A new acronym, the TNFD – or Taskforce on Nature-related Financial Disclosures – is looming large for banks, who will lift disclosure on natural environments.
Banks are not only having to get a grip on the emissions of their customers, but also the effect that lending is having on the natural environment.
The big banks and Macquarie have signed up as TNFD “forum members” and lenders are hiring nature leaders in business banking management teams, to ensure they comply with what will become retailed reporting requirements.
“We are moving from a state of understanding climate credit risk to actually doing something about it, and for many organisations, some decarbonising will be through nature-based solutions, which can provide a most cost-effective way of taking action now,” Mr Symons said. CBA joined the TNFD this year and said it had “designed a high-level road map to guide our approach to natural capital”.“In the coming year we aim to set our priorities related to natural capital and explore metrics to measure our progress,” the bank said.
Opportunities will emerge in trading credit attached to protecting and improving the natural environment. Many of these markets, such as those for biodiversity credits in NSW, are fragmented. But Deloitte predicts a coherent, regional market will emerge based around “natural capital assets”. These could include “co-benefits” attached to carbon credits.It suggests banks and other financial institutions collaborate on creating a “nature-based equity exchange”.
Deloitte quotes Jessica McDougall, the director of BlackRock Investment Stewardship, in its report, who said careful management of natural capital would become “a core component of a resilient, long-term corporate strategy for companies that rely on the benefits that nature provides”.