Collaboration Key to Tackle Nature Risks
Tools increasingly target interoperability to provide investors with ways to engage with firms and impact their practices.
Communication and engagement between asset owners, managers and companies is essential to improve action on nature preservation, industry experts have said.
Speaking during ESG Investor’s Stewardship Summit 2024, Shipra Gupta, Investments Stewardship Lead at Scottish Widows, suggested that “collaborating and sharing” was key to overcoming nature-related challenges, underscoring the importance of open and honest conversations between asset owners and managers.
“I would encourage focusing on policy advocacy and supporting industrial networks,” she said. “Even if it is lending your name and assets under management (AUM) to organisations that are driving change – engage with them, join investor statements, and call regulators and policymakers.”
Gupta took part in a conversation examining how asset owners engaged on nature-related themes, for which she was joined by Nikki Gwilliam-Beeharee, Investor Engagement Strategic Lead at the World Benchmarking Alliance (WBA).
The WBA is currently developing the Nature Benchmark Collective Impact Coalition (CIC) – an engagement initiative bringing together investors, academics and other stakeholders to collaboratively engage with companies and bring about systems change.
Open for an initial set of signatories until early last month and due to run until 2025, the CIC has been designing actions to help incentivise companies to assess and disclose their impacts and dependencies. These includes direct engagement with companies, as well as with regulators and standard-setters.
“I think value in engaging with companies directly is immense,” said Gupta. “Being in that room speaking to companies and to management can help you understand and encourage them, and better challenge them. It also helps you in all the conversations with regulators and policymakers.”
The WBA’s 2022 and 2023 nature benchmarks assessed nearly 800 firms, less than 1% of which holistically assessed and disclosed their dependencies on nature. Less than 5% also did this for their impacts on nature, despite half of the global GDP being moderately or highly dependent on nature.
The alliance recently released an insights report based on the 2023 benchmark, which included a tweak to its methodology to ensure full alignment with global standards such as the Taskforce on Nature-related Financial Disclosures (TNFD). The report also recommended that benchmarked firms prepare to follow TNFD recommendations, and called on financial institutions to engage with clients, investees and other stakeholders on nature protection and restoration.
Increasing interoperability
The Global Reporting Initiative (GRI) and the TNFD recently confirmed that they would further collaborate to support global market participants’ needs on corporate reporting.
The two organisations are planning to publish an interoperability mapping document in Q2, providing a detailed overview of alignment between TNFD disclosure recommendations and GRI metrics and standards – including GRI 101: Biodiversity 2024.
In addition, they will issue joint case studies and guidelines on the links that exist between nature-related dependencies, impacts, risks and opportunities.
“The fact that we’re referencing each other’s work shows there’s a high level of alignment now,” said TNFD CEO Tony Goldner. “We’re seeing a huge amount of demand for briefings on how the various standards and frameworks in the landscape align, and are publishing this document in the next few weeks precisely to inform the market and address those perceptions.”
The GRI 101 was updated to align with TNFD recommendations, outlining a list of aspects to illustrate consistency with the TNFD’s approach.
In January, the TNFD named the first 320 organisations that committed to its recommendations, featuring more than 100 financial institutions – including some of the world’s largest asset owners and managers with a combined US$14 trillion in AUM.
“There are several challenges on nature-related themes,” said Gupta. “Fragmented information and lack of data are difficult obstacles facing asset owners.”
The TNFD is currently looking to remedy those issues by developing a global nature-related public data facility, aiming to aid investors and companies struggling to access reliable and comparable information.
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