Conclusion
The finalization of the TNFD framework represents a significant milestone in the journey toward greater awareness and action in the financial sector regarding integrating nature-related risks and opportunities into decision making. Although many challenges remain, including the lack of data on location relating to FIs’ financing activities and limited reporting by corporates on nature-related metrics, the result of this analysis demonstrates that there is action that the sector can take today.
Those that are seen to be leading have already taken steps to:
- Educate and upskill key management teams and boards on biodiversity concepts, frameworks, and tools.
- Identify and assess their nature-related impacts, dependencies, risks and opportunities, prioritising key areas of focus.
- Develop a response and strategy to reduce impacts on and enhance biodiversity including identifying specific data requirements to ensure the ongoing oversight and management of risks and opportunities.
This is just the beginning of a longer journey. It’s unlikely there will be the same runway as there was for climate, so acting early will allow FIs to develop a considered and appropriate response.
FIs must continue to enhance the quality and coverage of their disclosures, align their governance structures, and develop strategies that contribute to halting and reversing biodiversity loss. By doing so, the FS industry can play a pivotal role in safeguarding our planet's natural capital while sustaining economic and financial stability for future generations.
This article is co-authored by Sean MacHale, Partner, Financial Services Climate Change Advisory and Sustainability Service, Ernst & Young Chartered Accountants; Laura Moss-Bromage, Senior Manager, Financial Services Climate Change and Sustainability Services, Ernst & Young LLP; Nicola Todd, Assistant Manager, Climate Change and Sustainability Services, Financial Services, Ernst & Young LLP; Hugh Garbutt, Assistant Manager, Climate Change and Sustainability Services, Financial Services, Ernst & Young LLP; Sujay Natson, Senior Consultant, Climate Change and Sustainability Services, Financial Services, Ernst & Young LLP; and Dylan Green, Senior Consultant, Climate Change and Sustainability Services, Financial Services, Ernst & Young LLP.