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Adoption of nature-related corporate reporting increases 30 per cent since January, as 96 firms confirm plans to follow recommendations from the Taskforce on Nature-related Financial Disclosures
The Taskforce on Nature-related Financial Disclosures (TNFD) has today announced a 30 per cent increase in adoption of its corporate reporting recommendations since January after 96 firms signalled their intention to adhere to its nature-related disclosure framework.
The update, revealed at London Climate Action Week (LCAW) alongside the launch of a new a suite of sector-specific guidance from companies looking to report on nature-related risks and opportunities, means 416 firms have now committed to disclose material nature-related issues to investors and stakeholders based on the taskforce's recommendations.
Spanning more than 50 jurisdictions and 62 of the 77 Sustainable Industry Classification System sectors, the publicly listed companies represent in excess of $6tr in market value - a 50 per cent increase since the TNFD's announcement of the first wave of early adopters in January.
The update earlier this year saw more than 320 companies, financial institutions, and other organisations - including high profile companies such as the London Stock Exchange, BBC, OVO, and Drax - confirm they will disclose their impacts and dependencies on nature using the TNFD's framework.
Notable new adopters announced this week include financial institutions LGIM, Generation Investment Management, and MUFG Asset Management, as well as Volvo, Ricoh, China Mengniu Dairy and the Spanish sustainable infrastructure firm Acciona.
As such, 114 financial institutions are now working to report in line with TNFD guidelines, representing $15.9 trillion in assets under management and including a quarter of the world's largest banks.
The latest cohort have signalled their intention to begin adopting TNFD recommendations and publishing aligned disclosures as part of their annual corporate reporting for financial year 2024 or 2025.
"The ongoing uptake of the TNFD's recommendations is further evidence that the mindset in business and finance is quickly shifting to a recognition that accelerating nature loss is imposing costs and risks on society as a whole as well as to individual business models and capital portfolios," said David Craig, co-chair of the TNFD.
"Voluntary uptake now of the TNFD recommendations is the best way to meet these shifting expectations and the best way to meet new regulatory requirements such as CSRD. We are delighted that organisations globally are also using TNFD to prepare for the forthcoming expansion of the global sustainability reporting baseline now that the ISSB has commenced its important work on nature building on the recommendations of the Taskforce".
The Taskforce also announced the launch of its first set of Additional Sector Guidance covering eight real economy sectors and Additional Guidance for Financial Institutions.
Sector guidance - which has been developed following 18-months of engagement with stakeholders - includes recommended metrics for nature-related issues across value chains for the aquaculture, biotechnology and pharmaceuticals, chemicals, electric utilities and power generation, food and agriculture, forestry and paper, metals and mining, and oil and gas industries.
Additional Guidance for Financial Institutions also released today includes guidance on TNFD recommended disclosures and metrics for banks, insurance companies, asset managers and owners, and development finance institutions.
News of increasing TNFD adoption and the launch of sector guidance coincides with the release of fresh figures from NatureMetrics suggesting that while further commitment to the framework represents "positive movement", the majority of companies are not yet prepared to report on their nature-related impacts.
According to figures from the impact management firm's Nature Maturity Tool, 86 per cent of respondents scored less than three out of five for 'nature maturity', indicating a poor level of current understanding and readiness for improved reporting. Moreover, it claimed 77 per cent are not currently committed to nature-related disclosure, or only have a basic level of nature disclosure, while around half have no clear roadmap to deliver nature-related commitments within a specified timeframe.
NatureMetrics also claimed that 43 per cent of firms do not currently collect data on the nature-related impacts of their business activities, while half do not currently collect data on the nature-related dependencies.
"We should be under no illusion that this movement towards nature-positive outcomes is still in its nascent stage," said Pippa Howard, chief nature strategist at NatureMetrics. "Many of these organisations will be used to reporting on climate impact, but nature is inherently more complex, and will require a sophisticated approach to effectively monitor biodiversity impact through their supply chains.
"Our data suggests that while businesses want to improve, their activity does not yet match these ambitions. Ultimately, they need more support when it comes to understanding their nature impact and dependencies, making nature-related disclosure, and taking action - as well as a push in the right direction from regulation."
However, recent analysis from Morningstar Sustainalytics' Biodiversity and Natural Capital Stewardship Program claimed firms in Europe and Asia-Pacific are currently leading the way towards more TNFD-aligned disclosure.
It also suggested the top three reasons companies have yet to commit to TNFD-aligned reporting include issues with data quality and availability, prioritising mandatory reporting first, and assessing the TNFD's relationship to other nature-related frameworks and standards such as the European Sustainability Reporting Standards.
"With just six years left to achieve global biodiversity targets, initiating action now and refining processes along the way is crucial," said Gayaneh Shahbazian, stewardship engagement manager at Morningstar Sustainalytics. "Collating and disclosing nature-related data will offer organisations a clearer understanding of the challenges and enable transformative actions.
"In turn, this will empower financial institutions to make informed investment decisions that will shift financial flows away from activities that harm nature and toward those that can contribute to halting and reversing nature loss."
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