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January 22, 2024

Low boardroom understanding and capacity constraints blocking TNFD adoption, says non-profit

Business meeting in boardroom
Research by CDP found that fewer than a quarter of financial institutions have one board member ‘with competence on nature’ in their boardroom (Photo: Monkeybusinessimages/Dreamstime)

The adoption of the Taskforce on Nature-related Financial Disclosures framework by 320 companies and financial institutions at the World Economic Forum’s annual meeting was heralded as progress, but companies are lacking the ability to apply it

A lack of understanding in boardrooms and insufficient capacity are hindering companies from producing TNFD-aligned disclosures, says a new survey by UK non-profit Aldersgate.

The TNFD’s recommendations, issued in September 2023, offer companies disclosure recommendations and guidance for reporting on nature-related issues. It was announced at Davos that 320 companies and financial institutions intend to produce TNFD-aligned disclosures in 2024 or by 2025. 

But citing a 2022 CDP report, Aldersgate argues that companies lack an understanding of nature in their boardrooms. CDP’s research observed that fewer than a quarter of financial institutions even have one board member “with competence on nature”, while 68 per cent of institutions have at least one board member who is climate-competent, it said.

Aldersgate also points to capability and capacity gaps, as well as a lack of data and standardised metrics as barriers to TNFD adoption. Its report refers to a Credit Suisse survey that revealed 70 per cent of institutional investors blamed a lack of data as a significant barrier to investing in biodiversity.

The non-profit is calling on the UK to become the first G20 nation to compel TNFD-aligned disclosures.

“Very few, if any, companies are likely to be fully compliant with the TNFD framework immediately,” it says. “The government should outline an iterative timeline, setting out several ‘core’ disclosure requirements they expect companies to report against in the first year of disclosure, followed by a number of ‘extended’ disclosure requirements for subsequent years.”

Aldersgate is also urging the UK government to introduce proposals to increase capacity and skills concerning nature, and to “champion the uptake of the TNFD framework and encourage data sharing internationally”.

You can read the full report here.

A service from the Financial Times