Financial institutions from across the globe, including Schroders, Robeco, Nomura Asset Management, Mirova, Fidelity International, Federated Hermes and Candriam, are among the early adopters of the Taskforce for Nature-related Financial Disclosures’ (TNFD) reporting recommendations.
Announced at the World Economic Forum’s Davos conference, 320 organisations from over 46 countries – including over 100 financial institutions representing $14trn in assets under management – have committed to start making nature-related disclosures based on the TNFD recommendations published in September last year. This will form part of their annual corporate reporting for the financial years of 2023, 2024 and 2025.
The recommendations have been designed to enable the achievement of the global policy goals outlined in the Kumming-Montreal Global Biodiversity Framework, agreed to by 196 countries at the Convention on Biological Diversity COP15, held in Montreal in December 2022.
See also: – Empowering investors: TNFD in action
David Craig, co-chair of the TNFD, said: “This is a milestone moment for nature finance and for corporate reporting. As climate-related sustainability reporting goes mainstream through the new International Sustainability Standards Board (ISSB) standards and regulation in a growing number of countries, this is a clear signal that investors, lenders, insurers and companies are recognising that their business models and portfolios are highly dependent on both nature and climate and need to be treated as both strategic risks and investment opportunities.
“We are delighted to see such a strong, diverse and international group of companies and financial institutions step forward only four months after the release of our recommendations and look forward to even more stepping forward over the coming months.”
Vibrant data community ‘to bring down cost and complexity’
During a webinar in answer to a question from ESG Clarity, Emily McKenzie, technical director at the TNFD, said there are no plans to regularly change the top-level recommended disclosures, but that “what we are evaluating is the guidance and tools themselves”.
“Part of our ongoing role in the technical team is to support the taskforce in understanding how the data landscape evolves, both from a science perspective – for example, progressing on further alignment around indicators and metrics, particularly around areas in need of further consensus such as measuring the state of nature or invasive species – and from a data analytics providers perspective.
“We will continue to bring together hypothetical and real-world examples – including from early adopters – where companies and financial institutions are working through real management problems, strategy questions and reporting. We will then get stuck in to see if there are already data and analytics tools available to address these issues, or whether new innovations could be catalysed as a result of this learning.”
Tony Goldner, executive director of the TNFD, added: “A whole lot of new nature tech has spawned off the back of initiatives like the TNFD, and I think it’s fair to say that our work and the market momentum we’ve helped to create alongside the Science-based Targets Initiative has really stimulated a lot of very exciting innovation on the data side to create those solutions for market participants.
“There has been some concern about compliance cost, firstly on the climate side and now on the nature die. But we’re confident that this very vibrant ecosystem is going to help bring a lot of the cost and complexity of some of that down over the next couple of years.”
Reaction: ‘Take action now’
Biodiversity loss was a breakthrough topic last year within the asset management sector, after “what has been a long battle for many of us advocating for the issue”, according to Jan Erik Saugestad, CEO of Storebrand Asset Management, who became one of the early adopters of the TNFD reporting recommendations. But now, this issue is increasingly being understood to rank alongside climate change – and to be intrinsically linked to solving it – as areas of significant systemic risk for investors.
“We have already started to implement the TNFD methodology in our portfolios to better understand our nature-related risks and opportunities, and are committed to publishing our first TNFD disclosures from 2025 based on 2024 data,” continued Saugestad.
“We encourage businesses to take action now as it is only a matter of time before these recommendations become requirements as we are seeing with the Taskforce for Climate-related Financial Disclosures. The European Corporate Sustainability Reporting Directive (CSRD) for biodiversity and ecosystems will require similar disclosures from 2025, with an estimated 60,000 businesses affected globally.”
Andy Howard, Schroders’ global head of sustainable investments, commented: “The services nature provides underpin global economies and industries, but the UN estimates that close to $7trn is invested globally each year in activities that have a direct negative impact on nature.
“It is important that companies start articulating their risks, impacts and dependencies on nature, to help ensure nature-related risks can be identified and integrated in investment decisions. Companies are early in their journeys in understanding and disclosing nature-related issues, but progress needs to occur quickly and we are focusing on ensuring we are as prepared as possible. The TNFD framework provides a logical and comprehensive picture, which we are working toward.”
For Jenn-Hui Tan, chief sustainability officer at Fidelity International, the TNFD marks “an important milestone in helping to address nature loss”, providing organisations with a risk management and disclosure framework to facilitate clear and consistent disclosures on nature.
“As a forum member, we are supportive of the TNFD and actively participated in the development of the framework through our work with Finance for Biodiversity. We are pleased to announce our first TNFD report, covering the 2024 reporting year, will be available to investors in 2025.”
Carine Smith Ihenacho, chief governance and compliance officer at another early adopter, Norges Bank Investment Management, added: “Addressing nature-related financial risks has been a longstanding priority on our ownership agenda at Norges Bank IM. As active contributors to the TNFD, 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.”
The full list of the 320 organisations adopting TNFD recommendations can be found here.
