Around one-fifth of companies approached during the latest round of Morningstar Sustainalytics’ stewardship engagement are ready to report in line with the Taskforce on Nature-related Financial Disclosures’ (TNFD) recommendations by 2025 or earlier, despite those disclosures only being finalised last September.
According to a blog post exploring the rise of TNFD reporting and nature-related disclosures, industry efforts such as the TNFD recommendations are shifting the momentum toward regulatory mandates. Additionally, the integration of Target 15 of the Global Biodiversity Framework into national strategies this year is expected to further amplify this trend, with the TNFD set to play an important role in facilitating this implementation by countries.
Drawing on insights gained from their stewardship engagement with 50 companies across the agricultural value chain, Morningstar Sustainalytics identified three key trends when examining the evolving landscape of nature-related disclosure.
Alongside the rapid adoption of TNFD reporting among leading companies, Morningstar Sustainalytics found that Europe and Asia-Pacific (APAC) are leading the way in TNFD-aligned disclosure within Sustainalytics’ engagement programme.
However, it was noted that these regions represent a small portion of Sustainalytics’ engagement, with three out of 14 companies from APAC and four out of 10 from Europe. In contrast, two out of 17 companies were from the US. According to the research, these regional disparities reflect the regulatory environments, market pressures and current regional priorities regarding sustainability in general.
The engagement also found that the top three reasons why companies have yet to commit to TNFD-aligned reporting include issues with data quality and availability, prioritising mandatory reporting first and assessing the TNFD’s relationship to other nature-related frameworks and standards such as the European Sustainability Reporting Standards.
Morningstar Sustainalytics’ stewardship engagement manager, Gayaneh Shahbazian said: “With just six years left to achieve global biodiversity targets, initiating action now and refining processes along the way is crucial. Collating and disclosing nature-related data will offer organisations a clearer understanding of the challenges and enable transformative actions.
“In turn, this will empower financial institutions to make informed investment decisions that will shift financial flows away from activities that harm nature and toward those that can contribute to halting and reversing nature loss.”
The research comes as London Climate Action Week kicks off from 24 June, with the TNFD are expected to announce the next cohort of adopters.
