Major financial institutions and multinational corporates have endorsed the launch of a new market-led Taskforce on Nature-related Financial Disclosures (TNFD), which will support business in assessing emerging nature-related risks and opportunities. More than half of the world’s economic output – US$44tn of economic value generation – is moderately or highly dependent on nature. The recorded extinction of 83% of wild mammals and 50% of plants therefore represents significant risk to corporate and financial stability. Action for nature-positive transitions could generate up to US$10.1 trillion in annual business value and create 395 million jobs by 2030.
A report titled ‘Nature in Scope’, published today, describes how the initiative will deliver a framework for organisations to report and act on evolving nature-related risks, in order to support a shift in global financial flows away from nature-negative outcomes and towards nature-positive outcomes. A complementary report also sets out the proposed technical scope for the TNFD.
Through an inclusive approach, the initiative aims to consult with a variety of stakeholders from all regions – to develop and build on voluntary, consistent disclosures to help corporates, investors, lenders and insurance underwriters manage nature-related risks, such as new legal liabilities and systemic loss of soil fertility.
In its first year, the TNFD aims to build upon the success of the Task Force on Climate-related Financial Disclosures (TCFD), which has become instrumental in mainstreaming the issue of climate-related financial risks. The TNFD’s framework for nature-related risks will complement the TCFD’s climate-related framework, to give companies and financial institutions a complete picture of their environmental risks. Through its framework, the TNFD will support organisations to report and act on both their nature-related risks. The framework will be tested and refined in 2022 before its launch and dissemination in 2023.
The initiative to bring together a Taskforce on Nature-related Financial Disclosures was first announced in July 2020. Kicking off its work in September 2020, an Informal Working Group, comprised of 74 Members across 24 countries – including financial institutions, corporates, governments, regulators, multilaterals, NGOs and consortiums – have worked to propose practical recommendations for the scope and workplan of the TNFD, which is released today. This informal group was ably co-chaired by market-leaders: Banorte, BNP Paribas and the Green Finance Institute.
Following the completion of this preparatory phase, two Co-Chairs of the TNFD have been announced: David Craig, CEO of Refinitiv and Group Leader of Data & Analytics Division at London Stock Exchange Group (LSEG), and Elizabeth Maruma Mrema, Executive Secretary of the United Nations Convention on Biological Diversity (CBD).
The Taskforce will consist of approximately 30 members, with an equal representation of financial institutions, corporates and data/service providers from developed and emerging markets. It will be informed by a diverse Stakeholder Group.
Commenting, Elizabeth Maruma Mrema, Co-Chair of the TNFD, 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.”
Fellow TNFD Co-Chair, David Craig, also commented: “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.”
Deputy Governor of the Banque de France, Sylvie Goulard, said: “For too long we took natural resources for inexhaustible and did not look at the consequences of human action on the planet. Climate change and the rapid loss of biodiversity invite us to transform our societies and economies, which means that finance needs to be transformed as well. The TNFD, a new global initiative, aims to give the finance sector a complete picture of environmental risks. The TNFD’s work on nature-related risks will be an important complement to the work already done on climate-related risks. Biodiversity is a systemic challenge and having a global platform for collaboration across private actors, international organisations, public authorities and NGOs is essential. The TNFD will support the development of more reliable and comparable nature-related data, which is critical to promote sustainable investments.”
Global Environment Facility CEO and Chairperson, Carlos Manuel Rodriguez, said: “Mainstreaming biodiversity into the financial sector is one of the prerequisites to reversing nature loss. The Global Environment Facility is a proud anchor investor in the TNFD and I have great expectations for this initiative. Helping companies, investors, and financial institutions to measure and address financial risks derived from biodiversity loss will help redirect financial flows into nature-positive investments. We need this kind of transparency to underwrite the changes the planet needs, both in the short and long-term.”
CEO of BNP Paribas, Jean-Laurent Bonnafé, said: “Collective action is needed to help protect our natural ecosystems and stop their degradation. BNP Paribas has already taken commitments to preserve biodiversity, but common and applicable standards are needed to leverage the power of finance for nature. The TNFD is key in convening market participants towards such standards.”
CEO of AXA Group, Thomas Buberl, said: “We view the biodiversity challenge as a natural extension of our climate efforts, since the two crises are interconnected. Having supported the TCFD since its launch, we know how strategic reporting frameworks can be; this is why we called for the creation of the TNFD in 2019. Today we are proud to support its launch, and it is our hope that the TNFD will develop the risks & opportunities framework that corporates and investors need to support nature-based solutions.”
The Minister for Pacific and the Environment at the Foreign, Commonwealth & Development Office (UK), Rt Hon Lord Goldsmith, said: “If we are to halt the destruction of the natural world, we urgently need financial decision making and investments to take account of nature. The launch of the Taskforce for Nature-related Financial Disclosures (TNFD) marks an important milestone in this process, building a framework to help lenders and investors make informed decisions that are aligned with climate and the natural environment. Its launch is also an important milestone in the delivery of the UK government’s Green Finance Strategy. We have supported this market-led initiative from its very inception and commend all the stakeholders involved in persevering against all odds, and putting in so much time and effort towards reaching this stage. We welcome the two excellent and committed co-chairs and look forward to building a successful, international, market-ready framework.”
MD and CEO, YES BANK, Prashant Kumar: “Incorporating nature-related risks into financial decisions is important to safeguard future investments and respond to the clarion call of protecting the natural ecosystems. Sustaining our current ambitions of growth and alleviating the damages caused to biodiversity, requires a better alignment of technology, investments, and policies with the needs of nature. TNFD will provide the much-needed framework to mitigate the risks and leverage the emerging opportunities arising out of the shared journey to restore planet’s once-rich natural capital. YES BANK is proud to be associated with TNFD and we continue our support to this global endeavor of mobilizing finance towards nature-positive outcomes.”
Head of Sustainability at H&M Group, Leyla Ertur: “Biodiversity and variety of life on earth is crucial to sustain healthy and functional ecosystems. It is only through collaborations that we can solve our global challenges within the loss of nature, and we believe that this joint taskforce on nature-related financial disclosure will play an important role for including biodiversity into our industry. We are happy to use our size and scale to transform our industry for the better.”
The Minister of Ecological Transition (France), Barbara Pompili, said: “The challenge of biodiversity and nature preservation is crucial. We need corporate and financial institutions to take their parts. Yet, we lack unified definitions, standards and metrics to acurately and thoroughly embrace nature preservation. The TNFD will constitute a. Important step to start properly addressing at global level biodiversity-related risks and impacts.”
Deputy Prime Minister and the Minister of Agriculture, Nature and Food Quality of the Kingdom of the Netherlands, Carola Schouten: “Recent reports (for example by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services) show the threats that nature and the global biodiversity face due to our current economic system. We have a responsibility towards future generations to leave them a healthy and habitable planet. Therefore, things need to change. I believe that the global framework that will be developed by the Taskforce Nature-related Financial Disclosures (TNFD), will accelerate the transition towards a nature-inclusive financial sector and thus society. The Netherlands is very well aware of the need for TNFD and will keep supporting it.”
Global Chairman & CEO, KPMG International, Bill Thomas: “Biodiversity loss and the destruction of the natural world can only be prevented if we all push for urgent and necessary changes. A critical step is ensuring that our financial markets drive sustainable growth. KPMG is committed to helping accelerate that transformation, and we fully endorse the critical role the TNFD will play in shaping a nature-positive future.”
Chief Sustainability Officer of Credit Suisse, Marisa Drew: “Our ability to protect and preserve the planet’s biodiversity is critical to its survival. We are proud to support the TNFD and the development of a framework that will guide companies to evaluate, operate and report on their impacts on nature while at the same time, supporting capital flows towards nature-positive outcomes.”
CEO of Wells Fargo Asset Management, Nico Marais: “As a global asset manager with clients and investments around the world, Wells Fargo Asset Management (WFAM) is aware of the increasing relevance of nature-related risks to both our economy and society – and the opportunities in addressing those risks. At WFAM, we strive to create thoughtful solutions and a future of which we can be proud. Therefore I’m excited that WFAM is participating in the TNFD’s efforts to develop a framework intended to support the assessment of nature-related financial risks, and to facilitate investors seeking sustainable solutions with ‘nature-positive’ outcomes.”
Vice President for Sustainable Development, World Bank, Juergen Voegele, said: “Biodiversity is a key development issue, with the loss of ecosystem services affecting poor countries the most. While public sector and financial regulators create the necessary enabling conditions for nature-smart action, private sector finance will be necessary to reverse biodiversity loss. The Taskforce on Nature-related Financial Disclosures has a vital role as it seeks to better integrate nature-related risks into decision-making, leading to greener, more resilient and inclusive development outcomes.”