By Veda FitzSimons, Associate
The third volume of the Intergovernmental Panel on Climate Change’s 2022 report landed today, after several years of work by the world’s leading scientists, and weeks of line-by-line reviews by scientists and government delegates. Its focus is on mitigation, and it follows a report last month on adaptation.
What is clear from both reports is that climate change is already having a devastating impact on nature, and there is evidence that we are butting up to the hard limits of some ecosystems’ capacity to adapt. Plainly, on both the mitigation and adaptation fronts our efforts so far have not been nearly enough. The report today states that the average annual investment required is three to six times greater than current levels if we are to limit warming to 2°C or 1.5°C.
It also highlights the critical role natural climate solutions can and must play in mitigation. Along with clean electricity, the report identifies agriculture, forestry and land use (AFOLU) as the sectors where the earliest emissions reductions can be achieved – putting them ahead of industry and transport.
In numbers, the projected mitigation potential of agriculture, forestry and land use options – costing less than USD$100 per tonne of CO2e – is 8-14 gigatonnes of CO2e per year (roughly a quarter of current annual global emissions). 30 to 50 per cent of this potential is available at less than USD$20 and could be upscaled in the near term across most regions.
Beyond mitigation, the report last month also highlighted how critical nature will be in adaptation – from trees cooling cities to mangrove forests acting as a buffer for coastal floods (more on these amazing ecosystems and carbon stores below). Around 30 to 50 per cent of Earth’s surface needs to be effectively conserved to build resilience against climate change, the report found.
Whether in mitigation or adaptation, the science tells us that nature is a critical solution.
TNFD releases first guidance on nature risk
For corporates, nature is complex to grapple with – far more complex than climate. Nevertheless, investor expectations on nature risk are already building, and we believe companies and financial institutions will be expected to respond much more quickly than they did on climate. This is in part because the nature response is leveraging the climate playbook.
In this context, the just-published ‘beta’ version of the Taskforce for Nature-related Financial Disclosures (TNFD) framework is particularly welcome.
The TNFD is asking organisations across different sectors and geographies to test and provide feedback on the Beta v0.1 framework. There are certainly synergies with the approach of the Task Force on Climate-Related Financial Disclosures (TCFD) that many organisations are already using. However, the TNFD also clearly outlines where there are important differences when it comes to nature risk, notably the so-called ‘double materiality’ of risk and dependency on nature.
The framework sets out how companies can assess their impacts and dependencies, understand the risks and opportunities associated with these, and consider future disclosures as appropriate.
Although the extent of nature loss from climate change is already devastating – as the latest from the IPCC attests – the TNFD Beta v0.1 provides a framework for us to understand and assess cumulative nature risk across a broader set of drivers including land-use change, pollution, natural resource use and exploitation, and invasive species. This more comprehensive view is a crucial underpinning to the global response to nature loss.
Though the final TNFD framework is not due to be published until 2023, this beta version provides enough to get started, and at Pollination, we’re already working with clients to begin the TNFD alignment journey. These include consumer goods, agriculture and infrastructure companies, and private equity firms.