Nature Risk Profiling, a new methodology for analyzing companies’ impacts and dependencies on nature has been launched by the UN Environment Programme (UNEP) and S&P Global, targeted to support the implementation of TNFD’s disclosure framework.
More than 50% of the world’s GDP is highly dependent on nature, resulting in biodiversity loss causing huge concerns for global business leaders. Market participants need a trustworthy and, quantitative approach to measure the biodiversity impact, abate risks, and push forward nature-positive outcomes. This comes as the World Economic Forum’s 2023 Global Risks Report, claims that biodiversity loss is the fourth most severe global risk over the next ten years behind climate action failure, climate change adaptation, and extreme weather.
In December 2022, the adoption of the Kunming-Montreal Global Biodiversity Framework was launched. The Global Biodiversity Framework urges governments to take legal, administrative or policy measures to encourage and enable businesses to frequently monitor, and transparently disclose biodiversity hazards, dependencies and affects. These requirements touch all large as well as transnational companies and financial institutions along with their operations, supply and value chains, and portfolios.
The potential impact of the Nature Risk Profile methodology is significant, transforming the parameters of financial decision-making. Developed by experts from across the conservation, business, and finance communities, it aligns with the emerging approach of the Taskforce on Nature-related Financial Disclosures (TNFD) and will support the implementation of TNFD’s disclosure framework.
The methodology allows users to adjoin company-level data with best-practice nature-related statistics to figure out essential risk metrics. Built using powerful, science-based impact and dependency measurement tools, including the Exploring Natural Capital Opportunities, Risks and Exposure database and the developing Ecosystem Integrity Index.
To further develop the methodology to accelerate the shift of capital towards nature-positive outcomes S&P Global Sustainable1 has also launched a new knowledge community inviting investment managers, insurers, businesses, non-profits, and others to collaborate. Developed by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and partners, combined with S&P Global’s in-depth information about local business activities, this pilot programme aims to assist the practical implementation of the TNFD framework process using geospatial biodiversity datasets.
Neville Ash, Director of UNEP-WCMC, said: “The methodology provides a major step forward to deliver the actions required for transformative change and support the finance sector’s critical contribution to delivering the ambitions of the Kunming-Montreal Global Biodiversity Framework. This methodology links science, policy and finance to bring nature to the heart of financial decision-making. The collaboration with a global financial data provider such as S&P helps to test the methodology using their location-specific data on thousands of financial and corporate assets. In developing and sharing this methodology as a public good, we are supporting the TNFD in implementing a common and harmonized approach to nature-related risk management within the finance sector.”
Dr Richard Mattison, President of S&P Global Sustainable1, said: “Against the backdrop of net zero commitments from investors and companies, it is essential that net zero for climate should be net positive for nature in line with the important work of the TNFD. The development of this new methodology will be key to unlocking better understanding, analysis and action around nature-related risks for companies and investors. Significantly, the methodology will also be open access, and developed and refined by stakeholders, to support transparency and adoption.”
Download the methodology.