The Climate and Nature Disclosure Landscape
GRI, TCFD, TNFD or ISSB?
Overview
If you do not recognise the acronyms above, this section will help you to better understand the climate and nature disclosure landscape and guide you through the basics of climate and nature disclosure requirements.
What you need to know
What is climate disclosure?
Climate disclosure typically entails clear and comprehensive reporting on:
- Greenhouse gas (GHG) emissions and reduction targets (also net-zero targets) that are based on science and could be validated by the Science Based Target Initiative (SBTi).
- Material climate or sustainability-related risks and opportunities.
- The governance and strategy regarding those risks, including the process for identifying, managing and monitoring them.
- Sustainability and climate targets and metrics.
What is nature disclosure?
Similar to climate disclosure, nature disclosure usually involves reporting on:
- Metrics related to the interactions between the organisation and nature, and nature-positive targets. To ensure targets are credible and science-based, organisations can get their targets validated by the Science Based Target Network (SBTN).
- Material nature-related risks and opportunities.
- The governance and strategy regarding those risks, including the process for identifying, managing and monitoring them.
This information can be included in regulatory filings, such as the foreword of annual reports, prospectus, initial listing disclosures, transition plans and the notes to financial statements. It should be made accessible to stakeholders, including investors, shareholders and local communities.
Choosing the appropriate reporting and disclosure framework from the many available (mandatory or voluntary) schemes can be challenging, however, efforts towards global harmonisation of standards are underway.
Do you remember the initial list of disclosure acronyms (GRI, TCFD, TNFD or ISSB)?
Explore this interactive tool to learn about them and the other initiatives of the climate disclosure landscape:
Source: Climate Governance Initiative’s Climate and Nature Disclosure Navigator
Who is responsible for disclosing the climate and nature-related information of an organisation?
The responsibility falls upon the collaborative efforts across various departments within the organisation. By fostering cross-departmental collaboration, a comprehensive understanding of climate and nature impacts throughout the business operations and supply chain can be achieved, enabling effective risk management and the identification of valuable opportunities.
Ultimately, the approval of corporate climate and nature disclosure rests with you, the board of directors, as part of your director’s duties. You may be exposed to litigation risk if you fail to meet governance standards in the stewardship of your organisation, including incorporating climate change and nature into the business strategy and disclosing the derived risks and opportunities in the organisation’s financial disclosures.
Broader context
Climate and nature disclosure provides investors with vital information about an organisation’s exposure to climate risks and the organisation’s ability to manage those risks and take advantage of emerging opportunities. Investors are increasingly paying more attention to climate and nature-related factors in their decision-making processes, and robust disclosure enables them to make more informed investment choices, helping to build investor confidence and trust.
Additionally, climate and nature disclosure helps companies to better engage with stakeholders, including customers, employees, and communities. It demonstrates the organisation’s commitment to climate and nature action and facilitates dialogue with stakeholders who are increasingly concerned about climate change and nature loss, including employees. Engaging these stakeholders can lead to increased loyalty, improved brand reputation, attracting and retaining staff, and expanded market opportunities.
How to take action
Embedding climate change and nature into your business strategy and disclosing associated risks and opportunities in your financial disclosures is a key director’s duty. This not only safeguards your organisation’s future but also positions your organisation as a trusted leader in addressing climate change.
Here are some questions you can raise in your boardroom:
- Is the organisation subject to mandatory climate and/or disclosure requirements in any of the jurisdictions in which we operate, and if so, are we meeting these requirements to a high standard?
- Will the organisation be subject to emerging disclosure requirements in some jurisdictions and if so, are we prepared for this?
- Do we have a net-zero transition plan and net-zero targets aligned with the Paris Agreement? Do we have nature-positive targets aligned with the Global Biodiversity Framework (GBF)? Are these plans and targets science-based, time-bound and externally accessible?
- If there is a transition plan, who is responsible for developing and delivering it? Is it embedded across the organisation?
- How are we communicating our progress towards net-zero and nature-positive targets to all stakeholders including our board, employees, investors, community members and consumers?
- How are we holding management accountable for implementing the regulatory requirements for climate and nature- relevant disclosure?
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Your regional Chapter can support you with tools and resources to enable effective corporate climate governance in your region.
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To navigate this landscape with confidence, please explore the Climate Governance Initiative’s navigator for board directors ‘Climate and Nature Disclosure Navigator’;