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Nature risk pilot reporting framework

Today, there is no standard for defining and reporting nature-related risks, and corporate disclosure on impacts and dependencies on nature is limited. Several international initiatives are trying to fill this gap.

Implementing structured reporting on nature-related risks

While waiting for further development of tools and methodologies, a Norway-based group decided to launch a pilot project to demonstrate how real-economy companies can implement more structured reporting on nature-related risks and identify areas for improvement.

The project also discussed how a financial institution could use this type of disclosure for active and informed engagement with a portfolio company in pursuing risk identification and reduction.

Based on a real-world exercise, this project aimed to improve and guide the development of relevant international initiatives, particularly the Taskforce on Nature-related Financial Disclosures (TNFD). Launched in 2021, this initiative is developing a framework to support businesses in assessing their nature-related risks and opportunities.

The project is also contributing to the UNEP FI Sustainable Blue Finance Initiative and acting as a case study on how to use the recent guidance for financial institutions, Turning the Tide (Guidance), on how to finance a sustainable blue economy across five sectors, including seafood.

Who

The group consists of:

What

The challenge that the project aims to address is the lack of corporate reporting on nature-related risk. The TNFD was launched in 2021 to deliver a framework by 2023 for companies and financial institutions to report and act on nature-related risks.

Given the urgency to stop the degradation of our planet, we need companies and the finance sector to start acting now. Various tools and methodologies for businesses and financial institutions are under development, and companies can already start to increase their understanding of their nature-related risks and report on the most critical risks for their business.

The purpose of this pilot is to test how one could implement a reporting framework for nature-related risks, how the framework can be improved and made more accessible for companies to report on, and how financial institutions and other stakeholders can use it.

To Storebrand’s knowledge, no such thorough reporting relates explicitly to risk. The expectation is that the most progressive companies already disclose some information in their publicly available reporting (annual and sustainability reports). However, it is often the case that this information is not adequate for financial institutions to assess the level of risk that a company might represent, nor is it reported in a standardized way that enables corporate comparisons across sectors (within the industry).

Potential benefits of the project are to improve understanding of the impacts and dependencies of aquaculture companies on nature and to contribute to generating better data on the ESG impacts of companies, which is beneficial to both companies and investors.

How

The group considered several frameworks and tools, including the ENCORE tool and an adapted TCFD framework.

In the end, the group decided to attempt to adapt a framework developed by the United Nations Environment Programme - Finance Initiative (UNEP FI) to provide sector-specific, decision-useful information to banks, investors, and insurers on how to avoid and mitigate environmental and social risks and impacts, as well as make the most of opportunities, when providing capital to companies or projects within the blue economy.

The Guidance was published in March 2021 and provides a useful framework to identify key impacts and risks to and from nature specific to aquaculture. However, the Guidance was not designed to be a reporting framework, so part of the purpose of this pilot is to make certain modifications to adapt it without changing the primary content and information presented.

The project demonstrates that it is already possible for a company to report thoroughly on various factors that might constitute a risk related to the nature of the company itself and its financiers. This exercise aims to contribute to the ongoing development of international standards, such as the TNFD, and constitute a concrete example of how a reporting framework could be designed. This particular project concludes with the publication of the final report.

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