Amid growing concern over biodiversity depletion and the recent heatwaves that have scorched much of the Asia Pacific region, experts have called on businesses to adopt nature-related disclosure mechanisms to monitor their socio-environmental impacts.
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A newly published United Nations Development Programme (UNDP) white paper, titled Asia in Focus: Biodiversity and the Business and Human Rights Agenda, highlighted the importance of such mechanisms for the sustainable management of value chains and to address potential environmental and human rights abuses.
However, limited availability and a lack of accessibility to nature-related data hinders the adoption of reporting guidelines such as the UN-backed Taskforce on Nature-related Financial Disclosures (TNFD).
“With carbon emissions, we have metrics like CO2 per tonne. But with nature, what is its equivalent value? We don’t see that yet,” said Jessica Cheam, founder and managing director of Eco-Business.
Pegging a monetary value to nature has its merits and pitfalls. However, companies and investors are increasingly recognising that nature risk is also financial risk, said David Craig, co-chair of TNFD, in a recent interview with Bloomberg Intelligence.
TNFD is a recent addition to the market in terms of the financial valuation of nature-related impacts. With its regulatory framework only finalised in 2023, its goal is to help businesses assess and manage nature-related financial risks.
To date, TNFD only has 320 early-adopters – organisations committed to making TNFD-aligned disclosures in their reporting by fiscal year 2024 or 2025.
Asia Pacific accounts for 42 per cent of early adopters, just one percentage point behind Europe, though this number has largely been swayed by the high rates of adoption in Japan, according to Craig.
The lack of suitable decision-grade data is a key impediment to the adoption of disclosure frameworks like the TNFD, according to a study by the United Nations Environment Programme (UNEP). Only 7 per cent of nature-related datasets in the case studies were deemed suitable for financial decision-making, the study found.
The relevance/suitability of existing datasets to guide financial decision-making is extremely low, with a rating of only 1 out of 5. Only 7 per cent of datasets were found to be of decision-grade. Source: UNEP; Image: Eco-Business.
Notably, Indonesia is the only territory involved in the study without country-level coverage of land use data, one of the key metrics the TNFD relies upon to assess impacts.
Even when adequate data is available, they may not always be accessible. This makes it difficult for businesses to account for the value of nature in their balance sheets.
“The challenge is finding the horsepower to interpret the data and put it into the context of the business, and that takes capital,” said Craig.
Working with nature-related data requires not just technical skills like geospatial analysis; it also involves a deeper understanding of sector-specific risks and dependencies, which must be contexualised for the region a business is located in, he added.
A mismatch between the demand and supply of qualified staff with sustainability expertise is a key issue identified in TNFD’s landscape assessment of nature-related data. Nearly 40 per cent of investors cite a shortage of expertise as the principle reason holding them back from pursuing environmental, social, and governance (ESG) investing more fully, according to HSBC’s global Sustainable Financing and Investment report.
“Whether or not to put a monetary value on nature is an issue that polarises. However, what is sure is that we often completely underestimate the value of nature, and that environmental and social costs alike are often not reflected in the market value of products,” said Solene Le Doze, regional technical advisor for UNDP Nature Hub.
Sidelining of Indigenous peoples
Another concern that disclosure mechanisms like the TNFD hope to fix is the human rights violations that Indigenous communities face – a key area of policy oversight that the UNDP report highlighted.
According to the report, Indigenous peoples suffer human rights impacts disproportionately – while they comprise only about five per cent of the global population, they make up 15 per cent of the world’s poor, and often lack secure land rights and access to justice.
Even in official documents, the rights of indigenous populations are inadequately recognised.
“There is general agreement among stakeholders and wider society that the [Asean Human Rights Declaration] is not ambitious, even by soft law standards,” said Nicole Torres, programmes director of Parabukas, an Asia-based international consultancy for environmental laws and policies.
The phrase “ethnic communities” has been used in place of “Indigenous people”, but even then mention is rare, she added.
Often, well-intentioned solutions to protect the environment can lead to unintended repercussions for the livelihoods on Indigenous peoples, due to their lack of involvement in policy consultation. Fortress conservation – a conservation model built on the belief that optimal biodiversity protection is achieved through the creation of isolated areas free from human interference – is one such example.
This ignores the realities on the ground, often impinging on Indigenous peoples’ access to these spaces for economic, cultural and spiritual purposes, said Torres.
In Thailand, the registration of the Indigenous Karen village of Bangkloi as a World Heritage Site forced the Karen people to relocate from their traditional homelands. When members of the community returned to their ancestral land to live and farm, due to insufficient farmland allotted to them despite promises from the Thai government, they were arrested and detained, with some later incarcerated.
Asia is home to 70 per cent of the world’s Indigenous people, many of whom rely on natural ecosystems both materially and culturally. They have long histories of living harmoniously with nature, and possess deep reservoirs of ecological knowledge that can benefit conservation, science and potentially hold economic value.
According to the UNDP report, Indigenous peoples around the world have been estimated to invest US$5 billion annually on conservation practices, an amount that is equivalent to a quarter of the world’s conservation spending by governments, NGOs, foundations and others.
The Kunming-Montreal Global Biodiversity Framework has recognised the value of traditional knowledge, and the TNFD has also published specialised guidance for engagement with Indigenous peoples.
Torres highlighted the importance of re-evaluating what it means to engage with Indigenous communities. “They should not just be a tick box on the form. We cannot keep thinking of them as beneficiaries. We need to think of them as partners who have a lot to bring to the table and can make [environmental sustainability efforts] more effective,” she said.
