adopt recommendations on nature-related financial disclosures within the Taskforce on Nature-related Financial Disclosures (TNFD) framework, bringing the total to 416 adopters with over $6 trillion in market capitalisation.
The latest adopters of the TNFD recommendations, disclosed on Friday on the sidelines of the ongoing London Climate Action Week, joined the first batch of 320 companies announced in January, and include listed companies and industries based in 29 developed and emerging economies.
As many as 114 financial institutions, representing $15.9 trillion in assets under management, have now committed to disclosing their nature-related impacts and disclosures under the TNFD, the task force said in a statement.
“The ongoing uptake of the TNFD’s recommendations is further evidence that the mindset in business and finance is quickly shifting to a recognition that accelerating nature loss is imposing costs and risks on society as a whole as well as to individual business models and capital portfolios,” said David Craig, co-chair of the TNFD.
Among the new adopters are financial institutions LGIM, MUFG Asset Management, and Los Angeles Capital Management, as well as major companies spanning sectors ranging from food and automobiles to metals and mining.
These include Swedish car maker Volvo, Japanese electronics company Ricoh, Spanish construction firm Acciona, and Chinese dairy products manufacturer Mengniu, which recently became the first company in the industry to release its nature-related information disclosure on risks and impacts based on the TNFD recommendations.
Other big names are Indian aluminium and copper firm Hindalco Industries, Danish jewellery manufacturer Pandora, Japanese real estate developer Nomura Real Estate Holdings, and UK-headquartered investment manager Generation Investment Management.
“To achieve a world which protects nature and preserves a habitable climate we must drive the growth of sustainable investing and expand what capital values,” said David Blood, senior partner at Generation Investment Management.
“We believe the TNFD recommendations and nature-related disclosures will help create the enabling conditions for investors and capital to achieve sustainability outcomes and impact.”
JAPAN LEADS THE WAY
Geographically, Japanese companies and financial institutions made up the bulk of new adopters with 28 signatories, followed by British and Taiwanese organisations with 12 and six, respectively.
Approximately 12% of the second wave of adopters are based in Europe, where the EU’s new Corporate Sustainability Reporting Directive (CSRD) will require over 50,000 organisations to report on their environmental, social, and governance (ESG) practices from 2025.
“Voluntary uptake now of the TNFD recommendations is the best way … to meet new regulatory requirements such as CSRD,” said Craig.
By joining the TNFD, 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 task force launched last September.
IMPROVING ALIGNMENT
The recommendations are designed to help achieve specific targets of the Kunming-Montreal Global Biodiversity Framework, which urges businesses and financial institutions to regularly monitor, assess, and disclose their risks, dependencies, and impacts.
As well, they are in line with separate reporting frameworks, such as the International Sustainability Standards Board (ISSB), which recently announced it will include biodiversity research in its priorities, paving the way for potential new requirements on nature for investors.
“We are delighted that organisations globally are also using TNFD to prepare for the forthcoming expansion of the global sustainability reporting baseline now that the ISSB has commenced its important work on nature building on the recommendations of the task force,” said Craig.
The TNFD also released a suite of guidance to support reporting by companies across eight sectors – aquaculture, biotechnology and pharmaceuticals, chemicals, electric utilities and power generators, food and agriculture, forestry and paper, metals and mining, and oil and gas.
Separate guidance was released to steer financial institutions in implementing the TNFD recommendations, including specific metrics for banks, insurance companies, asset managers and owners, and development finance institutions.
Under the TNFD, financial institutions are required to look at where they invest and assess whether this affects sensitive locations when it comes to biodiversity, though they’ve often cited the lack of data on investees’ nature-related impacts as hampering their efforts.
While the guidance recognises that this lack of data makes it more complex for financial institutions to assess and disclose the dependencies and impacts on nature, it urges them to rely on external data providers to overcome this issue.
As nature-related disclosures gain traction among companies worldwide, the task force expects that greater amount of better quality data and analytics will become available over time.
By Sergio Colombo – sergio@carbon-pulse.com
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