Ensuring nature is no longer an invisible externality
Actively supporting businesses to better understand their nature-related dependencies, impacts, risks and opportunities
UNDP is one of four founding partners of the Taskforce on Nature-related Financial Disclosures (TNFD) - along with United Nations Environment Programme Finance Initiative (UNEP FI), the World Wildlife Fund and Global Canopy.
Launched 4 June 2021, the TNFD is a global initiative that is working to deliver a comprehensive and rigorous reporting framework by 2023 - supporting a shift in global financial flows away from nature-negative toward nature-positive outcomes.
In doing so, the TNFD will be vital to advance the implementation of Target 15 of the Global Biodiversity Framework, which explicitly calls for taking legal, administrative and policy measures to encourage and enable business, and in particular to “ensure that large and transnational companies and financial institutions to regularly monitor, assess and transparently disclose their risks, dependencies and impacts on biodiversity.”
The framework will promote worldwide consistency for nature-related reporting.
The materiality of nature-related risks is often invisible because the realized or potential costs associated with nature degradation, are transferred to consumers, society at large or other third-parties, rather than being built into the balance sheets of companies.
This is an important shift so that nature is no longer an invisible externality. Aligning global financial flows with nature is an essential path to protect biodiversity, support communities, meet climate and biodiversity targets and achieve the Sustainable Development Goals.
TNFD Early Adopters
Read more about the 320+ inaugural Early Adopters who have signalled their intent to start adopting the TNFD Recommendations.
Our commitment
At UNDP, we will assist stakeholders globally to implement the framework, including through a new project entitled: ‘Enabling and Scaling up Nature-related Financial Disclosures’. Being rolled-out in cooperation with the TNFD Secretariat, the Federal Republic of Germany (specifically, Die Internationale Klimaschutzinitiative (IKI), and our partners, it aims to accelerate uptake of the final framework. It will also assist enterprises and financial institutions across 10 to 15 developing countries to better understand their risks, dependencies, impacts and opportunities on nature. Funding for these efforts from UN and governments ensure that TNFD maintains its neutral status and thus avoid undue influence from the private sector.
We strongly support the principle of double materiality, that is for companies to report not only on financial risks that nature presents for them, but also on the impacts that companies themselves have on nature and third parties; and our support and engagement will focus our efforts to training companies to adopt it, and be able to report on both sides of materiality.
UNDP is also committed to ensuring that the development and implementation of the Framework is inclusive, and adequately incorporates multi-stakeholder inputs and considerations. UNDP and its partners supported TNFD in anchoring its Guidance on Engagement with Indigenous Peoples, Local Communities and Affected Stakeholders in the UN Guiding Principles on Business and Human Rights, and directly engaging civil society, local resource users and communities, and other relevant stakeholder groups in the development of the Framework.
UNDP will continue to work to ensuring that Indigenous Peoples and Local Communities, who are often at the frontier of nature conservation and highly dependent from natural assets, are adequately engaged in the management of material nature-related dependencies, impacts, risks and opportunities, and related human rights considerations.
Catalysing an unprecedented movement within the finance and business sector
The WEF estimates that more than 50% of the world’s GDP is moderately or highly dependent on nature. Construction, agriculture, and food and beverages are the largest highly nature-dependent industries, with an economic value roughly twice the size of Germany’s economy. Yet many businesses simply do not have the information they need to act on evolving nature-related dependencies, risks and impacts to their business, as well as the opportunities to contribute to the protection and restoration of our natural world.
A reporting framework that identifies how nature impacts the organisation’s immediate financial performance, or the longer-term financial risks that may arise from how the organisation, positively or negatively, impacts nature, puts nature on the balance sheet.
Engaging the private sector is a key element of the global green transition and better information to incorporate nature-related risks and opportunities into their strategic planning, risk management and asset allocation decisions, will support this shift - convincing businesses to opt fornature-based solutionsrather than overexploitation and environmental destruction.
