Global Updates on ESG Disclosure: There's nowhere to hide from nature risk

Australian companies are grappling with a fundamental challenge: while they can decarbonise their operations to achieve net zero, they cannot simply 'denature' their businesses. This reality is driving unprecedented global momentum around nature-related financial disclosures, with profound implications for how organisations assess and manage environmental dependencies.

Tony Goldner, Executive Director of the Taskforce on Nature-related Financial Disclosures (TNFD), has been working at the intersection of finance, sustainable development and diplomacy for over two decades. Speaking at the Impact X Summit for ESG Reporting & Disclosure, Goldner emphasised the urgent need for businesses to broaden their focus beyond climate change.

"There's nowhere to hide from nature risk," said Goldner, quoting a Swedish institutional asset owner who joined TNFD's task force. "We've realised we need to walk towards this issue, we can't walk away from it."

The Scope of Nature-Related Financial Risk

The financial implications of nature-related risks are already manifesting in dramatic ways. Research from Bloomberg New Energy Finance identified multiple instances where companies suffered material financial consequences from nature-related events. Tesla's share price dropped 3.5% after news broke of potential regulatory action in Germany for lowering the water table under their Berlin Gigafactory. More dramatically, PG&E, a listed Californian energy company, experienced a 90% share price fall, bankruptcy, and now faces $40 billion in capital expenditure after being found liable for causing bushfires.

"We're not talking about rounding errors here, we're talking about very significant financial impacts," 

The TNFD framework addresses five key drivers of nature change, with only one being climate-related. This comprehensive approach recognises that ecosystem collapse presents unique systemic risks that differ from traditional climate transition risks.

"We run the risk of entire ecosystems collapsing, and there's this notion in the science of tipping points," Goldner explained. "If we get past those tipping points, by the time we understand that we've crossed that threshold, it may be too late to turn back."

Integration and Standardisation Challenges

Mark Gough, CEO of the Capitals Coalition, leads a global collaboration transforming decision-making by including the value provided by nature and people. His organisation has been working to harmonise various sustainability frameworks and reduce the complexity burden on reporting teams.

Gough highlighted a critical shift in market expectations: "At the moment, most of the success criteria of how we judge things is still based around finance... but what most people really want to think about in their personal lives is their families, their friends, the nature that they go walking in – all of those things that we care about are not represented in the economic system."

The Capitals Coalition has developed what Gough describes as a breakthrough approach to integrated reporting, moving beyond isolated climate, nature, and social assessments toward a unified framework that addresses trade-offs between different sustainability issues.

"When we first released this, the response we were expecting was that people were going to say 'I can't do that, I've got too much going on with climate'... actually, the response has been completely the opposite," Gough noted. "People have been saying this is really needed now."

Market Momentum and Regulatory Alignment

The TNFD has now exceeded 500 adopters globally, representing nearly $20 trillion in assets under management. This adoption spans diverse industry sectors and geographies, with particularly strong uptake across Asia-Pacific and Europe.

Importantly, the framework is designed to integrate with existing climate reporting structures rather than creating additional standalone reports. The TNFD recommendations align with International Sustainability Standards Board (ISSB) standards S1 and S2, and the organisations are working closely together on future nature-related standards.

"ISSB covers all material sustainability topics in its S1 standard, so if you do have material nature-related issues, you are in fact already expected to understand and disclose those issues," Goldner clarified, addressing misconceptions about current reporting requirements.

Strategic Implications for Australian Leaders

For Australian sustainability executives, these developments signal a need to expand risk assessment capabilities beyond traditional climate metrics. The TNFD's LEAP Assessment Approach (Locate, Evaluate, Assess, and Prepare) provides a structured methodology for identifying nature dependencies and impacts across business operations.

The regulatory landscape is also evolving rapidly. While voluntary adoption continues to grow, mandatory requirements are emerging in the European Union and other markets. Australian companies with international operations or investor bases need to prepare for these expanding disclosure requirements.

LEAP is now being used by thousands of companies and financial institutions globally.

Perhaps most significantly, investors are increasingly incorporating nature-related factors into their decision-making processes. The Norwegian sovereign wealth fund, the world's largest investor, engaged over 500 portfolio companies on nature-related issues last year, resulting in 10 divestments and 8 reinvestments based on companies' responses to nature-related risks.

"Investors are not just seeking information about risk exposure, they're looking at what companies are doing to take remedial action and also invest in new products and services that could create new opportunities," Goldner observed.

Looking Forward

The integration of nature-related disclosures into mainstream financial reporting represents a fundamental shift in how businesses assess value creation and risk management. Unlike climate change, where the goal is elimination of emissions, nature-related strategies offer opportunities for positive impact and business model innovation.

As Goldner concluded: "Unlike climate, where we're trying to eliminate what we don't want, with the rest of nature we have this unique opportunity to work with nature to accelerate its own ability to restore itself."

For Australian business leaders, the message is clear: nature-related financial disclosures are not just an emerging compliance requirement, but a strategic imperative that will increasingly influence capital allocation, operational decisions, and competitive positioning in the years ahead.

Explore the TNFD recommendations and guidance.