Nature Risk Measurement Is Evolving
By Maxine Nelson, Senior Vice President, GARP Risk Institute
Attention on nature-risk management is increasing following the agreement of the pivotal UN Global Biodiversity Framework (GBF) in December 2022 which set a country-level framework to halt and reverse biodiversity loss. It is the nature version of the Paris Agreement, and therefore important for risk professionals to understand as it has potential policy implications.
Under the GBF, countries agreed that by 2030 they will:
- Protect 30% of Earth’s lands, oceans, coastal areas, and inland waters — the so-called 30 by 30
- Reduce annual harmful government subsidies by USD 500 billion
- Cut food waste in half
After the Paris Agreement, there was a lot of activity in establishing corporate disclosure regimes, such as the Taskforce on Climate-related Financial Disclosures (TCFD). We see a similar pattern following the Global Biodiversity Framework, with the publication of Taskforce on Nature-related Financial Disclosures (TNFD) recommendations in September 2023.
The TNFD uses the same framework as the TCFD, but with the addition of three nature-specific requirements. Given the speed with which TNFD was published after the Global Biodiversity Framework was agreed, and its similarity to the TCFD, we may expect it to follow the same path as the TCFD and become embedded in international accounting standards within a few years.
As reporting on nature risks is a means to better understand and manage them, to get started the first step is to understand where, and how big, our dependencies and impacts on nature are.
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