In a significant development, BlackRock, HSBC and Swiss Re are among the companies who are seeking to create a risk management and disclosure framework aimed at channeling capital towards environmentally projects and away from ones which damage nature.
Earlier this year in June, a taskforce on Nature-related Financial Disclosures (TNFD) was launched to factor in losses from natural disasters which pose significant risks to corporate and financial stability.
On Thursday, TNFD said, senior executives from 35 companies will aim to create a draft framework which will have a launch date in early 2022.
The TNFD will be voluntary and aims to follow in the footsteps of the Taskforce on Climate-Related Financial Disclosures (TCFD), championed by United Nations climate envoy Mark Carney.
Incidentally, TCFDs are increasingly being made mandatory.
While TCFDs requires companies to disclose climate change related risks, many of which are linked to nature, including the impact of rising sea levels on factories located near the coast, TNFDs will go further in its scope, as in the impact of deforestation, water shortages, declining on bee numbers on whom plants depend for pollination, their potential impact on food producers; all of these affect a company’s share price.
Companies, including Nestle, Holcim, Citi and 200 other institutions have expressed interest in joining the TNFD Forum.
“The business and financial world’s race towards net zero emissions will only succeed if they race equally fast towards nature-positivity,” said TNFD Co-Chairs Elizabeth Mrema and David Craig in a statement.
Each Taskforce member would be part of one of five working groups focused on defining nature-related risks, assessing the available data, looking at current standards and metrics, developing the beta framework and pilot testing it.
“The financial rationale for managing nature-related risks is increasingly clear now, but the information for identifying and acting on the risks in practice is not easily available,” said Herry Cho, Head of Sustainability and Sustainable Finance, at Singapore Exchange.