The UK should become the first G20 country to mandate financial disclosures on nature to propel widespread adoption by the private sector, according to an influential lobby group.
The call by the Aldersgate Group, which includes prominent businesses, professional institutes and academics, follows last week’s announcement at Davos that 320 companies and institutions have registered as early adopters of the Taskforce on Nature-related Financial Disclosures (TNFD) framework. The cohort of early adopters has $14 trillion in assets under management.
Businesses have a strong appetite to start producing TNFD-aligned disclosures, but barriers such as low board level understanding of nature-related risks, organisational capacity and lack of access to data are inhibiting progress, the group argues. While 91% of financial institutions have board-level oversight of climate change issues, only 32% supervise their impact on forests or water.
While a methodology for calculating carbon emissions is fairly developed, it adds, assessing firms’ biodiversity footprint is “inherently more challenging” with no commonly agreed metric for quantifying nature-related impacts.
It calls on the government to set out a phased roadmap towards implementing mandatory disclosures, introduce policy to build businesses’ capacity and skills, and champion biodiversity data-sharing internationally.
This would generate board buy-in by company boards, Aldersgate says, and should be accompanied by the government and regulators working closely with professional bodies and publishing guidance.
Executive director Rachel Solomon Williams welcomed the pledge by businesses and financial institutions to disclosing their impact on nature.
“This important step towards understanding how human activity influences the natural world will provide reliable data that can shape future policy measures,” she added. “To maximise effectiveness, the government must now look to provide support and guidance to build capacity within businesses, with a view to making disclosures mandatory through a phased plan in the future.”
