The nature imperative and the importance of the TNFD framework

This article was jointly authored by?Tiffany Duffin,?Barny Harrison,?Swasti Saraogi,?Nishtha Mukesh Maloo,?Jazmin Crognale,?Naresh Bhansali, and?Bex Paffard

Why are we talking about nature and why should you care?

Nature gives us life – it gives us water, land, oceans, the atmosphere, and everything that allows us to exist. Yet humans are the biggest threat to nature, and as we continue to overexploit natural resources, biodiversity is declining faster than ever. In the past 50 years,?wildlife populations have declined by an average of 69%,?disturbing the delicate balance of ecosystems. You may have noticed the recent buzz in this area – the focus has grown, in part, to the Global Biodiversity Framework agreement reached at COP 15. This includes, among other goals, driving effective conservation and management of at least 30% of the world’s land, coastal areas, and oceans by 2030.

Climate change and nature are inextricably linked – nature is critical for us to slow down global warming, battle the effects of climate change, and build more resilient societies. Although not alone in their value, let’s take mangroves as an example. As well as removing and storing huge amounts of carbon from the atmosphere, they provide habitats for aquatic organisms, act as protective natural barriers and solutions against strong storms, floods and erosion, filter water, and provide food and resources to local communities. By working?with?nature,?researchers from?The Nature Conservancy estimate that we can reduce emissions by up to a third of what is needed to meet the Paris Agreement?goals.

There is also growing recognition that nature-related risks can affect long-term enterprise value, the global economy, and society. There is over?$44 trillion of economic value dependent on nature?(think agricultural and extractive businesses), and?under BAU, ecosystem collapse could cause a decline in GDP of 10% from 2021 to 2030. For broader society,?there are 1.6 billion people relying directly on forests alone for their food, income, and livelihoods.

“The economy is a wholly?owned subsidiary of?the environment, not?the reverse” – Herman E. Daly, award-winning economist

The impact of companies that use large amounts of raw materials and land is obvious – it’s easy to understand how a mining process can negatively affect nature (e.g. through deforestation). The impact might not be so obvious however for service-based industries – if you’re not directly exploiting nature, should you care about your impacts? The short answer is?yes.?If you have an office, computers, or milk in the fridge, you’ve probably had a negative impact on nature. Construction of your office itself might have led to deforestation; your company laptops might be made with materials from a mine which has disturbed various species nearby.

What is TNFD and why is it important?

You may have heard of TCFD (Taskforce on Climate-related Financial Disclosures). Well,?TNFD (Taskforce on Nature-related Financial Disclosures)?is a bit like that – as TCFD is to climate, TNFD is to nature. TNFD is an international, market-led initiative delivering a risk management and disclosure framework to help organisations respond to nature-related risks and opportunities, to promote a change in global financial flows from nature-negative to nature-positive outcomes. TNFD is addressing the need for a robust, consistent framework which is critical for businesses to be able to disclose key information regarding their relationship with nature, allowing investors to make informed decisions and companies to take appropriately targeted action. The draft framework is applicable across sectors, and while disclosure is not currently mandatory for organisations, it is quite probable that some governments will make TNFD a mandatory reporting requirement, as has happened with TCFD in some cases.

Why did we decide to undergo a full TNFD pilot?

Given the focus on nature as an emerging issue for our clients, and as a responsible business, we at Accenture decided to run a full TNFD pilot using the?‘LEAP’ approach?(Locate, Evaluate, Assess, and Prepare), to:

1. Understand our own impacts and dependencies on nature, and the risks and opportunities associated with those
2. Contribute feedback to the TNFD during the consultation period, in order to support the further development and refinement of their framework and guidance
3. Upskill our team and analyse the tools and data sets suggested by the TNFD, to gain a robust understanding of the process and how to apply it across the value chain of an organisation
4. To meet these aims, we went through the process step by step as if disclosing in line with the guidance, analysing over 85 tools and datasets recommended by the TNFD and other organisations.

?

What did we learn?

Piloting the TNFD framework on our own business provided a rich set of insights into where we have the largest impacts and dependencies on nature, including in our direct operations, through our suppliers, and the work we do with our clients. This knowledge allowed us to prioritise specific parts of our value chain for deeper analysis, including:

1. Where our tier n suppliers are most likely located, to a hyper local level, enabling us to identify and quantify the availability of the ecosystem services and environmental assets around those sites
2. What the changes in nature have been in the areas surrounding both our office sites, and surrounding the most likely locations of our tier n suppliers. Detailed geospatial analysis helped identify changes in: Forest and other land cover, levels of water pollution, and presence and abundance of terrestrial and marine / freshwater species of flora and fauna
3. What risks these changes in nature create for our business and what the set of tangible opportunities are which can help mitigate those
4. How our approach to governing nature could evolve to further elevate the attention that the topic gets within our global leadership teams
5. What the wide range of nature-focused tools and data sets can do for us, and for our clients, through detailed assessments of their functionality, depth of insight, relevance, and useability

The challenge of nature-related data

Nature-related information is often found within a complicated mosaic of data and tools which can be difficult for even experts to navigate. While working through the TNFD process, we have so far identified a set of four key learnings relating to these data and tools:

1. Limited availability:?Data is critical for businesses to better measure their baseline nature performance, and to monitor and mitigate nature-related risks. Yet despite recent advances in areas such as material traceability, remote sensing, and environmental DNA sampling, high quality data often remains unavailable at a sufficiently granular spatial level. Nature-related datasets need to be built at a finer resolution than national or regional level
2. A siloed approach to primary nature research:?Many existing tools and datasets provide insights limited to certain species, or ecosystems, at a single point in time. Moreover, wide variances in the timeframes over which data is collected hinders integration and comparisons over time. With a comprehensive, global approach to collecting and storing data, conducting analyses and identifying actionable insights will become easier
3. Limited tools for non-technical users:?Many tools are inaccessible to non-technical users, which will impede businesses’ ability to integrate a nature focus into their operations and day-to-day decisions. It is imperative that owners of these tools produce outputs within interfaces which can be easily understood by non-experts
4. Poor transparency:?While new products are emerging and advancements in geospatial analysis have been a game changer, gaps remain in the transparency of the processes and methodologies that sit behind many of these, which can affect their credibility and the confidence that businesses have in using them

?

Our advice for others

The realisation of nature-related risks can be costly for businesses, potentially causing supply chain disruptions, increased maintenance costs, litigation cases, and reputational harm, among other impacts. That’s not to say, however, that nature considerations are always negative; there are plenty of opportunities for businesses to realise the positive value of nature.

Although still in draft, we firmly believe that nature management frameworks like TNFD’s are a key first step to understanding your business’ impacts and dependencies on nature, and the risks and opportunities arising from those.

Before embarking on the complex journey of understanding your nature footprint, we can offer four pieces of advice:

1. Know the data:?Understanding internal data and external nature-related data takes time and expertise – procurement data can be complicated, nature-related data even more so. Invest time and resources into exploring this data before working through the TNFD process
2. Make friends with your suppliers and procurement team: Making sense of procurement data will be crucial in helping many businesses to identify impacts and dependencies on nature – as with carbon, the largest effects on nature may be within your supply chain. Additionally, this presents an opportunity to engage directly with suppliers to understand where their specific locations are, and to work with them to understand the nature-related risks and opportunities at those locations
3. Budget for tools: Of the tools and datasets available to support in measuring impacts and dependencies on nature, many require investment to gain a level of insight that is actionable for businesses. We would advise budgeting $5k - $10k to access data for your first analysis
4. Engage with nature experts:?This topic is complicated – you’re not expected to do it on your own. Running a TNFD assessment will likely require extensive understanding of primary and secondary literature on water, biodiversity and more, along with expertise in geospatial analysis, organisational strategy, and governance

If this article has piqued your interest and you would like to discuss what nature and the TNFD means for your business, feel free to get in touch. We’re passionate about this topic, and always happy to talk!