The Taskforce on Nature-related Financial Disclosures (TNFD) is spearheading the efforts to move reporting beyond climate and into nature as a whole. While entirely voluntary for the time being, the TNFD is designed to give investors information about how companies impact nature, and how companies are impacted by nature. A critical step in building this framework is the creation of sector-specific guidance. Nature, unlike climate, is more subjective and how a particular company interacts with nature depends largely on what that company does. These guidance documents were published in draft form back in December and have now been formally adopted. Ropes & Gray writes about the new guidance documents:
“Version 1.0 sector guidance covering the following “real economy” sectors was published. This guidance previously was published in draft for public consultation and feedback.
· Aquaculture
· Biotechnology and Pharmaceuticals
· Chemicals
· Electric Utilities and Power Generators
· Food and Agriculture
· Forestry and Paper
· Metals and Mining
· Oil and Gas
Version 2.0 guidance also was published for financial institutions. The Version 1.0 guidance was published last September. The financial institutions guidance includes guidance and recommended metrics for banks, re/insurance companies, asset managers and asset owners and development finance institutions.
Lastly, sector-agnostic value chain guidance also was released (Version 1.0).”
We are now seeing mandatory climate disclosures playing out on the world stage; these too were once voluntary. Whether the TNFD and nature-related financial disclosures generally will see wide adoption is speculative at this point, but possible. In the meantime, for those reporting voluntarily, the sector guidance documents are sure to provide some clarity.
Our members can learn more about the TNFD here.
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