Scenic summer landscape and blooming mountain laurel, Morning light, Blue Ridge Mountains, North Carolina

Scenic summer landscape and blooming mountain laurel, Morning light, Blue Ridge Mountains, North Carolina

Driving action on nature through enhanced transparency and reporting

Authors

Lucy Godshall

Principal, Climate Change and Sustainability Services, Ernst & Young LLP
Mark Weick

Managing Director, Climate Change and Sustainability Services, Ernst & Young LLP

1 minute read 17 Sep 2024

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Climate change and sustainability services

The 2024 EY Nature Risk Barometer provides insights into nature-related corporate disclosures against TNFD recommendations.

As the world grapples with climate change and the interconnected nature crisis, businesses are increasingly recognizing the need to understand their reliance on nature and the critical role that nature plays in driving business value, but the journey has only begun. According to the 2024 EY Nature Risk Barometer, more companies are disclosing information related to nature in alignment with one or more of the 14 Taskforce on Nature-related Financial Disclosures (TNFD) recommendations but overall coverage and alignment remains limited.

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Building on the baseline analysis of the inaugural EY Nature Risk Barometer conducted in summer of 2023, the 2024 edition extends its scope to more than 350 companies across the United States, Canada and Latin America in preparation for COP16 to be held in Colombia in October of this year. The Barometer provides insights into the evolving state of nature-related disclosures, benchmarked against the final TNFD recommendations finalized in September 2023.

Some of the key findings include:

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While 94% of companies assessed have disclosed against at least one TNFD disclosure pillar, overall alignment (extent to which a company’s disclosures align with TNFD recommendations) with the disclosures remains limited.
Latin American companies lead with 89% coverage (provided at least some level of information toward each of the 14 TNFD recommendations), followed by Canadian (72%) and US companies (66%).
Alignment scores are lower, with Latin American companies at 29%, Canadian companies at 15%, and US companies at 13%, reflecting the challenge of fully integrating TNFD recommendations into corporate disclosures.
The extractive and mineral processing sector tops TNFD disclosure with 91% coverage and 27% alignment.
The food and beverage sector follows closely with 88% coverage and 24% alignment.
Financial sector companies show the lowest coverage and alignment, at 26% and 8%, respectively, highlighting the complexity of assessing indirect nature-related risks.

Chart 1:

While 94% of companies have disclosed information relating to at least one of the four TNFD disclosure pillars, overall alignment (extent to which a company’s disclosures align with TNFD recommendations) with the disclosures remains limited.

Chart 2:

Disclosure coverage indicates that a company has disclosed some level of information relating to each of the 14 TNFD disclosure recommendations. Among companies assessed across the Americas, companies in Latin America lead with 89% coverage, followed by Canadian (72%) and US companies (66%).
Disclosure alignment indicates a company's disclosures were closely guided by the TNFD recommendations. Alignment to TNFD recommendations are lower than overall coverage. Companies in Latin American represent 29% alignment, Canadian companies at 15%, and US companies at 13%, reflecting the challenge of fully integrating TNFD recommendations into corporate disclosures.

Chart 3:

Companies in the extractive and mineral processing sector are leading in nature-related disclosures, with 91% coverage over and 27% alignment to TNFD's recommendations.
The food and beverage sector follows closely with 88% coverage and 24% alignment.
Financial sector companies show the lowest coverage and alignment, at 26% and 8%, respectively, highlighting the complexity of assessing indirect nature-related risks.

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Summary

While corporate disclosure around nature is improving with the help of key frameworks like the TNFD, companies have more to do to enhance transparency and inform decision making.

More robust disclosures will help companies and their stakeholders to better understand what is needed to help protect or restore nature.

About this article

Authors

Lucy Godshall

Principal, Climate Change and Sustainability Services, Ernst & Young LLP
Mark Weick

Managing Director, Climate Change and Sustainability Services, Ernst & Young LLP

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