As we all know, economic and financial sector
development relies on natural resources and biodiversity. The three largest
sectors that are highly dependent on nature generate close to US$8 trillion of
gross value added, i.e., construction (US$4 trillion), agriculture (US$2.5
trillion), and food and beverages (US$1.4 trillion) (WEF and PwC 2020).
In addition, developing countries in particular face the greatest risk of
ecosystem loss. Therefore, by aligning corporate goals and strategies with
biodiversity conservation, companies not only contribute to environmental
stewardship but also attract socially responsible investors. Collaboration among
the financial sector, the government, the private sector, and civil society in biodiversity-focused
initiatives can promote projects aiming at biodiversity
conservation. This collaboration can facilitate the creation of innovative
financial products, such as green bonds. In addition, there
are various frameworks and sets of recommendations related to biodiversity that
can serve as a foundation for assessing the operational risk to nature. Among
them, the TNFD framework stand out as a suitable starting point.
The
Task Force on Nature-Related Financial Disclosures consists of 40 senior
executives from financial institutions, corporates and market service providers
with a market capitalization of over US$2.3 trillion, over US$20.6 trillion in
assets under management and offices in over 180 countries. The TNFD
recommendations published in September 2023 promote a consistent and
practical approach to nature-related risk assessment and reporting. In
addition, this framework adopts a four-pillar approach, structured around how
organizations operate, which are governance, strategy, risk and impact management,
and metrics and targets.
On 20 February 2024, the SEC officially became
one of the TNFD forum members*, demonstrating its leadership role and signaling
to listed companies and stakeholders the importance of prioritizing the risks
to nature and biodiversity stemming from their operations.
Furthermore,
the SEC is the second global and the first Asian regulator to have
joined the forum. Through the implementation of the TNFD**, companies will
be able to analyze and formulate strategies to address nature-related risk thereby
enhancing the information available for investors to make informed investment
decisions. The TNFD recommendations share a similar structure with the TCFD
recommendations, making
them easily comprehensible. Companies have the option to implement these
recommendations or initiate an analysis of their actions related to nature.
Additionally, investors can apply these recommendations in their
decision-making processes and prioritize their investments on those indicating commitments
to conservation of nature and biodiversity.
Remarks:
* Currently, the number of TNFD forum members
exceeds 1,400 organizations, both public and private sectors, from more than 70
jurisdictions around the world. There are 10 TNFD forum members in Thailand
including SEC. The list of TNFD forum members in Thailand is available at https://tnfd.global/engage/tnfd-community/?_sfm_is_forum_member=1#search-filter
** The TNFD recommendations are structured
around four thematic areas, namely:
(1) Governance: Disclose the organization’s
governance of nature-related dependencies, impacts, risks and opportunities.
(2) Strategy: Disclose the effects of
nature-related dependencies, impacts, risks and opportunities on the organization’s
business model, strategy and financial planning where such information is
material.
(3) Risk and impact Management: Describe
the process used by the organization to identify, assess, prioritize and
monitor nature-related dependencies, impacts, risk and opportunities.
(4) Metrics and Targets: Disclose the
metrics and targets used to assess and manage material nature-related
dependencies, impacts, risks, and opportunities.
For more information on
disclosure in accordance with the TNFD recommendations, please visit: https://tnfd.global/recommendations-of-the-tnfd/