This article is co-authored by Jayne Kelly.
Norton Rose Fulbright anticipates wide ranging legal reforms and scaled up action to address the biodiversity crisis to continue accelerating throughout 2023.
Taking reasonable steps to mitigate negative impacts on nature is no longer enough – shareholders, consumers and employees are now expecting that organisations adopt a nature positive approach. Indeed, “nature positive” has been framed as the new “net zero”.
Just this week, the Taskforce on Nature-related Financial Disclosures (TNFD) released its final beta framework for nature-related risk management and disclosure. We anticipate the TNFD framework will become the primary global framework for the assessment of nature-relate risks and opportunities, and its recommendations will shape corporate disclosures on nature in the coming decade.
In Australia, the Environment Minister, the Hon Tanya Plibersek has introduced the Nature Repair Market Bill 2023 to Parliament, which will facilitate tradeable biodiversity certificates to be issued for land and marine conservation and regeneration projects.
These developments, alongside a number of other Australian and international developments set out below, are key tools that will enable the private sector to address the biodiversity crisis.
We recommend that organisations across all sectors take steps to quantify their impacts on nature, assess their exposure to nature-related risks, and develop nature positive action plans.
Biodiversity loss is occurring faster than at any other time in human history.1 However, scientists have warned us for decades that we are currently experiencing the world’s sixth mass extinction event, and it is only in the past few years that policy-makers and organisations have begun to view this as a major economic risk.
In January this year, the World Economic Forum (WEF) identified biodiversity loss and ecosystem collapse as the fourth greatest risk facing humanity in the coming decade. The biodiversity crisis is one of the fastest accelerating global risks, and one of six compounding environmental risks identified in the ten greatest risks of the next decade.2
At Norton Rose Fulbright, we recognise that nature has an intrinsic value, and this is reason enough to conserve and protect it. However, it is important to recognise that the collapse of ecosystems will have severe economic and social consequences, with over 50 per cent of global economic output moderately to highly dependent on nature.
The Dasgupta Review, commissioned by the UK Government, found that our economic system is dependent on biodiversity.3 This study is a key driver and justification for investment in nature repair at scale.
In December 2022, nearly 200 countries agreed to a “new deal for nature” at the 15th Conference of Parties to the Convention of Biological Diversity (COP15). The Kunming-Montreal Global Biodiversity Framework (GBF) incorporates a 2030 mission to “halt and reverse biodiversity loss”, and a 2050 vision for biodiversity to be “valued, conserved, restored and wisely used”.
The GBF has been heralded as nature’s equivalent to the Paris Agreement in the sense that it provides a vision, a mandate and a framework for urgent and transformative action at the domestic level. Similar to the Paris Agreement, we anticipate that the GBF will trigger wide-ranging legal and policy reforms at the domestic level, which will be necessary to achieve the targets relating to protected areas, chemical use, and government subsidies that are harmful to biodiversity.
In the private sector, a consensus approach is emerging on capturing and reporting data related to nature use and impact. In particular, the release of the Taskforce on Nature-related Financial Disclosures (TNFD)’s final draft framework this week is a significant step in standardising a nature-related risk and opportunity assessment approach and related financial disclosure. This will be bolstered by the finalisation of the International Sustainability Standards Board (ISSB) standards on sustainability and climate-related disclosures, which is targeted for later this year.
The TNFD is nature’s equivalent to the Task Force on Climate-related Financial Disclosures (TCFD), and similar to TCFD, we anticipate that the recommendations of the TNFD will drive the disclosure of nature-related financial risks by organisations to become mandatory in some jurisdictions.
Finally, we consider that the ability to quantify and value nature repair is critical to driving voluntary action at scale. There has been significant progress on this front, with a number of international voluntary standards developing methodologies for quantifying benefits to biodiversity, in some cases in the form of tradable credits. Examples include Plan Vivo’s PV Nature,4 Verra’s nature crediting framework,5 among others.6
The need to ‘value’ nature is also being elevated and is at the core of the Australian Government’s proposed Nature Repair Market.
This update summarises these recent developments, and considers what actions organisations should take now to reduce their legal exposure and access the opportunities to generate value from natural capital assets.
After years of negotiation, nearly 200 governments agreed and signed the Global Biodiversity (GBF) at COP15 in Montreal in December 2022. The GBF presents a significant step forward towards the preservation of nature and biodiversity worldwide while recognising the need to align public and private activities, including through blended finance.
The core purpose of the GBF is to “halt and reverse” biodiversity loss. We consider that this amounts to global agreement that a nature positive approach is required, and we anticipate that this expectation will filter down to government and the private sector.
The GBF has four long-term goals for 2050, which broadly relate to ecosystem repair, maintaining genetic diversity, sustainable use of ecosystem functions and services, equitable sharing of benefits and the protection of traditional knowledge associated with genetic resources, and equitable access to means of implementation (including finance, capacity-building, scientific cooperation and technology transfer). While these goals are mostly general in nature, they include the following specific targets:
Signatories to the GBF have also agreed to monitor and report at least every five years on indicators related to progress against the GBF's goals and targets.
Separate to the GBF, it was also agreed at COP15 that a Special Trust Fund would be developed to support the implementation of the GBF.
The full text of the GBF including all goals and targets is available here.
Australia announced at COP15 that it will host the 2024 global Nature Positive Summit in collaboration with Pacific Island countries. A key purpose of the summit is to promote private investment in the environment, and many of the world’ environment ministers are expected to attend. The host city and dates are yet to be announced.
Established in 2021, the mission of the Taskforce for Nature-Related Financial Disclosures (TFND) is to create a risk management and disclosure framework for organisations to report and act on nature-related risks. The TNFD’s overarching aim is to support a change in global financial flows away from nature-negative outcomes, and towards nature-positive outcomes.
Like the TCFD, the TNFD format is modelled around governance, strategy, risk management and metrics. However, the TNFD has added specific nature and biodiversity considerations for companies when assessing nature related dependences, impacts, risks and opportunities. A key focus for companies is the location of their direct operations and that of their suppliers to determine their dependencies and impacts on ecosystem services, including the state of nature in these locations.
The TFND’s fourth and final beta framework was released earlier this week, which can be viewed in full for the first time. The final framework for market adoption is expected to be released in September 2023.
The TFND framework has three core elements: the core concepts and definitions; a risk and opportunity assessment approach (referred to as LEAP); and disclosure recommendations.
The TNFD’s disclosure recommendations support integrated climate and nature disclosures, with a high level of alignment between the recommended disclosures of each framework. The TNFD framework uses the same four pillars of governance, strategy, risk and impact management, and metrics and targets as the TCFD. The disclosure recommendations are set out in full in Figure 1.7
Figure 1: TNFD Disclosure Recommendations
The TNFD’s framework addresses organisations’ direct, upstream, downstream and financed operations, which promotes holistic supply chain analysis. In addition to global disclosure metrics, core sector disclosure metrics are included, as well as draft guidance for four sectors: Agriculture and Food; Mining and Metals; Energy; and Financial Institutions.
We note that the TNFD framework draws from the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) standards, and it is likely that the TNFD will also inform ongoing standard development by these bodies.
The International Sustainability Standards Board (ISSB) was formed by the International Financial Reporting Standards Foundation in 2021 to develop global standards for sustainability related disclosures. At COP15, the ISSB announced that it will begin to incorporate nature and biodiversity in future standards and developments. The ISSB has indicated that initial focus will be placed on building the links with the ISSB’s draft climate standard, including consideration of recent TNFD developments.
The two standards released by the ISSB for public consultation last year (‘S1 General Requirements for Disclosure of Sustainability-related Financial Information’ and ‘S2 Climate-related Disclosures’) seek to establish an internationally standardised and reliable framework for climate and other environmental, social and governance reporting.
Further information about these standards can be found here. The ISSB confirmed at their February board meeting that we can expect that these two standards will be finalised around June 2023.
The Australian Government’s Nature Repair Market Bill (2023), which proposes a scheme to incentivise investment in nature restoration, was introduced to Parliament on 29 March 2023. The proposed Nature Repair Market will facilitate the trading of biodiversity certificates and will be overseen by the Clean Energy Regulator.
The Nature Repair Market Bill proposes to establish:
Nature and biodiversity markets around the world have emerged partially in response to the need to bridge the gap in global biodiversity financing, particularly from the private sector. The Organisation for Economic Cooperation and Development (OECD) estimated in 2020 that the scale of global biodiversity finance was between USD $78-$91 billion, most of which arose from public funding.8 While estimates differ, the Nature Conservancy estimates that an additional USD $598 to $824 billion needs to be spent annually to reverse the biodiversity crisis by 2030.9
Publication
A Victorian parliamentary inquiry report published in August 2024 concerning workplace drug testing (the Report) contains key recommendations relating to medicinal cannabis for both the Victorian Government and WorkSafe Victoria.
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