New proposals to help firms account for nature-related risks

Phyllis MUCHOKI

The final recommendations for nature-related risk management and disclosure has been launched by Taskforce on Nature-related Financial Disclosures (TNFD) has been introduced to the Kenyan market in partnership with the African Natural Capital Alliance (ANCA), the Kenya Bankers Association (KBA), Kenya Private Sector Alliance (KEPSA) and WWF.

These recommendations were launched globally by the TNFD in New York during the Climate Week NYC in September. Significantly, organizations’ – including, Equity Bank and Sanlam Kenya- have announced their commitment to actively begin using the TNFD Recommendations in their operations.

By doing so, they aim to enhance decision-making processes for financial service providers and companies, ultimately enabling the shift of financial investments towards nature-positive initiatives and outcomes.

The launch comes following two years of design, development and engagement with over 1,200 institutions and four draft releases. The recommendations are drawn from the widely adopted Taskforce on Climate-related Financial Disclosures (TCFD) and are consistent with the standards of the Global Reporting Initiative (GRI) and ISSB.

During the launch event, Elizabeth Maruma Mrema, TNFD Co-Chair and UN Assistant Secretary-General, emphasised the critical nature of addressing nature degradation. She stated, “Nature degradation is increasing, and with six of the nine planetary boundaries already breached, nature risk is a financial risk.

Yet to date, businesses have mostly considered nature to be an unlimited and free provider of critical inputs into their operations and value chains.”

John Gachora, KBA Governing Council Chair, emphasized that that Nature is no longer a corporate social responsibility issue but a core and strategic risk management issue that goes hand in hand with climate change.

He said, “It is important therefore to integrate nature positive business practices in our governance structures, strategic planning, risk, and impact management frameworks while having clear targets to pursue into the future.”

Dr. Habil Olaka, CEO, Kenya Bankers Association, also reiterated KBA’s commitment to support the industry to embrace actions that advance nature-positive outcomes, commenting, “KBA is proud to be a TNFD Consultation Group co-convener alongside KEPSA and ANCA.

The Association is keen to encourage financial institutions and businesses to be a force of good for nature. Through our Sustainable Finance Initiative, we are committed to encourage voluntary market adoption of the TNFD recommendations.

We will be working closely across the Kenyan and East African banking sector to support them in integrating the Recommendations. We’re excited about what’s to come.”  

Carole Kariuki, CEO, KEPSA shared “Recognizing the interdependence of the environment with human well-being and economic prosperity is crucial for ensuring a sustainable and resilient future for all.

There is growing evidence that degradation of nature poses risks for businesses, capital providers, financial systems and economies, and that these risks are increasing in severity and frequency.

As co-conveners of the TND Kenya Consultation Group, we   are committed to supporting our members through awareness and capacity building in adopting the TNFD Recommendations, for promoting sustainable and responsible business practices.

We believe that implementing this framework is a critical step towards creating a more environmentally friendly and responsible business environment.”

Dorothy Maseke, ANCA Head of Secretariat, hailed the launch of the recommendations as a step in the right direction, stating “As ANCA, we are proud to have run the Africa pilot to the TNFD that brought together several financial institutions to review and test the framework and provided feedback to the TNFD from an African context.

This launch in Nairobi comes at an opportune time. All over the world and particularly here in Africa, the figures on biodiversity loss are astounding. It is not just the scale of the devastation, but the speed too with which whole species are being decimated.

At the heart of this grave thought is colossal failure of leadership, planning and governance across all levels of society. That’s why it’s quite heartwarming to see the financial services sector roll up sleeves and decide to mainstream nature preservation in their business.”

During the launch, Dr. James Mwangi Plc Group MD and CEO, Equity Group Holdings said “We appreciate that to manage the risks to lives, livelihoods and financial risks to businesses we need to solve the integrated impact of nature, climate and people and that the private sector has a key role to play in nature climate action.

This is why at Equity, we joined the Africa Natural Capital Alliance (ANCA) as a founding member, to ensure a coordinated Africa voice with the private sector as a key partner in solution generation towards the TNFD Framework. This is also why we have committed to be an early adopter of TNFD.”

Sanlam Group, Africa’s largest non-banking financial services provider, is one of the first companies in Africa to announce its commitment to publish its first TNFD-aligned disclosures.

Patrick Tumbo, Group CEO, Sanlam Kenya Plc, stated: “At Sanlam Kenya, we are committed to adopting the Taskforce on Nature-related Financial Disclosure (TNFD) recommendations in our Sustainability reporting given that one of our ESG priority pillars is on Climate Action and Decarbonization.

We recognise that we will not attain our objective without intentionally incorporating the protection of nature-related assets in our strategic and operational decision-making.

We congratulate TNFD for launching these recommendations in Kenya, which will act as a guide and allow easier benchmarking on nature-related disclosures, and we encourage the private sector to adopt these recommendations as we work towards a common purpose”.

Alice Ruhweza, Senior Director, Policy Influence and Engagement, World Wide Fund for Nature International said: “As founding partners of the Taskforce for Nature-related Financial Disclosures (TNFD) we commend the commitment Kenya is making today towards adopting the TNFD reporting recommendations.

This is a milestone in the transition to a nature-positive economy. As the adage goes, you can’t manage what you can’t measure.”

The final TNFD Recommendations comes at a time when there has been considerable pressure from shareholders, regulators, and customers for companies to disclose the impacts of biodiversity and nature-related loss.

The TNFD Recommendations are consistent with existing and emerging IFRS and GRI Reporting Standards and are aligned with the requirements of the Kunming-Montreal Global Biodiversity Framework.