The industry-led initiative Taskforce on Nature-related Financial Disclosures (TNFD) aims to get financial decision making and investments take account of nature. H&M Group was part of an informal working group, contributing to the development of the initiative that was launched on 10 June, 2021.
Why another financial reporting framework?
According to World Economic Forum, more than half of global GDP is moderately or highly dependent on functioning ecosystems. At the same time, human activities are causing widespread decline of species and habitats; the vital pieces of the systems that economies and societies rely on.
The ongoing loss of biodiversity already poses risk to business and financial stability. The finance sector has an important role in redirecting capital from nature-negative to nature-positive outcomes. To do this, a framework that enables relevant and more sustainable financial decision-making is needed. This is what this new taskforce will create, says Magnus Emfel, Chief Economist at WWF Sweden and member of the partner group that initiated TNFD.
TNFD, supported by Global Canopy, UNDP, UNEP Finance Initiative and WWF, is set to present a standardized global reporting framework for companies and investors by 2023 that show their organizational risks, dependencies and impacts related to biodiversity and nature, and how these actors manage these issues.
The importance of engaging
Prior to the official launch of the TNFD in June 2021, H&M Group was part of an informal working group where 74 representatives from the private sector, policy makers and the financial sector contributed to shape the governance, scope and workplan for TNFD.
The roadmap developed by the informal working group will form the basis for the formal taskforce that was presented in summer 2021. Co-chaired by executives from London Stock Exchange and the UN Convention on Biodiversity, 30 taskforce members from finance and business will continue the work.
Moving forward, TNFD will be run by the formal taskforce, supported by a stakeholder group of which H&M Group will be part.
FAQ: How will TNFD work?
Companies will disclose financially relevant information about their nature-related risks and how they plan to deal with these risks, connected to their dependency and impact on nature. Investors and other financial actors can then use this as a tool for investment strategies and policy development. The framework also applies for investors, so they can submit their own data on nature-related risks in their financial portfolio.
The TNFD’s focus on nature-related risks is set to complement the already existing framework Taskforce on Climate-related Financial Disclosure’s (TCFD) framework, which today has become instrumental in mainstreaming the issue of climate-related financial risks. The two frameworks will enable companies and financial institutions to comprehensively assess their environmental risks and contributions to sustainable development.
Learn more and follow the process at www.tnfd.info.