Why is TNFD needed now?
Currently, just 20% of financial companies measure their exposure to nature-related risk, compared to 85% who calculate climate risk. But, the momentum behind the TNFD Recommendations reflects increasing global recognition of the impacts and dependencies of business on nature.
Every business relies on nature for resources and ecosystem services such as water, food, minerals, climate regulation, crop pollination and water filtration, both in their direct operations and their supply chains. In fact, more than half of the world’s economic output – US$44tn of economic value generation (PDF) – is moderately or highly dependent on nature.
While every business is reliant on nature, every business can also have a negative impact on nature through their operations and supply chains, be this through pollution, the exploitation of natural resources, land use change or their contribution to climate change.
This can create a vicious circle where businesses’ impact on nature also creates real and immediate risks to their bottom line. These risks could be physical, for example, habitat disruption leading to supply chain disruption, or market-based, such as the growing expectations from consumers for corporates to take responsibility for their impact on nature, and to be ambitious in setting nature-related ambitions.
While sectors with relatively high and immediate burdens on nature – such as mining, energy and infrastructure – have taken significant strides in understanding and mitigating their impact, for many industries, nature is not yet prioritised in Environment, Social and Governance (ESG) strategies. This needs to change urgently in line with the planetary emergency we are facing, and the TNFD can play a key role in making this happen.