Initiative launched to help financial sector address nature-related risks

The Taskforce on Nature-related Financial Disclosures (TNFD) has today been launched to support financial institutions and corporates in assessing and managing emerging risks and opportunities as the world looks to reverse biodiversity loss.

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The market-led initiative will help organisations report on their vulnerability to risks such as new legal liabilities related to nature, and systemic loss of soil fertility.

This will enable corporates, investors, lenders and insurance underwriters to shift finance towards firms and projects that protect and enhance nature, building on the success of the Taskforce on Climate-related Financial Disclosures (TCFD).

A full technical scoping document for the initiative was also published today, while a summary report providing an overview of how the TNFD will work will be released soon. 

This comes after research found that more than half of the world’s economic output is dependant on nature, and that nature-positive transitions could generate up to $10.1trn (£7.1trn) in annual business value and create 395 million jobs by 2030.

TNFD co-chair, David Craig, said: “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.”

The new framework will be tested and refined in 2022 before its launch and dissemination in 2023.

Preparatory work began in September 2020, supported by an Informal Working Group (IWG) and an Informal Technical Expert Group (ITEG), the latter co-chaired by Simon Zadek, chair of Finance for Biodiversity (F4B).

The TNFD will consist of approximately 30 members, with an equal representation of financial institutions, corporates and data/service providers, and will be informed by a diverse Stakeholder Group.

Zadek said: “After nine months of intense foundational work as co-chair of the ITEG, F4B is delighted to celebrate the start of TNFD’s important journey. 

“With the support of the global financial and business community, international policy makers including the G20 and G7, standard-setting bodies, the TCFD, and development finance institutions, TNFD can meet its aim of making a major contribution to aligning financial flows and the global economy with nature-positive outcomes.”

 

Image credit: iStock

Author: 

Chris Seekings is a reporter for TRANSFORM

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