Interested? Contact us now
In order to contact us please fill the form on the right or directly email us at the address below
sales@senecaesg.com
by
Alexander Olding
- September 27, 2023
Recent reports from the World Wildlife Fund (WWF) and Intergovernmental Panel for Climate Change (IPCC) reveal alarming statistics on global environmental degradation and the urgent challenge of limiting global warming to 1.5 degrees Celsius. It is certain that failing to keep temperatures below the threshold will certainly make climate change the primary driver of biodiversity loss in the near future. Uncontrolled temperature increases will lead to anthropogenic consequences, such as mass northward migration due to the expanding Sahel region in Sub-Saharan Africa, irreversible environmental degradation in Central and South America leaving nutrient rich lands depleted and the encroachment of urbanization into Southeast Asian virgin forests for resource access and inward protection from rising-sea levels. These early signs of the effects of global warming foreshadow what could become the new norm in the coming decades. [1]
In response to these warnings, the 15th Conference of Parties (COP) held in December 2022, introduced the Global Biodiversity Framework (GBF). This framework requires all 196 signatory nations to commit to halting biodiversity loss by protecting 30% of terrestrial and marine environments by 2030 through 23 action-oriented global targets. The implementation of these targets should align with the Convention on Biological Diversity (CBD), relevant obligations and other key regulatory standards such as the recently introduced Science-Based Nature Targets (SBTN) and the Taskforce for Nature-Related Financial Disclosures (TNFD) which builds off the existing Taskforce for Climate-Related Financial Disclosures (TCFD). To bridge limited capacity and business resources, the GBF is also committing to resourcing and financing incentives for eligible organizations to tackle climate change and biodiversity loss. [2]
Australia’s Role in the TNFD and SBTN
For example, Australia, a growing market in APAC (Asia Pacific) is a country that has been heavily impacted by nature-related risks and has thus played a significant contributory role in the development of TNFD. Australia’s exposure to volatile climate-related risks has also seen action taken more recently by its federal governments release of its second Consultation Paper on Climate-Related Financial Disclosures outlining the proposed design of its first-ever climate reporting regime expected to commence for entities from 2024-2025. It’s phased in approach will intend to implement standardized, internationally aligned reporting requirements and is a first step in several responses by the APAC nation to taking to tackling the climate and biodiversity crisis. [3]
In Australia, biodiversity conservation operates at both federal and state/territory levels. States and territories focus on strategies like eco-tourism, biodiversity carbon offsets, and ecosystem restoration. Meanwhile, the Australian Government’s Department of Climate Change, Energy, the Environment, and Water (DCCEEW) has initiated a Nature Positive Plan (NPP) to address challenges identified in their 2021 State of The Environment Report. This plan aligns closely with the TNFD in terms of target setting but could be improved with mutual alignment with SBTN which is designed to improve target setting, monitoring and evaluation of nature-related risks and opportunities.
Science-Based Targets for Nature (SBTN)
The release of the SBTN reporting guidance in May 2023 is a significant move forward for organizations and cities committed to combatting the global degradation of nature. The reporting guidance disclosure prioritizes environmental impacts on freshwater quality and quantity, as well as land targets for safeguarding terrestrial and marine environments. Otherwise recognized as the Science Based Targets Initiative (SBTi), the targets aim to offer positive outcomes and mutual benefits for people and nature. [5] While the SBTN and SBTi are separate, the SBTN seeks to expand the coverage of the SBTi, which is primarily climate-related and focused on decarbonization initiatives. The goal is to include the setting of targets for nature, biodiversity, and climate too.
It is expected in late 2023 that the SBTi will release its own corporate manual guidance to support alongside its own Net Zero Standard, companies who wish to implement technical methods effectively and efficiently. Further access to resources and stakeholder engagement guidance will help facilitate better decision-making and ensure alignment with the Taskforce on Nature-Related Financial Disclosures (TNFD). [5]
Taskforce on Nature-Related Financial Disclosures (TNFD)
Being the new framework for ESG-related risks, the TNFD is an international initiative that builds off the reporting guidance by the Taskforce on Climate-Related Financial Disclosures (TCFD). Both nature and environmental risks, encompassing biodiversity loss and ecosystem degradation, are distinct yet interconnected with climate risk hence the significance of ensuring global temperatures do not exceed 1.5 degrees Celsius.
Developed with the support of a broad range of stakeholders, including leading businesses, policymakers, knowledge partners and others, the TNFD framework provides an integrated risk and opportunity assessment method known as the LEAP approach for Corporates and Financial Institutions to assess monitor, disclose, and report on nature-related risks, dependencies, impacts and opportunities. The framework creates the perfect opportunity for business leaders to incorporate nature-related risk assessments and business management prospects into their financial and business decisions. [6] [7]
Most importantly, however, the TNFD Recommendations are also aligned with the requirement of Target 15 of the GBF for corporate reporting which requires the disclosure of nature-related risks, impacts, and dependencies. It is also important to mention the TNFD aligns closely not only with TCFD but also remains consistent with the IFRS S1 and S2 global sustainability standards developed by ISSB, the impact materiality approach used by the Global Reporting Initiative (GRI), and the new European Sustainability Reporting Standards (ESRS) which underpins the Corporate Sustainability Reporting Directive (CSRD) of the European Union (EU) expected to go live in January 2024. [8] [9]
Overall, the consolidation of nature-related frameworks such as the SBTN and TNFD, along with the GBF, represents a crucial step in mitigating the impacts to nature and biodiversity. These frameworks are designed with interoperability in mind and work closely to provide a standardized approach for businesses, investors, and governments with the necessary tools and information to address several of the challenging nature and climate-related risks outlined by the IPCC and WWF.
Given the interconnectedness of terrestrial and marine environments and the potential impact of nature-related risks on various stakeholders, it’s crucial to collaboratively manage these ecosystems effectively and efficiently to achieve meaningful impact. The TNFD offers an enhanced nature-focused perspective, complemented by SBTN as a tool for establishing science-based targets. To further the objectives of the GBF and address environmental impacts on a large scale, businesses, investors, and governments must use these frameworks together to assess, disclose, and mitigate their impact on nature.
Sources
[1]https://assets.wwf.org.au/image/upload/f_pdf/file_living_planet_report_2022_final?_a=ATO2Bfg0
[4]https://www.dcceew.gov.au/sites/default/files/documents/nature-positive-plan.pdf
[5]https://green-business.ec.europa.eu/news/science-based-targets-nature-are-here-2023-05-26_en
[7]https://www.unepfi.org/themes/ecosystems/tnfd-final-recommendations/
[8]https://tnfd.global/wp-content/uploads/2023/09/FINAL-18-09-23-TNFD-final-recommendations-release.pdf
Start Using The Seneca ESG Toolkit Today
Monitor ESG performance in portfolios, create your own ESG frameworks, and make better informed business decisions.
