The much-anticipated Taskforce on Nature-related Financial Disclosures (TNFD) has launched today, aiming to help businesses assess nature-related risks and opportunities.
First announced in July 2020, the TNFD of around 30 members has today announced the appointment of two co-chairs – David Craig, CEO of Refinitiv and group leader of data and analytics division at London Stock Exchange Group, and Elizabeth Maruma Mrema, executive secretary of the UN Convention on Biological Diversity – and committed to delivering a framework for reporting and acting on nature-related risks by 2023.
Much like the Taskforce on Climate-related Financial Disclosures (TCFD) on which it is based, the TNFD will consult a variety of stakeholders to create uniform but voluntary disclosures to help corporates, investors, lenders and insurance underwriters manage nature-related risks, such as new legal liabilities and systemic loss of soil fertility.
Maruma Mrema said: “Science and economists are clear: nature is too big to fail. The health of the ecosystems on which we, and our economies, depend is deteriorating more rapidly than ever. Over the next few years we will work with Taskforce members, and other stakeholders, to design a framework that can be impactful and ultimately practical to companies and financial institutions. We encourage a wide range of financial institutions and corporates to participate in the TNFD and to become early adopters of the TNFD framework when it launches in 2023.”
Craig added: “Without urgent action, ongoing loss to biodiversity poses unprecedented risks for business, both now and in the future. Better nature-related data that enables informed decision-making by financial institutions and companies is how we will solve the global ecological crisis. Financial disclosures are essential to a market-based solution to nature loss. A properly functioning, informed market will price in risks appropriately and be empowered to channel investments to more sustainable opportunities.”
In the latest ESG Clarity digital magazine, focused on biodiversity, many commentators welcomed the TNFD. Rathbone Greenbank Investments head of investments John David said he was “excited to see what will transpire” from the TNFD.
Vian Sharif, head of sustainability at FNZ, added: “Then TNFD is helping to define and bring nature to the fore by, not necessarily being prescriptive, saying what would constitute a disclosure, in the same way as the TCFD. TCFD has achieved its phenomenal success in terms of its traction. The TNFD aims to identify – in terms of disclosure – the things investors and the financial industry need to consider and understand. This will be a journey just like climate has been a journey, but we need it to move faster. That is possible because we’ve understood climate, so there’s a model there.”
Commenting on today’s announcement, Nicolette Bartlett, executive director at CDP, said: “We welcome today’s launch of the Taskforce on Nature-related Financial Disclosures, with the appointment of its co-chairs. The TNFD is an exciting opportunity for a unified global response to the crisis of nature loss, which CDP is supporting.
“Private sector transparency and reporting, as well as levels of action and ambition, have up until now lagged far behind climate change. But standardised disclosure on nature impacts is critically important and now is the time for all companies to disclose their environmental data to build momentum for COP26 and drive a resilient green recovery from Covid-19.”