UNEP - Nature Risk Profile: A methodology for profiling nature related dependencies and impacts

Our current global economic and financial systems have an unsustainable relationship with nature. We are depleting nature at unprecedented rates, with over one million species at risk of extinction. Yet, more than half the world’s economic output (US$44 trillion) is moderately or highly dependent on nature and its services. We are therefore exposed to risks that will arise from the loss of nature. While we are making progress on building climate into decision making, all actors across society now need to also act on nature. This includes businesses and financial institutions that have a key role to play in the move towards a nature positive economy. Currently, businesses and financial institutions lack the knowledge, capacity and data that they need to understand, mitigate and disclose the nature-related risks that they face.

The Taskforce on Nature-related Financial Disclosures (TNFD) is bringing much-needed clarity on how organisations can start to incorporate nature-related risks and opportunities into their strategic planning, risks management and asset allocation decisions. The methodology that we present here is a first iteration that draws heavily on the principles outlined by the Taskforce on Nature-related Financial Disclosures (TNFD) in its Beta framework. It is a methodology for profiling nature-related risks associated with location-specific business activities. It allows reporting entities to respond to the TNFD by supporting implementation of the TNFD framework by Environmental, Social and Governance (ESG) analytics providers. It can draw on both disclosed and third-party company data. The methodology rests on two core building blocks for profiling nature-related risks, dependencies on nature and impacts on nature. We break these down into components that help to profile nature-related risks that can be assessed using company data and global nature-related datasets. We provide formulae and supplementary material to support application of this methodology by businesses and financial institutions.

Our development of this methodology has benefited from the input of multiple experts within the conservation community, the finance sector and businesses. While this first version of the methodology enables action on nature by businesses and financial institutions, we recognize that it will need to evolve in the future. We also identify key priorities for further development in the document. We will continuously review these to account for developments in the field, particularly those of the TNFD as well as the post-2020 global biodiversity framework of the Convention on Biological Diversity.