Nature-related financial risks group launches draft guidance

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LONDON (Reuters) – A group representing institutions with $18.3 trillion in assets under management on Tuesday published a draft framework on how to seize the opportunities and head off the risks linked to the natural world.

The Taskforce on Nature-related Financial Disclosures said it would be seeking industry input over the next 18 months to improve on the draft version before releasing recommendations in the third quarter of 2023.

It said it was a first attempt to embed in financial decision-making risk and opportunity analysis linked to nature as climate change leads to issues such as a decline in the number of pollinators needed for crop production, a degradation of soil quality and a reduction in marine life.

The guidance is closely aligned to the guidance of the Task Force on Climate-related Financial Disclosures, which was set up in 2015 to strive for industry-wide consistency in climate-related financial risk disclosure.

“Building an improved understanding of nature and nature-related risks and opportunities is a critical enabler of better corporate strategy, better capital allocation decisions, better governance, and better risk management and disclosure practices,” TNFD co-Chair David Craig said.

“With climate change and nature-related impacts and risks increasing, it is essential companies incorporate natural assets into their strategic planning and risk management if they are going to succeed.”

The TNFD said it was speaking with standards-setting bodies and regulators to ensure it is in line with sustainability reporting standards at the national, regional and global level, as they are developed.

The TNFD Taskforce consists of 34 people from financial institutions, businesses, and market service providers with assets under management of $18.3 trillion and operations in over 180 countries, it said.