Schroders has joined the Taskforce on Nature-related Financial Disclosures (TNFD) Early Adopters and Nature Action 100, reflecting the global asset manager’s commitment to managing risks associated with nature loss and ecosystem decline.

With $US 55 trillion, or more than half of the world’s GDP, moderately or highly dependent on nature and the services it provides, nature loss creates significant operational, regulatory, litigation, and reputational risk for companies and investors. However, Schroders does not believe the risks associated with the deterioration of the world’s ecosystems have been appropriately recognised by financial markets today.

Global business leaders are becoming more focused on the risks and opportunities nature loss presents. The work of Nature Action 100 and the TNFD recommendations will help organisations to better understand, assess, and integrate the risks associated with nature loss and ecosystem decline, into business decision making.    

Schroders became a TNFD Early Adopter last week, as announced at the World Economic Forum in Davos. The TNFD Guidelines aim to provide decision makers in business and capital markets with better quality information on nature-related risks and opportunities, and provide a path to increase disclosure, consistent with Target 15 of the Global Biodiversity Framework (GBF) agreed at COP15.

Schroders anticipates that more widespread nature reporting, which the TNFD is likely to support, will result in more detailed and widespread corporate disclosures. This will help businesses identify and incorporate nature insights into strategic planning, risk management and asset allocation decisions. It will also help investors distinguish leading companies from laggards.

As a TNFD Early Adopter, Schroders plans to commence disclosure in line with the TNFD recommendations in corporate reporting from financial year end 2024 (to be published in 2025), recognising data availability remains limited among investee companies and assets. Having already developed proprietary analysis to assess impacts, dependencies, risks, and opportunities related to nature across the portfolios it manages, Schroders expects this will support its own TNFD reporting, whilst also benefiting from improved disclosure more broadly.

Related Article: POSCO Holdings joins TNFD and strengthens ESG management

In addition, in 2023, Schroders joined Nature Action 100, a group of asset managers kickstarting an engagement drive in 2024, targeting 100 companies in eight key sectors deemed systemically important to reversing nature loss.

Andy Howard, Global Head of Sustainable Investment, comments: “We believe it is important that companies start articulating their risks, impacts and dependencies on nature, to help ensure nature-related risks can be identified and integrated in investment decisions.

“Many companies are early in their journeys in understanding and disclosing nature-related information. Direct engagement with the companies we invest in will help us understand their progress and plans, and the TNFD framework provides a logical and comprehensive way to assess complicate data.”