Joy Macknight

The “other COP” is tackling biodiversity loss and will be attempting to hammer out an agreement on a new set of goals for nature over the next decade.

While all eyes were on the UN’s Climate Change Conference, or COP27, in Sharm el-Sheik, Egypt earlier this month, another COP is on the horizon and could prove to be just as important.

The UN Biodiversity Conference (COP15), being held in Montreal, Canada from December 7–19, will see 195 countries adopt the Post-2020 Global Biodiversity Framework, which aims to protect and restore biodiversity and ecosystems, as well as establish sustainable management practices.

“We are seeing nature-related risks materialising and being relevant to business, finance and society everywhere,” said Tony Goldner, executive director, Taskforce on Nature-related Financial Disclosures (TNFD), which is defining a risk management framework for nature. “And while everyone in business and finance is very focused on climate, in the past 12 months the penny has dropped that climate and nature have to go together. We simply won’t get to net-zero [emissions] if we’re not also making nature-positive the heart of those net-zero plans.”

He pointed to the fact that there will be more non-governmental delegates at the COP15 conference than government delegates as a sign of the growing interest.

Mr Goldner was speaking ahead of COP15 during a webinar to launch version three of the TNFD’s beta framework for nature-related risk management and disclosures. The taskforce’s aim is to provide the market with a framework that helps to shift the flow of global capital to match nature-positive outcomes. “And by doing that, it’s also about making business and finance more resilient to nature-related risk,” he added.

But there is still more advice needed around metrics and targets. “This whole agenda is completely new to many companies,” he said. “They need a lot of support and guidance on how to bring nature into their existing enterprise portfolio risk management process.”

Not wanting to add to the “alphabet soup” of standards, TNFD is aligning with the Task Force on Climate-Related Financial Disclosures framework, to drive more standardisation and alignment. “Our job is to pull all of that together into a coherent framework in relation to nature-related risk reporting,” Mr Goldner said.

In the third iteration of its beta framework, the TNFD has broadened the disclosure recommendations beyond risks and opportunities to incorporate dependencies and impacts on nature. It has proposed new disclosure recommendations related to supply chain traceability, as well as promoting a flexible approach to applying the framework to meet a wide range of different market participants’ needs. In addition, it has drafted guidance on target-setting developed with the Science Based Targets Network and draft disclosure guidance for financial institutions.

The TNFD has also published two discussion papers on scenarios and societal dimensions of nature-related risk management and disclosure, including considerations around the just transition debates and human rights. It is soliciting further feedback from market participants and other stakeholders on these aspects of the framework.

“One thing that is really important is that we want the framework to reflect not just negative impacts on nature but also positive impacts, because our ultimate goal is to shift the flow of capital to nature-positive outcomes,” Mr Goldner said. “To do that, investors and lenders and companies need to know not just what to do less of, but where to put their money in terms of more positive investment opportunities and business models, such as the circular economy, regenerative agriculture, conservation and preservation.

“We think it’s important that [companies] should report on negative and positive impacts separately, not in net terms,” he added. “Because obviously there’s a risk that the negative impacts would get washed out, or investors wouldn’t actually have an appropriate level of transparency into the real impacts and dependencies that might be related to a particular company.”

The TNFD plans to include disclosure metrics in the final draft version of the framework due for release in March 2023. It plans to publish its final recommendations in September 2023.

Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight

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