A total of 39 financial institutions and private firms, 17 think tanks and 6 governments have formed an Informal Working Group (IWG) to establish a Task Force on Nature-related Financial Disclosures (TNFD).
The new TNFD is inspired by the lessons learned in the Task Force on Climate-related Disclosure (TFCD), and led by a coalition integrated by Global Canopy, the United Nations Development Program (UNDP), the Finance Initiative of the UN Environment Program (UNEP FI) and WWF. It has been created with the aim of create resilience in the global economy by redirecting flows of finance at scale towards nature-positive activities to allow nature and people flourish.
The initiative is supported by financial institutions such as AXA, BNP Paribas, DBS Bank, Rabobank, First Rand, Yes Bank, Storebrand, as well as the governments of the United Kingdom, France, the Netherlands and Switzerland. Ecoacsa is among the additional stakehokders that have come together to create the Informal Working Group (IWG) with the objective of scoping the mandate and governance of the TNFD.
Why a TNFD?
Nature cannot wait, while we devote efforts to solve the climate crisis. Despite their material influence on society and economies, nature-related risks and impacts are rarely measured or disclosed, and are largely excluded from corporate and financial decision-making, regulation and supervision.
The eventual outcome of the TFND is to make these risks and impacts visible and to increase the resilience of the global economy by reducing flows of finance that are negative for nature and people. At the same time, it seeks to increase funding that are positive, in alignement with the Paris Agreement, the Post2020 Biodiversity Goals and the Sustainable Development Goals.
In order to avoid risks and find new opportunities, members of the IWG will work over the next two years to solve the reporting needs, metrics and data of financial institutions, so that they can better understand their risks, dependencies and impacts on nature.
Throughout this period, it will be necessary for us to examine both the financial dependencies, impacts, transition and physical risks, not just on climate, but on nature´s assets and the ecosystem services provided to the business sector they invest in or lend to, which lost at scale could destabilise the economy.
Launch of the TNFD is planned for early 2021 and will be tasked with devivering a framework to guide nature-related financial disclosure by the end of 2022. Until then, the IWG is already scoping the mandate and governance to ensure that the initiative contributes to avoiding the systemic risk and instability for markets and the financial system at global scale that are already affecting countries, companies and financial institutions around the world experiencing the consequences of the dramatic loss of nature and biodiversity.
An informal Technical Expert Group will server at the direction of IWG to support the process and ensure a collaborative approach with other relevant initiatives. The TNFD partners are engaging with the Banks and Supervisors Network for Greening the Financial System (NGFS); the OECD and Multi Stakeholder Group on Business, Finance and Biodiversity, as well as the Natural Capital Coalition, Business for Nature and other organizations.
Biodiversity finance is the new frontier of green finance. Nature requires as much ambition and collective effort as it has been done for climate so far, and the private sector can play a crucial part in redirecting financial flows. We are convinced that the work of the Task Force on Nature-related Finance Disclosure or ‘TNFD‘ will accelerate the understanding of these issues and will ultimately lead to both a reduction in financial flows and economic activities that are harmful to biodiversity and a massive redirection of flows towards activities that are favorable to biodiversity.
Bérangère Abba, Secretary of State on Biodiversity of France
Habitat loss or degradation including deforestation that it is largely driven by the way we produce and consume food are rapidly undermining the natural systems on which our economies and societies rely on. Nature loss is a source of sytemic risk and instability for markets and the financial system but it is largely ignored in corporate and financial decision-making, regulation and supervision. Our economic behaviour has assumed the services that healthy natural systems provide, and on which our economies have been built, are infinitive. They aren´nt. We are pleased to welcome this collaboration with financial institutions, governments and other experts to establish the TNFD as a vehicle to swift finance away from destructive activities and toward a nature-positive economy
Margaret Kuhlow, Finance Practice Lead and Interim Conservation Director, WWF International
Changing flows of money from nature negative to nature positive is a fundamental ingredient in swifting global systems towards protecting and nurturing nature. Nature underpins world´s businesses. We desperately need nature —for air, water, food and for our health, inspiration, jobs, livelihoods, and for achieving the Sustainable Development Goals. Financial institutions and businesses have a critical key to protect nature. If we protect nature, it will pay us back with significant financial and material dividends.
Midori Paxton, Head of Ecosystems and Biodiversity, UNDP
An increasing number of financial institutions are stepping forward to address the twin crisis of climate change and loss of nature, and the strong apetite from the TNFD is further evidence of this momentum. Standarising nature-related disclosures will bring much needed efficiencies and transparency to financial markets.
Eric Usher, Head of UN Environment Program Finance Initiative
The launch of the Informal Working Group (IWG) for the TNFD is a significant step towards the goal of moving the global financial system from nature negative to nature positive. I look forward to working with the IWG members to shape and implement the Task Force that will help to make the transition possible.
Madeleine Ronquest, Head Environmental, Social and Climate Risk at FirstRand Group Enterprise Risk Management
Loss of nature is increasingly impacting business performance. Consumers, stakeholders and governments expect business to take actions which halt the loss of nature. WBCSD supports the launch of the TNFD which will help companies consistently and credibly assess, address and report their impacts and dependencies on nature.
Diana Holdorf, Managing Director & Senior Management Team, World Business Council for Sustainable Development
The creation of a TNFD is hugely important as it will lead to new ways of identigying, valuing and reporting on nature-related risks, as well as indentifying new economic opportunities to protect and restore natural world on which we depend, which is more pressin than ever.”
Andrew Mitchell, Founder and Senior Advisor to Global Canopy