Governments should make reporting in line with the Task Force on Nature-Related Financial Disclosures (TNFD) mandatory, the head of the UN Convention on Biological Diversity (CBD) told Responsible Investor.
Elizabeth Maruma Mrema, who also serves as co-chair of the TNFD, made the comments when reflecting on the results of the fourth round of high-level negotiations ahead of the COP15 conference on biodiversity in December.
Discussion in June held over six days in Nairobi, Kenya, concerned the Post-2020 Global Biodiversity Framework, which is expected to be finalised in December.
Mrema noted these were technically the first “real” negotiations. “The first meeting of the parties was all about the structure and scope of the post-2020 framework, while the second and third were like making shopping lists of what everyone wants to see,” she said.
The negotiations received mixed feedback from investors.
Mrema accepted progress in Nairobi was slow. “We tried to move from a heavily bracketed text – I believe there are still around 1,000 [brackets]. The document is not good enough to present, so we will be having another meeting in December.”
For the financial sector, the most relevant parts of the framework are targets 14 and 15. These focus on integrating biodiversity and its multiple values into policies, regulations, planning and development processes, as well as taking legal, administrative or policy measures to regularly monitor, assess, and fully and transparently disclose their impacts on biodiversity.
“These are important, as then financial institutions can directly see themselves in the framework and what they can do,” said Mrema. “It is clear now that institutions have a major role to play. They’ve realised that nature is economy and it is business. Without it the latter two will collapse.”
She sees the TNFD as crucial to implementing the targets. Launched in June 2021, the initiative is tasked with developing a framework for companies and financial institutions to assess, manage and report on their dependencies and impacts on biodiversity by 2023.
Last month, it released version 0.2 of its beta framework.
Although it will begin as a voluntary mechanism, Mrema hopes governments will make it mandatory, as has been the case with the Taskforce on Climate-Related Financial Disclosures (TCFD).
“Voluntary is a good way to start as it gives companies time to understand and get to grips with it, but it needs to move into mandatory for it to be truly effective,” she said. “If it was mandatory, it would be a significant step towards the full implementation of targets 14 and 15 in the post-2020 framework.”
Mrema added that the TNFD was particularly relevant for target 15. “It is to a large extent about the same thing as the TNFD, ie providing transparency on risks and impacts so that governments, investors and consumers can make choices towards reducing nature loss.”
Last month, Zac Goldsmith, minister for the Pacific and the international environment, said he hopes the UK will be the first country to commit to mandatory reporting in line with the TNFD, as it has been with the TCFD. He added: “It’s not yet government policy, but I’m absolutely convinced it will be at some point soon.”
Mrema said by 2023 she would be counting on a progressive regulatory shift to mandatory nature-related disclosures following the adoption of the framework.