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The recently launched Taskforce on Nature-related Financial Disclosures (TNFD) was established to improve private sector interaction with the natural world, leveraging reporting to direct finance away from nature negative activities and towards positive outcomes for nature. As a market-led initiative, it aims to create a standardised framework for disclosure which will provide financial institutions with decision-useful information to encourage redirection of financial flows towards nature-positive outcomes.
Climate Asset Management has been actively participating in the TNFD’s iterative development process, engaging across a number of the taskforce’s working groups on behalf of our shareholder, HSBC Asset Management, notably around targets and metrics, as well as building capacity both internally and externally to deliver on the TNFD’s ambition.
Over the last year, we have partnered with Phoenix, the UK’s largest long-term savings and retirement business, to pilot the TNFD framework to a portfolio of investment opportunities, which provide a unique perspective based on:
Working alongside experts from The Biodiversity Consultancy, who were engaged by Phoenix, we have applied a bespoke methodology translating the TNFD’s LEAP framework (Locate, Evaluate, Assess, Prepare) into a process applicable to our site-based approach to investment due diligence. Our objective was to understand better the TNFD process, including data requirements, prioritisation, target setting and disclosure. This information can then inform our management processes to align with our objective to demonstrate quantifiable improvements to the state of nature as well as to articulate and manage clear nature-related risks and opportunities associated with our investments.
This white paper details the findings of the first stage of the pilot, looking at a set of investment opportunities and focused on the Locate and Evaluate phases. The results of this stage identified a number of material impact and dependency pathways associated with each of the projects within the pilot. During the ensuing Assess and Prepare phases we expect some of these will likely translate into nature-related risks which will need to be managed. The majority, however, have the potential to represent nature-related opportunities both from a commercial as well as a sustainability performance perspective. The next stage of the pilot will now focus on how these impacts and dependencies can be translated into quantifiable risks and opportunities.