INSIGHT by Dr Rebecca Drury and Gemma James, Chronos Sustainability. Photo credit: Dr Rebecca Drury (left): private; Gemma James (right): PRI
That nature loss is a financially material risk is becoming universally accepted amongst investors and investor groups. Climate change and nature loss are intertwined, and net zero targets are unachievable without taking action to address both. As such, investors must – and are beginning to – consider nature loss a systemic risk alongside climate change.
Nature-related assessment is a critical first step in taking the urgent action necessary to halt and prevent nature loss, achieve net zero targets, and ultimately maintain a safe operating environment for society and the economy. While the challenges and limitations of data, tools and targets are evident, investors can ensure their investments have tangible outcomes for nature in 2024 and beyond.
The Taskforce for Nature-related Financial Disclosures (TNFD) is a science-based, collaboratively developed framework to enable business and financial institutions to identify, assess, act and report on their nature-related impacts and dependencies. It builds on and aligns with the Taskforce for Climate-related Financial Disclosures (TCFD).
Chronos Sustainability has been supporting financial institutions and companies with nature-based assessments using the TNFD framework. Here, we share five key learnings we can recommend from our experience so far.
〉Prioritise: Make this a manageable process by factoring in the capacity and timeframe available. It is better to start with a limited scope and extend this later, than to wait until there is more capacity available. For financial institutions, heatmapping by sector can help, especially for diverse portfolios.
〉Understand business locations or financed activities: Biodiversity impacts and dependencies are highly location dependent. Material biodiversity risks and opportunities may not always be linked to direct operations and are likely to extend throughout the value chain.
〉Progress with available data: The lack of adequate, readily available data should not prevent assessment. Where necessary, assessment can be progressed using proxies, potential impacts and dependencies, and available data, as long as assumptions and limitations are documented. Stakeholder engagement and interviews can also test or verify datasets. This can identify the most material impacts and dependencies requiring further attention and inform future data collection and management.
〉Build capacity: Identifying and interpreting data requires expert knowledge. However, awareness of biodiversity risks is low, and most organisations have limited resources assigned to the issue. Organisations will need to build in-house capacity and bring in external expertise, as needed.
〉Communicate: Nature-based assessment, even when limited in scope initially, can raise board-level awareness of nature-related risks and opportunities, supporting greater assignment of resources to their identification and management. It is possible to communicate the complexity of nature and of nature-related risks in a simple yet representative manner.
TNFD provides us with a framework for assessment and action which should be used widely. While there are challenges, it enables investors to make decisions that can both add value and make a substantive contribution to preventing and reversing nature loss.
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| brief bio
Dr Rebecca Drury, Senior Manager, Biodiversity and Nature. Rebecca supports the development and execution of Chronos’ biodiversity and nature-based programmes through providing technical and programme management support. Rebecca joined Chronos in June 2022 from Fauna & Flora International (FFI), where, as Head of Wildlife Trade, she led FFI’s Wildlife Trade Initiative which focuses on preventing illegal and unsustainable trade in wild species, with an emphasis on community-based approaches and integrating social dimensions into conservation practice. In previous roles, Rebecca focused on developing the institutional resilience of civil society organisations globally to deliver conservation impact. She has extensive experience of developing and delivering projects and partnerships across a range of landscapes.
Gemma Janes, Head of Biodiversity and Nature. During her career, Gemma has developed global expertise in biodiversity, water and environmental issues and has deep knowledge of investment research and decision-making. As Chronos’ lead for biodiversity and nature programmes, she is responsible for supporting clients to deliver nature-led engagement, research and intervention programmes. Gemma joined Chronos in early 2022 from the Principles for Responsible Investment (PRI) where, as Senior Lead and previously Head of Environmental Issues, she was responsible for overseeing investor initiatives, research and engagement on environmental themes including plastics, biodiversity and water. Prior to the PRI, Gemma worked for the International Council on Mining and Metals (ICMM), where she focussed on environmental and climate change issues.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
