Companies are undergoing a profound transformation in their approach to Environmental, Social, and Governance (ESG) strategies. This evolution is driven by the growing importance of nature-related factors in response to regulatory changes aimed at curbing biodiversity loss and mitigating nature risks. The recent launch of the Taskforce on Nature-related Financial Disclosures (TNFD) has underscored both the challenges and opportunities in this area.
A butterfly (Polyommatus), a bee and a shieldbug (Carpocoris fuscispinus) on a yellow flower (Rudbeckia).
Recent research has solidified the connection between environmental crises and the loss of biodiversity. A study by the World Economic Forum revealed that over half of the global GDP, approximately $44 trillion, relies significantly on nature. This realisation has spurred policymakers and investors into action as they recognise the need to address the decline in biodiversity.
Several significant policy developments have played a pivotal role in building momentum to mitigate biodiversity loss:
- Global Biodiversity Framework: In December 2022, a historic milestone was reached with the signing of the Global Biodiversity Framework at COP15. This framework includes a target for corporate disclosure regarding biodiversity risks, dependencies, and impacts.
Read more: 5 ways businesses can implement the new Global Biodiversity Framework
- EU's European Sustainability Reporting Standards (ESRS): These standards now incorporate a biodiversity and ecosystems standard, compelling companies to disclose their nature-related impacts, risks, and opportunities based on materiality assessments.
- Sustainable Finance Disclosure Regulation (SFDR): Mandating financial market participants to disclose activities negatively impacting biodiversity-sensitive areas, SFDR is another crucial policy driving corporate responsibility.
On 18 September 2023, the TNFD released its final set of disclosure recommendations, providing a comprehensive framework for companies to report on nature-related risks and opportunities. Investors, too, have recognised the fundamental importance of nature risks in their investment decisions.
Investor coalitions, such as Nature Action 100, have emerged to advocate for nature-conscious investment strategies. Large investment managers, like Norges Bank Investment Management and BlackRock, have integrated nature-related considerations into their engagement strategies, especially with companies that have substantial exposure to nature-related risks.
Read more: Global investors unite to combat biodiversity loss, mobilising $23.6 trillion
The ESG100 report by Position Green for 2023 analysed the ESG reporting of Nordic countries' 100 largest listed companies. It revealed that 46% of these companies already disclose policies or commitments related to biodiversity or nature, while 69% have climate-related policies in place.
However, the depth and ambition of these nature-based commitments vary significantly. Only 29% of these companies report on their impacts on nature or biodiversity, 19% disclose nature-related targets, and a mere 1% disclose the financial implications of nature-related or biodiversity risks and opportunities.
The launch of the TNFD marks a pivotal moment in the corporate world's shift towards embracing nature in their ESG agendas. The framework takes an integrated approach and aligns with existing standards, offering a roadmap for organisations to integrate nature into their strategies and reporting. As nature's importance continues to grow, companies must prepare for TNFD disclosures, leveraging existing data and tackling the challenge of measuring nature-related metrics. It's clear that nature is no longer on the periphery but firmly at the centre of the corporate ESG landscape, influencing decisions and strategies at every level.
DGB Group, in its pursuit of a greener and more sustainable future, is dedicated to a multifaceted approach that not only champions biodiversity restoration and ecosystem preservation but also plays a pivotal role in supporting ESG reporting. Our nature-based initiatives bring forth a plethora of advantages for the environment and the communities we engage with.
Our projects restore previously degraded lands, thereby contributing to reviving fragile ecosystems. They also serve as sanctuaries for diverse wildlife, enhancing overall biodiversity. In addition, our endeavours extend to the empowerment of local communities, with initiatives like energy-efficient cookstoves and comprehensive training programmes that enhance their wellbeing and promote sustainable practices.
At the heart of DGB's mission is our commitment to restoring nature through sustainable strategies, supporting the broader spectrum of ESG reporting. This harmonious combination of ecological restoration and ESG reporting is forging a future where nature thrives together with sustainability. We help companies, investors, governments, and individuals alike invest in nature and make a lasting positive impact, creating a brighter and more biodiverse world.
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