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EY’s “Nature Risk Barometer” reveals the results of its evaluation of nature-related disclosures against the 14 Taskforce on Nature-related Financial Disclosure (TNFD) recommendations across the core disclosure pillars of Governance, Strategy, Risk and Impact Management, and Metrics & Targets for 369 companies across 10 SICS sectors in the US, Canada, and Latin America.

Coverage—66% of US companies have disclosed some degree of nature-related information associated with one or more of the 14 TNFD recommended disclosures. This compares to 72% of Canadian companies and 89% of Latin American companies.

Across all companies, the Extractives & Minerals Processing companies had the highest coverage overall, at 91%, compared to 48% at the low end for Financials companies. 

Alignment—Alignment evaluates the quality of a company’s disclosures in relation to the TNFD recommendations on a scale of 0 to 5 (see page 11 of the report), expressed as a percentage of the maximum score, considering the level of detail and how well the disclosures meet the recommendations. A score of 100% indicates that the company included disclosures aligned to all recommendations and the alignment of the disclosures met the maximum score of 5 for each of the 14 recommendations.

Across all companies, alignment scores, like coverage scores, were highest among Extractives & Minerals Processing companies at 35% and lowest among Financials companies at 14%.

Key findings across disclosure pillars and companies

Governance

• Board oversight for nature-related issues remains limited, with just 5% of companies assigning the board direct oversight for nature or biodiversity beyond ESG and sustainability.
• Companies with the strongest TNFD coverage and alignment often have dedicated cross-functional working groups focused on specific nature-related issues such as biodiversity, water stewardship, deforestation, and ecosystem restoration.
• Engagement with indigenous communities to help manage nature-related dependencies, impacts, risks and opportunities, is increasing.

Strategy

• 27% of companies specifically address biodiversity as part of their sustainability agenda.

Risk and Impact Management

• Nature-related risks aren’t typically integrated into companies’ broader enterprise risk management and impact assessment frameworks.
• EY’s analysis revealed a dearth of disclosures concerning the financial repercussions or effects of nature-related dependencies and impacts.  

Metrics & Targets

• Companies are increasingly quantifying nature-related impacts and dependencies, with 43% of companies disclosing nature-related metrics, most commonly in relation to water use, discharge, and withdrawal, and afforestation, deforestation, and identification of key species and habitats under threat.
• Companies are setting targets on key areas like watershed remediation, habitat restoration, ecosystem preservation, and conservation of species on the International Union for Conservation of Nature’s (IUCN’s) Red List.

See EY’s release; “SBTN announces first companies publicly adopting science-based targets for nature” (Science Based Targets Network); our recent report: “Significant Uptick in Commitments to TNFD-Aligned Reporting”; and additional resources on our Nature/Biodiversity page.

                 This post first appeared in the weekly Society Alert!