Echoing the heated discussion on biodiversity,  the GIP Working Group on Climate and Environmental Information Disclosure (WG2) held a webinar, titled “Implications of TNFD Framework for Financial Institutions in Navigating Nature-related Risks”, on March 6, 2023. The webinar convened experts from both commercial and development banks to share their views on nature and biodiversity.

In the opening remarks, Dr. MA Jun, Chairman of China Green Finance Committee and Co-chair of the GIP Steering Committee, pointed out three important global trends on nature-related issues in the financial sphere: G20's sustainable finance roadmap incorporating biodiversity, the Network for Greening the Financial System (NGFS) recognizing biodiversity loss as a threat to financial stability, and the inclusion of nature-related disclosure in the G20 Sustainable Finance Working Group’s agenda for 2023. 

Nathalie BORGEAUD, Lead of Financial Markets Stakeholder Engagement from the Taskforce on Nature-related Financial Disclosures (TNFD), gave a detailed presentation on the TNFD framework and its relevance for financial institutions. The TNFD aims to build a risk management and disclosure framework to identify, assess, manage and disclose nature-related dependencies, impacts, risks and opportunities. The framework is in a similar format to the TCFD framework, but with an emphasis on dependencies and impacts in addition to risks and opportunities in the latter. Five impact drivers were identified: land/water/sea use change, resource use, climate change, pollution, and invasive species, and financial institutions can start with a list of industries with the highest potential dependencies and impacts in their portfolios. 

She then introduced the ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) tool, which can help financial institutions better understand how their businesses are dependent or impacting nature, and vice versa. For example, an asset management company used the tool to analyze its Assets under Management (AuM) in listed corporates and bonds. She also highlighted how TNFD recommendations can align with TCFD reporting in practice, through a case where sectors identified as nature-sensitive are overlapping with climate-sensitive ones. 

During the panel discussion, Sani ZOU, Strategy and Policy Officer of Nature, Biodiversity, Climate Change and ESG at the Asian Infrastructure Investment Bank (AIIB), shed light on the bank's approach to biodiversity and nature, focusing on three pillars. The first pillar is biodiversity risk management, which involves avoiding, minimizing, mitigating, and offsetting adverse impacts on biodiversity caused by projects. The second pillar is mainstreaming nature and biodiversity financing, emphasizing the synergy in achieving multiple environmental objectives in investment activities. The third pillar is partnerships. Multilateral collaboration among companies, commercial banks, and institutional investors is essential to achieve biodiversity and nature-related goals, particularly in scaling up nature-positive investments. Sani provided examples of how the AIIB implemented these pillars in projects in Indonesia, Turkey, and other regions. In terms of challenges, Sani mentioned the importance of establishing a global standard for measuring natural capital, developing innovative mechanisms to mobilize private capital required to fill the financing gap, and receiving high-level political support when integrating biodiversity into financing decisions.

Nathalie, responding to the question regarding the challenges raised by Sani, explained how the TNFD would address these issues. She affirmed that TNFD would play a crucial role in raising awareness and motivating institutions to assess nature-related risks. She also encouraged individuals and institutions to engage with TNFD by participating in forums, attending webinars, and conducting heat mapping of the hottest sectors in terms of impacts and dependencies to gain a comprehensive understanding of their investment portfolios.

Agenda: 

4⁰⁰PM-4⁰⁵PM

Opening Remarks

Jun Ma, Chairman of China Green Finance Committee and Co-chair of the GIP Steering Committee

4⁰⁵PM-4³⁵PM

Presentation: Introduction to the TNFD Framework and its Potential Application in Financial Institutions

Nathalie Borgeaud, Lead of Financial Markets Stakeholder Engagement from the Taskforce on Nature-related Financial Disclosures (TNFD)

4³⁵PM-5¹⁵PM

Fireside Chat: Latest Progress in Biodiversity Conservation and Nature-related Risk Disclosure by Financial Institutions

Carmen Tsang, Head of Sustainable Investment Banking, Greater China at Credit Agricole CIB

•Nathalie Borgeaud, Lead of Financial Markets Stakeholder Engagement from the Taskforce on Nature-related Financial Disclosures (TNFD)

•Sáni Zou, Strategy and Policy Officer of Nature, Biodiversity, Climate Change and ESG at the Asian Infrastructure Investment Bank

5¹⁵PM-5²⁵PM

Q&A Session