In February, we sat down with Luke Gowland, ESG reporting and data management specialist in the Verdantix ESG & Sustainability team to discuss his recent research into the impact of the Taskforce on Nature-related Financial Disclosures (TNFD).
Can you tell me a little bit more about what you’re researching at the moment?
My main area of research covers ESG and sustainability reporting and data management tools. I recently published a Smart Innovators analysis looking at ESG reporting and data management software tools specifically designed for investors. Now, I’m spending more time diving deeper into the TNFD and how organizations can adapt their reporting processes to accommodate nature-related disclosures.
In 20 words or less, can you tell me why the TNFD is important for firms?
Nature and biodiversity loss is a systemic risk; over half the world’s GDP is moderately or highly dependent on nature.
What are the wider implications for TNFD implementation?
The TNFD has catapulted nature and biodiversity from a specialist concern to a strategic risk. If organizations are aware of their nature-related impacts and dependencies, they are able to adapt their business models to mitigate risks from disruptions such as water shortages and land degradation. I read a report by economist Sir Partha Dasgupta that highlighted that, across a range of sectors, organizations that fail to manage their nature-related impacts have experienced permit refusals and even lawsuits, which have a detrimental impact on credit ratings and valuations.
What’s the one thing you would suggest organizations do to tackle TNFD disclosures?
It’s hard to give just one piece of advice, but I would say start by cultivating nature-related skills internally through education. In our surveys, we often find that access to relevant expertise stands in the way of sustainability initiatives. We often refer to sustainability as a team sport, meaning that expertise from across the organization is needed to produce disclosures and drive performance improvements. Upskilling the workforce can overcome the skills gap and ensure all stakeholders are on the same page.
What is one recent innovation in the biodiversity technology space that’s caught your eye?
I’ve been interested in seeing how digital twin technologies are being applied to biodiversity research. They effectively use real-time and historical data to present current models and simulate future scenarios, and are already being used in several industries. Applying a biodiversity lens to digital twins, organizations can begin to model future environmental conditions and land use changes to understand the impacts on their operations. There’s a still big mountain to climb and best practice protocols to establish before it is widely adopted, but I think the TNFD will act as a catalyst for progress in this area.
What’s next on your research agenda?
I’ll be undertaking a global corporate survey on ESG and sustainability later this year – we see this as an exciting opportunity to understand what is driving organizations to tackle ESG issues and gives us a good idea of the direction of travel for technology investments. I will also be updating our Smart Innovators report for ESG and sustainability data management and reporting software. Considering the range of reporting commitments businesses are facing, this has emerged as a critical software category to ensure regulatory compliance – while simultaneously acting as a management tool to drive future sustainability performance.
