TNFD: Leading the charge in the corporate battle for nature

Battles

The battle to solve a global nature crisis requires a clear vision of the opponent: humankind is one option, though indirectly it’s a combination of climate change, pollution, destruction of habitats, overexploitation of natural resources, and invasive alien species.

Reading through the 1,000-plus pages of Taskforce on Nature-related Financial Disclosures (TNFD) guidance that came out in September was a minor battle in itself. The release marks the culmination of two years of open innovation. Found within the TNFD, however, are ample weapons that could be brandished as we go into battle.

Corporations and financial institutions all have a part to play. While this is currently on a voluntary basis, that’s just a matter of time, especially for those with more than 500 employees and an annual turnover of greater than £500 million. Training begins at 20:23 sharp with some light stretching of metaphors followed by four weeks of mental exertion, including daily tests on TNFD’s glossary terms.

There will be a short break over the festive period, and then we’ll have just six years to reach the Global Biodiversity Framework (GBF) targets for 2030. The aim now is to hit targets of any description, and so GBF Target 15 to, “Regularly monitor, assess, and transparently disclose their risks, dependencies and impacts on biodiversity, including with requirements for all large as well as transnational companies and financial institutions along their operations, supply and value chains, and portfolios” will be locked-in.

Armed with the TNFD’s getting started guidance (digital version; let’s not waste paper), businesses must quickly take the first seven recommended steps. Once the fundamentals of nature are better understood and the business case is made, they will take a LEAP. Those following the taskforce’s LEAP approach will be able to:

Locate their interface with nature;

Evaluate their dependencies and impacts on nature;

Assess their nature-related risks and opportunities; and

Prepare to respond to nature-related risks and opportunities and report on their material nature-related issues.

At some point during the LEAP, and in truth this will be the first time that victory seems remotely plausible, they should begin to realise the difference between enemy and ally is an illusion.

Responsibilities

Corporations and financial institutions are extraordinary inventions. ‘Shareholder primacy’ is an invention of the more ordinary variety, altogether too simplistic for our time of interconnected nature, climate, inequality, and other crises. Short-term financial imperatives and the exclusion of nature from traditional economic models mean that our planet’s life support systems have essentially been ignored by corporations. Political expediency means that our leaders cannot always lead.

Partha Dasgupta and colleagues explore these issues persuasively, pointing out that nature’s attributes of mobility, silence and invisibility have profound economic implications. To quote just a bit of Professor Dasgupta’s inspiring preface: “The soils are a seat of a bewildering number of processes with all three attributes. Taken together the attributes are the reason it is not possible to trace very many of the harms inflicted on nature (and by extension, on humanity too) to those who are responsible. Just who is responsible for a particular harm is often neither observable nor verifiable.” According to Professor Dasgupta, hope for nature rests in humanity’s collective ability to ‘make the conscious decision to change paths’, including rethinking measures of economic success and systems of finance.

The TNFD can help us make nature observable, for both impacts and dependencies (though it’s generally trickier to connect the latter with business risks). The TNFD can help us understand responsibilities across corporations’ value chains and across financial institutions’ portfolios. The TNFD can help us to change paths.

Over the next couple of years, we’ll see many organisations test the TNFD and most will do it badly. Implementing the TNFD badly now as a conscious decision to better integrate nature into future corporate governance and strategy is commendable; we need more case studies of glorious failure to collectively improve.

Implementing the TNFD badly now as a conscious decision to greenwash is reprehensible, and misleading public statements about nature can be subject to litigation. It is not always easy to decipher greenwashing, but it’s considerably easier than it was a year or so ago, in large part because of the TNFD and similar initiatives like the Science Based Targets Network.

Those with a voice in the Board Room have immense influence to help solve the global crisis: nature is very likely a material ESG impact issue (and a material risk issue) for your organisation even if in the past it’s felt too abstract to be deemed as such. Shareholders, employees, and consumers also have ample influence to contribute to solutions, and humanity can push for much better.

As David Milch says, every man’s entitled to hope and I hope the TNFD, despite its flaws, will be vital in aiding nature. Failing that, humankind risks losing the battle before genuinely acknowledging it exists.