TNFD Plots Route to Decision-useful Nature Data
Taskforce proposes next steps for NDPF at COP16, building use cases on the path to final recommendations in Q4 2025.
Robust nature-related data will be a “driver for investment” in biodiversity, according to the Taskforce on Nature-related Financial Disclosures (TNFD), following its release of a roadmap aimed at stimulating supply.”
The TNFD has forecast demand for nature data from business and finance will grow “exponentially” over the coming years, fuelled by new and heightened reporting requirements, target setting, and transition planning.
To meet this demand, the roadmap seeks to improve market access to “high quality” nature-related data, as well as supporting corporates and financial institutions in understanding their nature-related dependencies and impacts.
“The roadmap reflects the user needs of TNFD adopters, financial institutions and corporates and the demand for quality, searchable and accessible nature-related data to inform decision-making,” Cathrine Armour, Director of Data Initiatives at TNFD, told ESG Investor.
“Without access to such data, institutional investors are unable to develop nature intelligence specific to their portfolios and gather insights on nature-related dependencies, impacts, risks and opportunities.”
The TNFD roadmap said there was an increasing awareness among investors and companies that they need to actively manage nature risks in their portfolios and cashflows, which requires access to decision-useful data.
It also set out more detailed plans for its much-anticipated Nature Data Public Facility (NDPF), inspired by the emissions-focused Net Zero Data Public Utility, which is set to make core climate data from more than 10,000 companies publicly accessible.
Armour said the NDPF could improve investor decision making, with increased nature data access enabling investors to evaluate the impacts of nature risks on portfolios and identify nature-positive opportunities. She added it could enhance risk management by being able to better assess nature-related dependencies and risks and make investment strategies more resilient.
“At COP16, the need for robust nature-related data has been highlighted as essential for achieving nature, including biodiversity, goals and supporting effective conservation actions,” said Armour. “Frameworks like the TNFD were discussed as critical for helping organisations manage nature-related issues, underscoring data as a driver for investment in biodiversity.”
A key objective of COP16 is agreement on implementation of the Global Biodiversity Framework, including Target 15, which calls on governments to “encourage and enable” firms to disclose their risks, dependencies and impacts on biodiversity.
Three priorities
The discussion paper identified three key areas of focus that will be prioritised over the next six to 12 months.
First, the taskforce intends to further define and clarify a set of composite data principles drawing on existing open data and corporate reporting data standards and principles. Secondly, it will specify the enhancements and quality improvements to the nature data value chain that need to be prioritised and funded in the medium term. Thirdly, the TNFD plans to further explore end-user requirements through a beta version of an open access NDPF, as first proposed by the taskforce its previous scoping study.
To inform the NDPF’s development, the TNFD has opened a consultation on the roadmap which will run until 17 January 2025. This will be followed by a series of webinars and focus groups between January and March 2025 to discuss the feedback received from the consultation.
The TNFD’s three priority areas will be the focus of pilot testing during 2025, ahead of a final set of recommendations being put forward in late 2025. These final recommendations will include whether there is a case for commissioning a permanent new open-source NDPF or upgrading an existing data platform with specific requirements to achieve this goal.
The TNFD said it has already received significant interest from upstream data providers and downstream data users in pilot testing a beta prototype of a NDPF. This includes national and intergovernmental organisations as data providers as well as market intermediaries, corporates and financial institutions as downstream users.
The exercise could include testing priority data sources and sets against a composite set of data principles, testing the connectivity of upstream data sources with the proposed technical design of a NDPF, and testing the connectivity of the NDPF to downstream customers, including market data and analytics intermediaries and end users.
Market concerns
The report flagged that market participants had identified several weaknesses in the current state of nature data. These included concerns about the accessibility, assurability, comparability, quality, and verifiability of the data needed for corporate reporting, target setting and transition planning.
“Quantifying, reporting and managing nature-related risk is becoming increasingly central to business and investment decisions [and] increasing access to high-quality, transparent data is fundamental to enabling this,” said Ben Macdonald, Managing Principal of Bloomberg Philanthropies’ Climate Market Strategy and Infrastructure group.
“The TNFD’s roadmap is a vital first step in building an infrastructure for nature-related data. It provides a clear pathway for driving further collaboration and progress across the nature data value chain – helping to better define the quality and consistency of the data that we need to assess risk, make decisions and take action to protect and restore our natural ecosystems.”
The roadmap builds on the TNFD’s prior work, including its 2022 nature data landscape assessment and 2023 scoping study on the potential NDPF. “The key conclusion of the scoping study was that there is a market failure in the provision of nature-related data and that some form of open access public data facility has significant merit,” said Armour.
The third phrase of NDPF development next year will identify and configure a mechanism to improve use of nature data for corporate decision-making.
Last week, a report from the Nature Tech Alliance found that large corporates were struggling to cope with “complex” nature-related data, as well as highlighting that fragmented and inconsistent data fragmentation was a pervasive problem limiting action by firms.
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