Source · Select Committees · Environmental Audit Committee
Recommendation 69
69
To provide the signals needed for the financial system to manage biodiversity risks, we recommend...
Recommendation
To provide the signals needed for the financial system to manage biodiversity risks, we recommend that: a) The Government commit to legislate for mandatory disclosure of nature-related financial risks once the TNFD framework is ready. b) The Government explore how a corporate natural capital accounting system could be set-up to require organisations to measure the impact of operations on natural capital. c) The Bank of England conduct an exploratory exercise into stress testing biodiversity loss. d) The Government should also ensure the National Infrastructure Bank has a mandate for net zero and includes a focus on nature and biodiversity for investment in its objectives. e) The Government commission a review into the Law Commission’s 2014 report on the Fiduciary Duties of Investment Intermediaries, given the developments in the understanding of climate and nature-related risks since the report’s publication. (Paragraph 329) Education and biodiversity
Government Response
Not Addressed
HM Government
Not Addressed
(30a) The Task Force on Nature-related Financial Disclosures (TFND) framework is scheduled to be ready for launch and uptake by the end of 2023. The framework won’t just focus on disclosures, but rather, as a critical first step, empower and enable institutions to understand, act and report on their evolving nature related risks. The government will work with the TNFD and will carefully review their recommendations and potential policy/regulatory responses when they are available. This includes ensuring there are links to the CBD Post 2020 Global Biodiversity Framework, requirements in the Environment Bill on biodiversity net gain, and the UK green taxonomy in order to signpost to the private sector the financial and environmental imperative of incorporating nature-related risks into risk analysis and decision making. (30b) The Government is committed to ensuring the private sector plays a significant role in the delivery of the UK’s net zero target and ambition to leave the natural environment protected and enhanced for the future. In line with this ambition, and in response to the Dasgupta Review, the Government has committed to delivering a ‘nature positive’ future and to including a requirement in the Environment Bill to set a new legally-binding target to halt the decline in species abundance by 2030. The Chancellor used his Mansion House speech 2021 to announce new economy- wide Sustainability Disclosure Requirements (SDR) for real-economy corporates, financial services firms, and pension schemes to disclose their impact on the climate and the environment - and the risks and opportunities these pose to their business. A key component of this will be disclosures against the UK green taxonomy, which will establish a common and transparent definition for which economic activities count as environmentally sustainable. The Government supports the development of global sustainability disclosure standards, including the work of the International Financial Reporting Standards Foundation to create a global baseline corporate reporting standard for sustainability. In recognition of rising private sector interest and action on the financial materiality of nature-related considerations, in its 2019 Green Finance Strategy, the Government committed to working with international partners to catalyse a market-led coalition on nature-related financial risks and reporting. Supported by the Government from its inception, TNFD will provide