Article
11 Oct 2023
Global9 min read

Catching Up with Climate – Where Next for Nature Disclosure?

Thomas Maddox, CDP Global Director for Forests, looks at some of the supporting frameworks, standards, and tools available to help companies expand their focus beyond climate towards a more holistic approach and how CDP intends to be the platform that brings these together.

In a blog in May this year I discussed how biodiversity ‘fits’ with climate and nature. I described how our environment operates as a complex web of interlocking systems, how ‘nature’ is another word for these systems and how ‘biodiversity’ can be understood as a measure of its quality. I also described how climate change is just one of many symptoms of the imbalance between the supply and demand of environmental services. To address the underlying illness we need to expand our focus beyond climate towards a more holistic approach. In this blog I look at some of the supporting frameworks, standards and tools available to help companies to do this and how CDP intends to be the platform that brings these together.

Frameworks for responding to climate

One of the reasons companies are making progress on addressing their impacts on climate is because there are now good, widely agreed frameworks in place to guide how to respond. The Sustainable Development Goals (SDGs) outline the environmental and social north stars for modern society. The Paris Climate Agreement builds on the SDGs by specifying a clear, quantifiable and globally agreed target for the climate. The Science Based Targets Initiative (SBTi) helps companies set an individual ‘fair share’ of the global target to work towards while the Greenhouse Gas Protocol, amongst others, sets out agreed methods for how to measure progress towards that target. The Taskforce on Climate Related Financial Disclosure (TCFD) then recommends what the market requires a company should disclose to demonstrate where it is on its climate journey. These approaches, and others, are rapidly being solidified into international standards and these in turn are being used to inform the development of laws on climate action and reporting in multiple countries.

Frameworks for responding to ‘nature’

One of the reasons cited for why companies are not making the same progress ‘beyond climate’ and into wider nature is the lack of clarity on how. Guidelines, frameworks and tools have been available for a while, but they often address specific issues or sectors and judging which to follow, when and to what purpose can be confusing. Now this is changing. At the global level, the signing of the Global Biodiversity Framework (GBF) in Montreal in 2022 gives a quantifiable and globally agreed set of targets, comparable to the Paris Agreement, that builds on the commitments of the SDGs. The Science Based Targets Network (SBTN) is now echoing the work of the SBTi by demonstrating how companies can set ‘fair share’ targets of their own to contribute towards these goals. Multiple tools still have to be relied on for measuring progress, but these are now being refined, organised and classified by initiatives such as ALIGN to help assess which ones are appropriate and, when to use. And now, since September 2023 the Taskforce for Nature Related Disclosure (TNFD) has published its recommendations, analogous to the TCFD, on what companies need to disclose to the market to demonstrate their progress beyond climate. Already these developments are feeding into the updating of standards and we are also seeing the first signs of the same approaches being encapsulated in law.

The remaining challenges of disclosing on nature compared to climate

While the enabling environment for nature is following hot on the heels of climate, it still faces numerous challenges. The process started later, is less well-resourced and, crucially, it is magnitudes more complex. Climate change is a comparatively simple piece of a wider problem. We have quantifiable targets (1.5°, or net-zero emissions), can use fewer metrics to quantify emissions (CO2e) and scientific understanding of what we need to do is relatively clear. There is no 1.5° equivalent for nature. The concept of ‘nature positive’ exists, but has not yet been accepted at a global level. The GBF sets 23 global targets, not one. Furthermore, nature is place-sensitive. A tonne of CO2e has the same impact wherever it is emitted. The impact of extracting a liter of water or clearing a hectare of forest varies by place and context. Data is also lacking for nature. Companies are expected to measure their own carbon emissions, but can reasonably expect others to monitor the global levels they are contributing to. For nature, those global datapoints are often absent, meaning companies are being asked to measure not only their own impacts, but the state of the environment they operate in.

The TNFD LEAP frog

While the enabling environment for responding to nature might be behind climate in some respects, the one advantage of coming from behind is that you can build on what has already been done. A good example of this is what the TNFD has produced. The key TNFD output is its Recommended Disclosures for Nature. These are structured identically to the TCFD and include the 11 TCFD recommendations, which are equally relevant for other aspects of nature, plus three more. The TNFD also released various supplementary information to its recommendations, including guides on how to understand the concepts covered, guides specific to companies operating in different biomes and guides on how to consider various social implications of action. But possibly the most important supplementary document was the ‘LEAP’ framework. LEAP is a guide to the steps a company should follow to understand all of its environmental relationships and how to respond to them. Built on multiple iterations of similar frameworks (such as the Capitals Coalition’s ACT-D framework and Natural Capital Protocol) it represents the culmination of years of business, science and civil society input.

It covers:

  • Locate

    – identifying where the environmental relationships exist and which are likely to be priorities.

  • Evaluate

    – identifying the impacts and dependencies associated with these relationships.

  • Assess

    – identifying the risks and opportunities associated with these relationships.

  • Prepare

    – identifying the actions and targets to respond to the risks and opportunities and tracking and disclosing progress.

Following the LEAP framework in its entirety will be challenging. But doing so would not only allow a company to disclose TNFD’s minimum recommended data points, it would also give a company excellent visibility over all aspects of its environmental relationships. Furthermore, the same process works for any environmental relationship, be it impacts on climate, dependencies on water availability or impacts and dependencies on the local ecosystem health. So, while the TNFD is currently marketed as being complimentary to climate reporting through the TCFD, the LEAP framework represents an excellent approach for gaining the holistic understanding of all environmental relationships I argued for in my previous post.

Making sense of the jigsaw

While there has been overlap in the ideas and even the personnel involved in setting the various nature reporting guidelines and frameworks, the fact remains that they were largely developed independently and are still in varying stages of development and thus do not, yet, fit together perfectly. Harmonization is active and improving, but conflicts and inconsistencies still remain. Confusion can lead companies not to act, but, if you view the pieces as a pyramid the picture becomes clearer.

CDP Forest blog graphic

The current frameworks and standards in the nature reporting pyramid include:

International agreements: Internationally agreed goals set by science and society.

  • The Paris Climate Agreement and the Global Biodiversity Framework are legally binding treaties specifying the environmental targets covered by the Sustainable Development Goals

Voluntary frameworks: Multistakeholder-driven agreement on what best practice looks like.

  • TNFD’s LEAP framework: the broadest approach, guiding companies on understanding all environmental interactions; the impacts, dependencies, risk and opportunities and how to approach managing, monitoring and disclosing them.

  • TNFD Recommended Disclosures: a subset of datapoints from the LEAP process identified by investors and other key stakeholders as key for disclosing to the market.

  • SBTN’s guidance on setting science-based nature targets: the best framework for setting the science-based targets that form an essential step in both TNFD processes. Developed as a stand-alone process there is substantial cross-over with the TNFD, but the two are largely are largely complementary.

Voluntary standards: These define how the frameworks must be followed and generally require verification by a third party. Standards for nature are still in development but will include:

Legislation: Often based on established standards, legislation is mandatory.

  • Legislation is often less ambitious than voluntary approaches, but the European Sustainability Reporting Standards (ESRS) being developed by the EU, which are the most advanced laws on nature reporting, look set to buck this trend with a wide scope and high bar. While structured differently to the other frameworks and standards, development has been carried out in conversation with all the main framework and standard setters and there is substantial overlap. The EU laws are likely to be influential in the development of legislation in other jurisdictions.

CDP can bring frameworks, standards and laws together

A key component of all the frameworks and standards is the transparent disclosure of environmental impact. CDP operates the world’s largest corporate environmental disclosure platform. At present, CDP collects data on performance against reducing climate change, against reducing impacts on freshwater and against the eradication of deforestation from supply chains. The climate change questions are fully aligned with the TCFD. The water and forest questionnaires represent a significant proportion of what comes under the banner of ‘nature’. In September 2023 CDP announced it would be aligning with the TNFD, part of our commitment to facilitate standardised and comparable data, and where possible harmonizing the different voluntary frameworks and standards, essentially becoming a ‘one-stop shop’.

Next steps

Understanding, managing and disclosing on all environmental relationships will require resource. It will be more difficult than doing so just for climate. But any business knows that knowledge of future markets is invaluable insight. We have that insight in terms of the environment. We know it will be a warmer world, we know it will be a more nature-depleted world and we know that the pressures to respond to this will be greater than ever. There is now a clear opportunity for companies to get ahead of competitors by acting now and positioning themselves for this new world. We now have a set of guidelines, standards and soon laws. They are not perfect, they don’t mesh at all times, but there is clearly enough to get started with. The most forward-thinking companies are already piloting, testing and responding to these frameworks – if you are not already one of them, I would urge you to get involved.

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