Taskforce on Nature-related Financial Disclosures

Tuesday 30th April 2024 Lords Chamber

Question

14:46

Asked by

[Baroness Willis of Summertown]

To ask His Majesty’s Government what progress they have made in exploring how best the Taskforce on Nature-related Financial Disclosures framework can be incorporated into UK policy and legislation in line with their commitment in the 2023 Green Finance Strategy.

[Baroness Willis of Summertown (CB)]

I beg leave to ask the Question standing in my name on the Order Paper and refer to my declaration of interests in the register.

[The Minister of State, Department for Environment, Food and Rural Affairs, and Foreign, Commonwealth and Development Office (Lord Benyon) (Con)]

My Lords, the Government remain a big supporter and funder of the Taskforce on Nature-related Financial Disclosures. At COP 26, the UK backed the International Sustainability Standards Board to bring much-needed harmonisation to global sustainability reporting. I am pleased that the ISSB recently confirmed that it will explore a nature standard, drawing on the work of the TNFD. The Government have established a framework for once that standard is developed to assess the ISSB’s standards for suitability in the UK context.

[Baroness Willis of Summertown (CB)]

I thank the Minister for his response, but I worry that we are just not moving fast enough. For example, last week the Green Finance Institute published a report that found that UK firms are now highly exposed to nature risk and that nature degradation could slow down our GDP, with an estimated 12% loss in the near term. Putting that into context, that is a greater drop than we saw during the Covid pandemic. Does the Minister agree that ambitious policy is urgently needed on this, as well as mandatory disclosures against the TNFD, to enable UK companies to understand better their impacts on and risks from the environment, particularly nature and the ecosystem services that it provides?

[Lord Benyon (Con)]

The noble Baroness is absolutely right. Assessing the Materiality of Nature-Related Financial Risks for the UK is an outstanding report, which needs to be read by chairmen of risk companies all over the world. It identifies precisely that this problem is not just about the environment but about risk. The net-zero economy grew by 9% last year. The value of net-zero technologies is now £74 billion, and the same will happen for nature. Therefore, there is an economic imperative as well as one that should drive us because we need to do the right thing for nature.

[Earl Russell (LD)]

My Lords, the UK was an early adopter of the TNFD framework, and it is great that more 300 businesses have now signalled their intention to sign up. What actions are the Government undertaking to promote and champion the framework internationally, particularly at key global functions such as the G7 and the G20 summits this year?

[Lord Benyon (Con)]

Climate and nature finance are raised at all those fora. The most important thing is that the Government have put a large amount of money in. We have backed the Green Finance Institute, a wonderful organisation, with £4.8 million to do a number of different pieces of work for us. This is being talked about in all sorts of fora and was mentioned last week at the World Bank spring meetings. It is now embedded in how risk is talked about as well as in how Governments are supporting a global endeavour to get some universal baseline which companies can understand and which is not overburdensome but which makes them look at their supply chains.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. I want to ask the Minister specifically about financing for deforestation. The green finance strategy committed the Government to organising some round tables to discuss how to tackle this problem. Can the Minister update me as to how those round tables are going and what the outputs are?

[Lord Benyon (Con)]

There is a lot of talking about it but there is also a lot of action. Any day now, we will publish our forest risk commodities regulation, which will be debated by this House and will be an effective way of making sure that consumers here know that they are not using commodities that will result in rainforests being destroyed. However, there is a lot more to be done. I give the example of the Congo Basin, where I was recently. The UK is a major funder towards protecting that extraordinary, vast ecosystem which if it was allowed to collapse would impoverish all sub-Saharan Africa. It is really important that we work internationally on these matters.

[Baroness Hayman of Ullock (Lab)]

Does the noble Lord know how many UK entities or investors have already signed up to the framework and are making progress towards the appropriate disclosures?

[Lord Benyon (Con)]

I do. At the TNFD’s early adopters moment at the World Economic Forum in Davos in January, 320 institutions from 46 countries publicly confirmed their commitment to adopt the TNFD recommendations. Of those early adopters, 46 were UK- headquartered organisations, which is more than in France, Germany and the United States combined.

[Baroness Northover (LD)]

ShareAction has reported on insurance companies. The insurance industry is obviously very big here in London, but the report shows that they are very weak across this sector, despite some of the things that they have been saying. Does the noble Lord agree that the insurance industry should be brought into this, and that they need to disclose in the way that other businesses are expected to do?

[Lord Benyon (Con)]

I entirely agree with the noble Baroness. A sector whose currency is risk should be at the forefront of this. This is about making sure that investments of whatever form are investable, and if an insurance company is not thinking about that, it is way behind the curve. This will not just be imposed on them; they would need to do it even if we were not pushing it, and insurance companies are key.