Investors call on companies to rapidly adopt new nature reporting framework

After two years of development, the Taskforce on Nature-related Financial Disclosures (TNFD) has released its final Framework, giving investors a commonly-accepted basis to compare companies' nature-related risks. The Framework was unveiled at UN Climate Week in New York.

The Responsible Investment Association Australasia (RIAA) has warmly welcomed the release of the Framework, describing it as a "monumental moment" for the responsible investment sector, and has issued a challenge to Australian and New Zealand companies to join the inaugural cohort of TNFD adopters to be announced in January.

"As Convenor of the official Consultation Group for the TNFD in Australia and Aotearoa New Zealand, RIAA is excited to be working with all sectors to facilitate its uptake. This will be crucial to making better business and investment decisions that protect and restore, rather than destroy, nature," said Estelle Parker, Executive Manager at RIAA.

TNFD was established to develop and deliver a risk management and disclosure framework for organisations to report on nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.

New global momentum to halt and reverse nature loss by 2030, as captured within the Kunming-Montreal Global Biodiversity Framework agreed in Montreal last December, presents a distinct opportunity and supports efforts to reach net zero emissions.

The TNFD recommendations build on the Task Force on Climate-related Financial Disclosures (TCFD) and are consistent with the International Sustainability Standards Board, Global Reporting Initiative and the Global Biodiversity Framework. Efforts to develop the TNFD's nature-risk Framework have been led by 34 individual Taskforce Members, representing financial institutions, businesses and market service providers, and supported by 1,200 forum institutions from 58 countries and territories. 

"The beauty of TNFD is that it provides investors with consistent, comparable information to inform decision-making and has sought to make information about something that is inherently complex accessible, bringing the language of science and finance together. This should sit alongside climate and financial information to help understand material risk," Estelle said.

RIAA has worked with Australian and New Zealand businesses and investors for the last two years to ensure a strong voice in the TNFD development from our region. 

The Framework incorporates the need for companies to describe how they engage with indigenous peoples, local communities and affected stakeholders. A key change from the previous beta version is that engagement with indigenous communities has been moved from TNFD's strategy pillar to the governance pillar, based on feedback TNFD received through its dialogue with indigenous people.

"Australian First Nations peoples and Aotearoa Māori are important stewards of much of our region's natural resources and play a key role in protecting our precious biodiversity," said Estelle. 

"Both governments recognise this, and the importance of biodiversity protection for social, cultural and economic outcomes. Incorporating engagement with indigenous peoples and local communities into the governance pillar will ensure strong oversight, including at the board level of companies," said Estelle.

The Australian Government has been supportive of TNFD, as a financial partner to the Taskforce, as well as funding capacity building workshops, which RIAA has delivered. RIAA is calling on the Australian Government to go further and move towards a rapid adoption of TNFD reporting.

"The Government understands investors' role in helping deliver on its sustainability objectives, and recently established Environment Information Australia. However, TNFD should form part of the Government's Sustainable Finance Agenda, as a comprehensive approach to harnessing capital," Estelle said.

"RIAA will also be engaging with the next Government of Aotearoa New Zealand to ensure that TNFD is well and truly part of its agenda. TNFD can help support the implementation of New Zealand's Biodiversity Strategy," said Estelle. 

Over 200 people from 130 organisations have joined RIAA's investment industry Nature Working Group, which is the hub for investors to discuss and learn about nature-related issues in Australasia.

"Nature's intricate interaction with investments can be challenging to navigate, but the structured approach of the TNFD promises to bring much-needed clarity to the risks and opportunities within investment programs. As a responsible investor, CareSuper wholeheartedly supports the launch of the TNFD," said Claire Molinari, RIAA Nature Working Group Co-Chair and Head of ESG at CareSuper.

Guy Williams, RIAA Nature Working Group Co-Chair, TNFD Taskforce Member and Executive Director at Pollination said, "Whilst it does seem like the launch of the TNFD Framework is the start of our journey, it is also important to reflect on all the work that has come before. For many of us the TNFD has helped to reflect on a foundation of existing awareness building, assessment and action across both climate and nature." 

Timothy King, CFA, CIO Melior Investment Management, and member of RIAA's Nature Working Group said, "Although healthy nature is essential to economic prosperity, food supply and human health, the natural world is disappearing at an unprecedented rate. The three pervasive features of nature - mobility, silence and invisibility - currently make it impossible for markets to internalise our use of nature's goods and services."

RIAA's research shows that nature is now a key focus for investors. In its Australian Responsible Investment Benchmark Report 2023 released yesterday, 54 percent of investment managers engage with investee companies on biodiversity or nature conservation issues; and natural capital is emerging as an increasingly popular positive screening theme, with 46 percent of survey respondents screening for biodiversity preservation and conservation. 

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BACKGROUND

The TNFD was established in 2020 to develop and deliver an integrated risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. The Taskforce has adopted an open innovation approach to its disclosure recommendations, with four Beta versions, and a number of official pilot projects prior to this release. 

RIAA is Convenor of the official Taskforce on Nature-related Financial Disclosures' (TNFD) Consultation Group for Australia and New Zealand, bringing together business, finance, public sector and civil society organisations to drive engagement in nature-related business and finance issues and the future adoption of the global TNFD Framework. This leverages the existing work RIAA is leading including through its very active Nature Working Group, and partnerships with the Australian Department of Climate Change, Energy, the Environment and Water.

MEDIA CONTACT           

Ruth Thomas
PR consultant, ruth@changemakersmedia.com.au, +61450656491 

Ada Tso
Marketing & Communications Manager, RIAA, ada@responsibleinvestment.org, +61481308718