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i4n The Earthshot Prize 2023

TNFD: Taking into account
the impacts of business on nature .

Most companies perform strategic and operational risk analysis and develop solutions to mitigate identified risks. However, only 5% of Fortune Global 500 companies have set biodiversity-related targets and assessed their impacts on nature even though the WEF has ranked biodiversity loss and ecosystems collapse as one of the third most severe risks that humanity will face in the next 10 years.
The link between the nature crisis and human activity is now well-established and the five drivers of biodiversity loss identified by IPBES can all be linked to business activities.

DEFINITIONS
Impacts: Any change in the state of nature, which may result in changes to the capacity of nature to provide value to business and society. Impacts can be positive or negative and they may be direct (caused directly by a business activity), indirect (caused by a business activity with an indirect causal link) or cumulative (caused by the interaction of activities of different actors or global trends). In the production of natural fibres in the textiles industry, direct impacts on nature could occur through converting habitats for crop production. The textiles industry’s greenhouse gas emissions contribute to air pollution and climate change, as indirect impacts. Cumulative impacts could occur through pollutants, where the pollution impacts of the fibre producer combine with pollution from other producers and industries operating in the landscape, resulting in substantial negative impacts on freshwater ecosystems and sensitive species, and all people who depend on them. This could be financially material for the textile company, exposing it to potential fines, supply chain disruption and the loss of its social licence to operate.

Depending on their industry, a company´s operations and supply chain structure will have differentiated direct and indirect impacts on nature.
There are several tools available to assess a company´s impact and dependencies on nature such as ENCORE. If you need support to get started with this process, get in touch.
The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a set of disclosure recommendations and guidance for organisations to report and act on evolving nature-related dependencies, impacts, risks and opportunities.

Further reading

  • TNFD: Taking into account business’ dependency on nature
  • Risks linked with nature

 

Relevant I4N ventures: Primal Soles, Fabas, and Mycpac

Author:
Coralie Delacoste