Nature-related finance and assessments rise globally

The Taskforce on Nature-related Financial Disclosures (TNFD) reports a global increase in finance and assessments focused on nature, driven by more financial firms integrating nature-related risks and dependencies into investment decisions and reporting.

In its latest report, the taskforce noted the number of banks, asset managers, insurers and corporations conducting nature-related assessments has risen and that capital flows are increasingly labelled or analysed for nature outcomes. The report links the change to investor demand for biodiversity information and evolving regulatory expectations.

Financial actors are using the TNFD framework and other tools to identify portfolio exposures to land use change, water stress, deforestation and habitat loss. Lenders and asset owners have expanded due diligence in sectors with high exposure, including agriculture, forestry, mining and food and beverage.

Companies that rely on natural inputs or operate on natural assets are being assessed more often for operational and supply-chain risks linked to biodiversity loss and ecosystem degradation. Banks and insurers have begun to factor nature into credit and underwriting decisions. Issuance of green and nature-labelled bonds and loans to fund conservation, restoration and sustainable land use has increased.

TNFD attributes the trend to investors seeking consistent, decision-useful data, regulators moving toward mandatory biodiversity-related disclosures in some jurisdictions, corporate pressure from customers and supply-chain partners, and increased philanthropic and development finance that helps mobilise private capital.

The report identifies obstacles including gaps in data, inconsistent methodologies, scarce historical baselines, difficulty translating ecological information into financially material metrics, and capacity limits at smaller institutions and among suppliers. These issues make it hard to measure and compare nature-related impacts reliably.

TNFD calls for improved data sharing, development of standardized metrics and closer collaboration between financial institutions, companies, scientists and governments. The taskforce recommends firms start with the most material nature-related issues in their portfolios and expand assessments as data and tools improve.

Market responses recorded in the report include growth in products that finance nature outcomes, more scenario analysis and stress testing for nature risks, internal targets to reduce portfolio exposure to activities that drive biodiversity loss, investor engagement to improve supply-chain traceability and insurers piloting nature risk models.

The report states, “Better disclosure will enable capital to be directed to activities that reduce nature loss and support restoration.”

TNFD, a global initiative, developed a risk-management and disclosure framework for nature-related issues and worked with financial institutions, companies, regulators and scientific organisations to produce guidance intended to make nature information more comparable and useful for decision making.

The report concludes uptake is uneven across regions and sectors and that further expansion of assessments and finance linked to nature depends on improved data, clearer regulatory signals and continued engagement between public and private actors.