Position Green recently took the opportunity to dig deeper into ESG and how the sector is growing in presence and popularity in the corporate world.
Recent developments underscore a paradigmatic shift, emphasising the vital relationship between nature and global economic health.
With over half the global GDP, approximately USD 44tn, intertwining with nature, its prominence in the corporate Environmental, Social, and Governance (ESG) agenda is soaring, underscored by extensive research and case studies, such as the ESG100 by Position Green.
Mitigating biodiversity loss is gradually coalescing into a potent policy theme across global platforms. A landmark moment was witnessed with the inception of the Global Biodiversity Framework at COP15 in December 2022, aiming at sharpening corporate transparency regarding biodiversity impacts and risks.
Furthermore, the European Sustainability Reporting Standards (ESRS) and the Sustainable Finance Disclosure Regulation (SFDR) have instated directives mandating businesses and financial entities, respectively, to transparently disclose their impacts and activities affecting biodiversity-sensitive zones.
Investors, discerning the intrinsic link between nature risks and financial vicissitudes, are shifting their strategies to embody this reality. The burgeoning of initiatives like Nature Action 100 and nature-centric strategies from prominent investment entities like Norges Bank Investment Management and BlackRock epitomises the amalgamation of investment strategies with nature and biodiversity considerations.
Noteworthy insights from the ESG100 – Position Green’s 2023 analysis indicate a prominent shift in corporate attitudes towards nature and biodiversity, with 46% of assessed companies elucidating their policies or commitment towards these crucial environmental aspects. The diversity in the ambit and aspiration of the pledges and reports concerning impacts on nature and biodiversity among companies is palpable, revealing a spectrum of engagement and disclosure levels in the corporate sphere.
The Taskforce on Nature-related Financial Disclosures (TNFD) has unfurled its final set of disclosure recommendations on 18 September 2023, intended to guide corporations through the labyrinth of nature-related financial disclosures. TNFD, eschewing a fragmented approach, integrates globally recognised standards and focuses on governance, strategy, risk, and impact management, and metrics and targets, analogous to the Task Force on Climate-related Financial Disclosures (TCFD).
With nature being a complex and multi-dimensional domain, TNFD’s recommendations provide a structured approach, such as the LEAP (Locate, Evaluate, Assess, Prepare) process, assisting corporations to pinpoint and address their specific nature-related risks and opportunities, aligning various data collection and analysis methodologies to render more precise and actionable data.
The onus of traversing through over 3,000 nature-related metrics and ensuring transparent sustainability reporting might daunt corporations. TNFD recognises the manifold challenges in earmarking and measuring pertinent data, prompting the necessity of a proficient ESG data management system. As stakeholders’ decisions are increasingly tethered to transparent sustainability reporting, mastering the art and science of implementing efficient nature-related financial disclosures has essentially become a pivotal operational requisite for corporations.
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