More than half (56 per cent) of investors are already exploring or deploying capital into nature-related investment opportunities, a status update from the Taskforce on Nature-related Financial Disclosures (TNFD) reveals.
In a survey of more than 500 investors across the globe, TNFD – which helps companies and financial institutions assess and manage nature-related impacts, dependencies, risks, and opportunities – finds almost three-quarters (74 per cent) expect a significant increase in financing of nature-related opportunities in the next five years.
The finding come as scientists confirm that a ‘super El Niño’ event is now underway, which TNFD says is making capital providers “acutely aware of the perils of living outside of the safe operating space of our planetary boundaries and the consequences for the future financial prospects of the businesses to which they lend, and which they fund and insure”.
All investors surveyed expressed concern about the effects of nature loss on financial markets while 59 per cent ranked nature among their organisation’s three most important sustainability topics.
According to S&P Global, 62 per cent of the 14,000 companies that make up its Global Broad Market Index have a significant nature dependency risk across their direct operations.
Consequently, more than 70 per cent of survey respondents support greater certainty through mandatory nature-related reporting requirements, with a preference for standards to be introduced in the next one to three years.
David Craig, Co-Chair of TNFD, says: “The market is moving beyond an appreciation of why nature matters to a much deeper understanding of how nature-related dependencies, impacts, risks and opportunities affect business and financial performance. Organisations are building the knowledge and experience needed to generate more consistent, decision-useful information for investors, boards and management teams and take the actions required to build more resilience into their business.”
The report reveals over 1,000 companies globally – 82 per cent of which are publicly listed – are reporting against at least one of the TNFD’s 14 recommended disclosures.
Craig said this is in predominantly in response to the growing presence of nature-related issues in stewardship conversations between investors and their portfolio companies, rather than because of regulation.
He noted that while central banks acknowledge nature as a systemic risk to economies and financial systems, market regulators in some jurisdictions are rolling back the scope of climate regulation and others are yet to formally consider climate-related disclosure requirements.
“Failure to move faster on climate and broaden requirements to cover other aspects of nature will leave investors and companies with a major risk blind spot,” he says.
