RIAA calls on industry to think beyond carbon

Investors and fund managers need to think more broadly about climate impact.

Thursday, March 4th 2021, 6:00AM

by Daniel Smith

New Zealand was the first country to sign the TCFD framework beginning in 2023. But international speakers, at a Responsible Investment forum yesterday, said that investors, both institutional and otherwise can do better by considering a broader view on nature that thinks about biodiversity and natural wealth.

Nicky Chambers, co-chair of the technical expert group at the Taskforce on Nature-related Financial Disclosures said that the new TNFD “is inspired by the TCFD to some extent, but will be broader in its reach and its view on what constitutes ‘nature’”.

“All economies are dependent on nature, it is surprising that financial systems do not already take this into account. This may be partly why we are currently seeing natural resources being liquidated.

“The financial industry needs to understand the risks and opportunities related to nature, particularly when allocating capital.”

Peter van der Werf, engagement specialist at Robeco says that in order to solve issues of biodiversity and deforestation, we need to act faster than was seen with carbon emissions.

“With climate it took ten years for the industry to get on board. With biodiversity we do not have that luxury. We need to figure out ways both to acquire more data but also to find and implement solutions to these problems.”

Ladislas Smia, co-head of responsible investment research at Mirova, agrees that solutions to these issues are needed soon. Smia stated that “The first pillar to action is to understand the scope of the problem. After that investors need to take biodiversity into consideration.

“Financing nature based solutions should inspire investors to think about different solutions, to grow portfolios into different asset classes.”

Van der Werf says that engagement from institutional investors means “having the right set of tools to take to companies and give them the confidence that this is what investors want to see.

“We can incentivise companies to change by saying that nature based solutions are what investors want, and use tools like the TNFD to show that a company who engages in these spaces has more value.”

Chambers says that like the TCFD take up in New Zealand, so too could the TNFD be adopted by governments and financial institutions around the world.

“It is quite possible that the TNFD could become mandatory some time in future. We will hopefully take lessons from the TCFD and can move faster through government and regulatory systems to get this in place.”

Tags: Climate Change climate risk reporting RIAA TCFD