Standard setters turn to biodiversity financial disclosures

Plus: NYSE proposes new asset class for natural assets

September 17, 2021

The Climate Disclosure Standards Board (CDSB) has launched a consultation on guidance for biodiversity-related disclosures.

The board – a member of one of the Taskforce on Nature-related Financial Disclosures (TNFD’s) working groups – recently conducted research that found “a definitive gap in the integration of biodiversity matters into mainstream reports” with fewer than half of large European companies referring to the topic in annual reports.

The CDSB Biodiversity Guidance is intended to support organisations make disclosures and to enable annual financial report users to assess biodiversity-related financial information.

The guidance will act as a supplement to the CDSB framework for reporting environmental and climate change action.

The final guidance is expected to be published at the end of the year, and is available for review on the CDSB’s website.

In July, the UK government published its response to The Dasgupta Review, a policy paper outlining the economics of biodiversity. Prime minister Boris Johnson said in a short statement attached to the review: “The Dasgupta Review confirms that economic prosperity and environmental protection are two sides of the same coin.”

Check out Minerva's briefing on biodiversity, covering topics like the Dasgupta Review and the TNFD.

Separately, the New York Stock Exchange has announced plans to develop a new class of assets called Natural Asset Companies (NACs).

NACs will be defined as “sustainable enterprises that hold rights to ecosystem services produced by land, such as carbon sequestration, biodiversity, and clean water”, the stock exchange said in a statement.

Intrinsic Exchange Group (IEG), which is helping the stock exchange develop the project, said: “Because the value created by NACs is not fully captured by transitional economic metrics, IEG has developed an accounting framework to measure ecological performance to complement GAAP financial statements.”

Meanwhile, the TNFD has appointed Tony Goldner as executive director of its secretariat, to be hosted by UK Green Finance Institute (GFI).

The TNFD was formed in July 2020 to develop a framework for financial institutions and companies to manage, assess and report on their impacts and reliance on nature.

It echoes the structure of the Task Force for Climate-related Financial Disclosures and is expected to publish its framework by 2023.

The secretariat will report to TNFD co-chairs David Craig and Elizabeth Maruma Mrema. It will be hosted virtually by the GFI, a partnership between the City of London and the UK government, and consist of a global team of seven staff.