President Hakainde Hichilema has unveiled Zambia’s first ever 10-year Capital Market Master Plan (CMMP) meant to among others, spearhead development of green bonds.
Government has in the Eighth National Development Plan (8NDP) earmarked capital markets as a critical success factor in achieving the objectives of the plan.
According to President Hichilema during the launch of the plan on Thursday in Lusaka, the CMMP had special focus on the development of new and innovative products on markets such as green bonds.
Zambia’s aspiration, he stated, was to become a financial hub that would seek to attract financing, including green bonds
He said this in a speech read for him by Finance and National Development Minister, Situmbeko Musokotwane.
“Under this pillar, the plan motivates for the introductions of innovations such as green bonds, private equity, and virtual capital among others. “This focus area creates an opportunity for the developing products that allow access to capital by Micro, Small and Medium Enterprises through mortgage refinancing,” Hichilema said.
He said another area of focus was improving the traditional security markets which included the stock market, corporate bond markets and collective investments scheme.
He said the CMMP was a comprehensive long term strategy which sets out the primary framework for Zambia’s capital markets development over the next 10 years.
“The plan will ensure that Zambia is an attractive destination to not only local but also foreign investors. The capital markets in Zambia were primarily established to stimulate a dynamic private sector. “I am optimistic that the launch today signals our resolve to set in motion the necessary interventions required to fully develop our capital markets as they are essential for creating employment for the youth,” Hichilema said.
Speaking earlier, Securities Exchange Commission (SEC) Chief Executive Officer, Phillip Chitalu said the launch of the CMMP signified that the market developmental efforts will change in to a fast pace moving train.
Chitalu urged the market players to contribute to achieving even further and greater success in the market contribution to economic development.
“This capital markets journey will not end here but should be carried on by those who will take over from us. I think 10 years is a long time. “For capital markets to have intended impact on our economy the common goal should have the capital markets taken to a level where these financial markets are enablers and cane be used to mobilise and channel in an efficient manner funds to the greatest economic impact,” he said.
• Capital Markets Master Plan is a comprehensive long-term strategy which sets out the primary framework for Zambia’s Capital Markets development.
• Zambia’s aspiration is to become a financial hub that will attract financing including Green Bonds.
• The plan aims at enhancing the Government Bond Market by implementing measures aimed at improving market operations.
President Hakainde Hichilema says government has reduced borrowing from the domestic market from K24 billion in 2022 to K16 billion in 2023.
Officiating at the launch of the Capital Markets 10 year Master Plan (CMMP), President Hichilema noted that borrowing too much from the domestic market stifles the required capital for private sector growth.
The Head of State said Zambia’s aspiration is to become a financial hub that will attract financing including Green Bonds and the Master Plan’s focus to improve the traditional security markets which include the stock market, corporate bonds market and collective investment schemes.
“The Capital Markets Master Plan is a comprehensive long-term strategy which sets out the primary framework for Zambia’s Capital Markets development over the next decade. It is an important tool that seeks to organize various actors in a manner that will be convincing, for holders of the capital to consider Zambia as a choice destination for investments. The Master Plan will ensure that Zambia is an attractive destination to not only local, but also foreign investors.”
“I am optimistic that the launch of the master plan signals our resolve to set in motion the necessary interventions required to fully develop our Capital Markets as they are essential for creating employment opportunities for our youth, enhanced access to capital for small and medium enterprises, and facilitate our transition to a green growth economy,” President Hichilema said.
He added that the Capital Markets Master Plan’s other motive is to introduce products such as Green Bonds, private equity, venture capital, real estate investment trusts, and derivatives among others.
“The plan aims at enhancing the Government Bond Market by implementing measures aimed at improving market operations. As a government, we have also realized that borrowing too much from the domestic market stifles the required capital for private sector growth. It is in this regard, that the New Dawn Government has reduced government borrowing from the domestic market from K24 billion in 2022 to K16 billion in 2023 and going forward, we hope to reduce even further,” he stated.
President Hichilema said this in a speech read on his behalf by Minister of Finance and National Planning Dr. Situmbeko Musokotwane.
Speaking at the same event, Securities and Exchange Commission (SEC) Chairperson Ruth Mugala stated that the inaugural launch of the Master Plan is a milestone in the history of Zambia’s Capital Markets.
“The work of actualizing what is contained in the Master Plan has just began As the Apex Regulator of the Capital Markets in Zambia, SEC is mandated under the Securities Act number 41 of 2016, (as amended) to create and promote conditions in the Capital Markets aimed at ensuring an orderly growth, integrity, and developments of the capital markets. The foregoing entails a dual mandate of promoting the orderly development of the markets, on one hand, whilst on the other – protecting investors.”
“We know that beyond our borders, investors are looking our way considering the astute leadership Government has taken towards creating Zambia as an attractive destination for investments,” Mrs. Mugala stated.
Meanwhile, Financial Sector Deepening (FSD) Africa Director-Capital Markets, Dr. Evans Osano revealed that a recent study on the landscape of Green finance in Africa highlights the gap between the funding available that is needed to deliver Africa’s Nationally Determined Contributions (NDCs) that has been estimated at US$277 billion per annum against Climate financial flows into the Continent which are slightly less than US$30 billion per annum.
Dr. Osano added that Capita Markets play an important role in mobilizing much needed long-term finance to fund real and social sectors and build climate resilience, adding that Zambia’s goal to launch Green Bonds in 2024 is very visible.
“The need to build climate resilience in Africa has never been more urgent. I am happy to note that the government’s commitment to providing facilitative environment for climate financing and a series of environmental sustainability measures and the recent budget, includes proposals which will incentivize the development of Green Bonds market,” he said.
The Capital Markets Master Plan (CMMP) is a ten-year long term strategy for capital markets development in Zambia.
Today, the European Investment Bank (EIB) and the Green Climate Fund (GCF) announced their collaboration in the Green and Resilience Debt Platform, a vehicle that aims to boost climate finance in Africa. The platform contributes to the European Union’s Global Green Bond Initiative, which relies on a governance structure defined by the European Commission and European development finance institutions. It will be implemented in partnership with the United Nations Development Programme and United Nations Capital Development Fund. The announcement came in the margins of the First EIB Group Forum in Luxembourg, which gathers policymakers, financial institutions and business leaders to discuss pressing issues of the time.
The new platform will focus on climate resilience and blue bonds in Africa. It will provide technical assistance to partner countries, promote a climate sensitive investment environment, create a pipeline of bankable green investments, and strengthen domestic and regional green debt ecosystems and financial institutions. It will also provide access to anchor investments in green bond issuances.
GCF will provide financing through its Project Preparation Facility window to support the design and establishment of the Green and Resilience Debt Platform. This support will initially focus on Cote d’Ivoire and Kenya with the potential for additional countries to be added. GCF will examine the platform’s feasibility and impact in these countries, in playing a unique role to align large financial flows with each country’s Nationally Determined Contribution and National Adaptation Plan.
A green, inclusive and resilient economic development worldwide requires an unprecedented scale of investment, particularly in high-quality infrastructure. Green bonds are widely recognized as part of the solution. Global experience has shown they are key in mobilising capital from private investors for investments with environmental impact. However, emerging and developing economies face specific barriers when it comes to green bonds. Their respective markets remain largely underdeveloped and continue to grow at a much slower pace than those of developed countries. The situation is particularly grim in least developed countries on the African continent. Africa accounted for only 0.077% of the total bond issuances 2021. In 2019/2020, only 3% of the total climate finance provided worldwide went to sub-Saharan Africa.
Three years of drought conditions in the Horn of Africa show no signs of letting up, according to a Kenya-based climate monitoring group. The IGAD Climate Prediction and Applications Center (ICPAC) says that below average rainfall is expected over the next three months, which is normally the region’s rainy season.
“In parts of Ethiopia, Kenya, Somalia, and Uganda that have been most affected by the recent drought, this could be the 6th failed consecutive rainfall season,” ICPAC predicts.
In contrast “wetter than normal conditions are expected over the cross-border areas of Ethiopia and South Sudan, north-western Kenya, and parts of central and southern Tanzania”, says the climate centre. Temperatures are also likely to be higher across the region, it adds.
The IGAD Climate Prediction and Applications Center (ICPAC) says that below average rainfall is expected over the next three months, which is normally the region’s rainy season. Image: ICPAC
In the most severely affected areas, drought conditions are worse than in 2010-2011 when hundreds of thousands of people died, according to ICPAC. An estimated 23 million people are currently “highly food insecure” in Ethiopia, Kenya and Somalia, and 11 million livestock in the region have died, it says.
IGAD has also announced plans to partner with the International Federation of Red Cross and Red Crescent Societies (IFRC) to help address the crisis. “These prolonged and recurrent climate change induced droughts will further worsen other existing, mutually exacerbating humanitarian challenges in the region, including the ongoing hunger crisis, the impacts of COVID-19 and internal displacement,” said IFRC director Mohammed Mukhier. “We need an all-hands-on-deck approach to strengthen food systems, livelihoods, and climate resilience.”
2. Plastic use in G20 could nearly double by 2050
Plastic use in G20 countries is on course to nearly double by the middle of the century unless a comprehensive and legally binding global treaty to curb consumption is drawn up, according to research.
Existing programmes to boost recycling or cut single-use plastic consumption only “scratched the surface” and a more comprehensive global plan is required, according to Back to Blue, a research group run by the Economist Impact think-tank and the Nippon Foundation, a private philanthropic organisation.
The United Nations began talks in November on an agreement to tackle plastic pollution. Around 175 countries have signed up to the talks which aim to draw up a legally binding treaty by the end of 2024.
However, if negotiations fail, annual plastic production in G20 countries could rise to 451 million tonnes by 2050 according to current rates of growth, Back to Blue says – up nearly three-quarters from 2019.
“There should be no illusions that the treaty negotiations will be anything but difficult and treacherous,” the research group said. “The chances of failure – not just that no treaty emerges but one that is too weak to reverse the plastic tide – are considerable.”
It’s calling for a more aggressive ban on single-use plastic, together with higher production taxes and mandatory schemes to make firms responsible for the entire lifespan of their products, including recycling and disposal.
3. News in brief: Top climate crisis stories this week
The fossil fuel industry is failing to tackle methane emissions despite its pledges to uncover and fix leaking infrastructure, according to a report by the International Energy Agency (IEA). The global energy industry released some 135 million tonnes of the potent greenhouse gas into the atmosphere in 2022 – only slightly below the record amount released in 2019.
Developed nations’ failure to deliver on a decade-old commitment to pay billions in annual climate financing to developing nations is a “travesty”. Image: IEA
Total ecosystem collapse is “inevitable” unless unprecedented current wildlife losses are reversed, The Guardian reports. Scientists studying the Permian-Triassic extinction event of 250 million years ago, known as the “Great Dying”, found that ecosystems can reach a tipping point from which they are unlikely to recover.
New data shows that only 0.4% of companies have a credible climate transition plan, reports Energy Monitor. An assessment of 18,600 companies by non-profit the Carbon Disclosure Project found that only 81 of the 4,000 claiming to have a climate transition project in place had a plan that met all of its key indicators for transition.
Digital Africa, in partnership with Make-IT in Africa, launched Talent 4 Startups in 2022. The program’s objective is to improve the employability of African talent in startups through fully-funded trainings. The program was designed on the basis of a repository of skills and jobs required by startups on the continent, developed with Edtech Connections.
The digital skills gap in Africa will reach 230 million jobs by 2030, yet only 690,000 professionals in the sector have been identified to date. More than 70% of African companies say they cannot find locally the skills they need to grow. In this context, it is becoming increasingly important to train tech talent and place them in jobs in order to accelerate the continent’s digital transformation. Startups emphasize the need to strengthen their technical and entrepreneurial skills to accelerate their development.
Digital Africa brought together all partners involved in Talent 4 Startups on November 8th and 9th at the D-HUB in Dakar to highlight the challenges that remain between training digital talent and their placement in startups, and to discuss the next steps of the project.
More than ever, Digital Africa wishes to reinforce its action with the actors in the field, in order to train more young talent during the next edition of the “Talent 4 Startups” program.
By 2025, the program aims to finance 1,000 trainings in the tech and digital sectors in Africa and to co-construct the means to build a “talent pool”.
Built through a multi-stakeholder approach, this program was developed by Digital Africa in partnership with Make-IT in Africa, a project implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).
Key figures of the “Talents 4 Startups” program:
10300 applicants to the program
More than 280 students trained
Training in 8 of the most in-demand professions identified in the skills and jobs repository
Full Stack developers / Front end and back end developers / Data scientists and analysts / Software engineers and Full Stack engineers / Mobile and Web developers / Digital Marketers / Growth hackers/engineers
By 9 Digital Education Providers selected following a call for proposals targeted at training organizations operating on the continent
Algrowithm / Blossom Academy / Edacy / Kinshasa Digital Academy / Moringa School / Open Classrooms / Sayna / Simplon MCS / Simplon Ivory Coast
AfricArena’s much-anticipated annual report says climate-tech can be grouped into three broad sectors of impact: directly mitigating or removing emissions, helping us to adapt to the impacts of climate change, and enhancing our understanding of the climate.
These products or services usually fall within sectors such as agri-technology, afforestation, carbon capture, trade and reporting, geo-engineering, bio-technology, built environments, and nature-based solutions.
In 2021, investments in climate-tech surged globally to $87.5 billion dollars from a low of $28 billion in the second half of 2020, according to a report by PwC. The US climate-tech firms raised the largest share, followed by Europe and China. Most of the capital funding growth targeted climate-tech-based businesses that had impacts in cutting carbon emissions through renewable energy and electric vehicle products and services.
However, as the report states, there has been a decrease in the number of deals being signed off with climate-tech based start-ups due to the pressures of the global economy with risks of a suggested recession on the horizon.
Venture capital firms and investors have thus invested into the safety and stability of well-established climate-tech businesses in their growth stages of funding, such as Northvolt, TeraWatts, PerraPower, Climeworks, and EnergyX. According to HoloniQ’s Climate Tech 2022 report, 83 climate-tech-based unicorns took 80% of the funding.
Despite this, there are still many climate-tech start-ups in Africa that are bettering the world through sustainable technologies. One example is M-Kopa Solar, a Kenyan start-up that provides affordable and clean energy to people living off-grid. Another example is Solar Freeze, a Kenyan company that provides off-grid solar-powered refrigeration to smallholder farmers in Africa. These start-ups are helping to address the energy needs of people in rural areas, where electricity is often unreliable or unavailable.
SunCulture, a Kenyan company, produces solar-powered irrigation systems for smallholder farmers. These systems allow farmers to irrigate their crops more efficiently and effectively, reducing water usage and increasing crop yields. Sun Culture has also developed a financing model that allows farmers to pay for the systems over time, making them more affordable and accessible.
Another promising African climate-tech start-up is Ecoligo, a company that provides solar energy solutions to small and medium-sized enterprises (SMEs) in emerging markets. Ecoligo offers a financing model that allows SMEs to install solar energy systems with no upfront cost, paying for them over time through the savings generated by the system.
This makes solar energy more accessible and affordable for SMEs, which often struggle to secure financing for such projects.
Economic opportunities
These start-ups, and many others like them, are not only addressing the urgent need to address climate change but also creating economic opportunities in Africa. It is clear that climate technology has moved well beyond a proof of concept and offers investors significant financial returns and the opportunity for outsized environmental and social impact. Climate-tech is now an asset class that presents a major commercial opportunity.
However, it is important to note that there is still much work to be done to channel this investment appropriately. There is a need to ensure that climate-tech investment is channelled towards sustainable technologies that have a real impact on reducing emissions and mitigating climate change.
Moreover, there is a need to ensure that these technologies are accessible and affordable for people in developing countries, where the impacts of climate change are often felt most severely.
In conclusion, the State of Tech in Africa report on climate change provides valuable insights into the challenges and opportunities facing the continent in the fight against climate change. While Africa faces unique challenges due to its geography, socioeconomic factors, and limited technological infrastructure, the report highlights how technology can be leveraged to mitigate the impacts of climate change and build a more sustainable future.
It is clear that African governments, businesses, and individuals must work together to adopt and implement innovative solutions that address the complex issues related to climate change. The report emphasises the importance of investing in renewable energy, promoting sustainable agriculture, and creating resilient infrastructure to adapt to changing climate conditions.
As we move forward, it is essential to recognise that climate change is not just an environmental issue but also a social, economic, and political challenge. Therefore, we must prioritise collaboration and collective action to ensure a sustainable future for the continent.
The State of Tech in Africa 2023 report – and its specific analysis on climate change – serves as a wake-up call for all of us to take action and make a positive impact on the world. We must embrace the power of technology to drive innovation and create solutions that benefit both people and the planet. With the right mindset and a concerted effort, we can build a brighter future for Africa and the world as a whole.
Triggering Exponential Climate Action (TECA) has announced the selection of seven startups that would benefit from the $385,000 startup grant, with each receiving $55,000 in funding to advance their solutions for the blue economy in Africa.
The startup founders were selected following their participation in TECA’s fellowship program, where they were supported to create ideas for companies in the blue economy, build teams, and form companies.
Each startup will receive $27,500 in seed capital and $27,500 in hands-on venture building support to progress financial and tech-enabled solutions that bolster the climate resilience of communities and ecosystems in and around the oceans, lakes, and rivers across the Eastern region of Africa.
Announcing the grant, Chairman and Chief Innovation Officer at BFA Global, David del Ser, said: “Through the TECA program, we are proud to support and accelerate the development of innovative solutions that will protect and sustain the environment and vulnerable communities in the Eastern coast of Africa. These seven startups represent the forefront of the blue economy in Africa, and we look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems.”
Digital Economy Director at FSD Africa, Juliet Munro, said: “The ventures that have been formed through the TECA program are an inspiration. They represent young Africans – including women – coming forward with great ideas and solutions to climate-related challenges, in this case, in the blue economy. I’m proud that FSD Africa is supporting this initiative, which leverages finance and technology to help build resilience and create opportunity in the context of climate adversity. Through our partnership with BFA Global, we plan to roll out TECA beyond the blue economy to also solve for other challenges and geographies across Africa.”
Nigeria may be Africa’s largest economy — its powerhouse, even — but power cuts remain a frequent occurrence. The country’s grid has only half the capacity required to serve its 210mn inhabitants reliably.
Fixing that will require massive investment — which president Muhammadu Buhari, whose tenure ends in May, has sought through multilateral financing and Chinese-backed loans denominated in US dollars. But, for now, that still leaves many businesses reliant on expensive, dirty diesel generators for back-up power.
A similar story of inadequate infrastructure is repeated throughout Africa and across multiple sectors: transport, agriculture, water distribution and waste management. So, too, is the story of seeking overseas money — and of producing equally disappointing results.
Now, though, a new generation of finance initiatives is starting to tap domestic sources of capital, by using a mix of government money and overseas development funding to create local currency guarantee companies.
Shareholders, including governments and private sector financial institutions, back these companies to provide a guarantee that money loaned to projects will be repaid. Guarantors charge borrowers a fee for taking on this risk — some aim to turn a profit for their shareholders; others aim primarily to achieve policy objectives while preserving capital.
Proponents argue that such schemes can unlock lending from local pension funds, insurance companies, and the like, for projects that commercial banks are reluctant to finance. And this may be particularly beneficial for environmental, social and governance-oriented projects — such as renewable energy infrastructure.
Because the guarantees are expressed in local currency, a significant source of risk is removed. In recent years, the weakness of Nigeria’s naira against the dollar, coupled with the country’s multiple exchange rate windows, has made it harder to repay foreign debt.
Some advocates are impatient for wider usage of this mechanism. “Can we please stop fixating on cross-border financing and start looking at domestic savings as a potential source — in local currency — to fund infrastructure assets?” says Philippe Valahu, chief executive of the Private Infrastructure Development Group, a finance organisation.
PIDG — which describes its goal as “high development impact” — is one of the backers of InfraCredit Nigeria, an infrastructure guarantee facility established in 2017. Since then, InfraCredit has provided N128bn ($278mn) worth of local currency guarantees across several portfolio projects, including green bonds for hydro power.
InfraCredit is also funded by the Nigeria Sovereign Investment Authority, Nigeria’s sovereign wealth fund, and InfraCo Africa — a finance vehicle backed by the UK, the Netherlands, and Switzerland — which became the third investor in 2020, pouring in $27mn.
Nigeria is not the only country to benefit from such schemes. In November 2022, InfraCo Africa announced that it would invest $15mn in a new guarantee facility in Kenya, alongside $5mn from Cardano Development, a finance company incubator and fund manager.
“We see various businesses here seeking to grow to serve domestic demand, but all facing the same problem that they cannot borrow in Kenyan shillings cost effectively or with a route to scale,” says Louis LaPaz, the Cardano Development representative responsible for the Kenyan facility. “Over the last few years, it’s been interesting to get cheap dollar debt — but, with the current environment of raising interest rates, that’s about to get a bit ugly.”
Kenyan infrastructure projects, including in green energy facilities, largely rely on US dollar-denominated loans from banks, which rarely offer the long maturities ideally required for successful developments, argue executives from InfraCo. They anticipate that, after three years of operations, they will have mobilised Ksh12.6bn ($100mn) of local currency guarantees for climate mitigation and adaptation projects, paving the way for further expansion.
“Local currency guarantees will enable institutional investors such as pensions and insurance funds to invest into high-quality assets whilst also supporting businesses to secure the finance needed for them to deliver vital new infrastructure,” says Claire Jarrett, InfraCo Africa’s chief investment officer. According to OECD data from 2020, Kenyans hold about $13bn in pension funds, equivalent to just over 13 per cent of the country’s GDP.
Bertrand Ketchassi, the InfraCo Africa investment manager responsible for the Kenya facility, thinks it has the potential to benefit many kinds of business. “[For these guarantee schemes] the main difference between the Kenyan and Nigerian market is that the latter is solidly focused on infrastructure, while the former is much more diversified,” he says.
Kenya, which prides itself on a reputation for financial and technological innovation going back to its early adoption of mobile money, has numerous businesses trying to tap investors’ appetite for sustainability.
Construction company Acorn, for example, recently built student accommodation that was designed to meet the government’s green building standards and was financed through the Ksh4.3bn ($34.2mn) dual listing of a green bond in Nairobi and London. Fintech IMFact — which was incubated by Cardano — offers local-currency financing for small and medium-sized enterprises.
But there remains an issue of scale. The N128bn ($278mn) and prospective Ksh12.6bn ($100mn) that InfraCo has tapped in Nigeria and Kenya, respectively, can hardly provide enough loans needed to fuel growth and development. Still, it is unlocking potential.
“We can now embrace the necessary tools to address the lack of liquidity that some companies in all these different sectors are facing, because the Kenyan market, as many markets in Africa, doesn’t provide long-term capital,” Ketchassi says. “Lots of people are waking up to the need to access local liquidity.”
ImpactAlpha, February 15 – Community-powered mangrove restoration. Restocking local fish supplies. A marketplace for seaweed farmers.
Triggering Exponential Climate Action, or TECA, invested $27,500 each in seven oceans and seafood enterprises in Kenya, Egypt, South Africa, Uganda, Zimbabwe and Tanzania.
The partnership between BFA Global and FSD Africa also provides the companies with hands-on support.
“We look forward to seeing the impact of their financial and tech-enabled solutions on communities and ecosystems,” said BFA Global’s David del Ser.
Final beta version to follow on heels of agreement on Target 15 in new Global Biodiversity Framework.
Following the adoption of the Global Biodiversity Framework (GBF) at Montreal’s COP15, the Taskforce on Nature-related Financial Disclosures (TNFD) said the release of its V0.4 beta framework in March would further assist firms in assessing and reporting on biodiversity and nature-related risks.
Speaking at the TNFD’s ‘Moving to Action After Montreal’ webinar, David Craig, Co-chair of the TNFD, called the GBF an “ambitious framework” and highlighted its role in “halt[ing] the degradation of nature and biodiversity”. He also underlined the importance of the GBF in ensuring “harmony in nature” by addressing restoring natural ecosystems, which the TNFD’s disclosure framework aims to support.
The GBF featured 23 targets and four goals, but Target 15 is viewed as vital to private-sector management of biodiversity-related risks.
Also speaking on the webinar, Emily McKensie, Technical Director at the TNFD, said there were “key points of conceptual alignment” between the finalised GBF – including Target 15 – and the TNFD framework.
Harmony in nature
Target 15 requires governments to encourage companies and financial institutions disclose their risks, dependencies and impacts on biodiversity along their operations, supply and value chains, and portfolios.
“Target 15 means that disclosures on nature impacts, dependencies and risk are coming and we’re seeing more and more activity to support these,” said Craig. “The TNFD is a framework and a tool to support Target 15.”
McKensie underlined the momentum the TNFD could offer the GBF and Target 15, through its focus on helping firms and investors to disclose and risk manage nature-related impacts and dependencies.
She also highlighted the TNFD framework’s ability to help “operationalise” which organisations will regularly monitor, assess and disclose nature risks, dependencies and impacts, resulting in a “clear connection” to Target 15.
However, the GBF was accused of being “watered down” by a number of observers due the word ‘mandatory’ being excluded from the framework.
Maelle Pelisson, Advocacy Director at Business for Nature, who was privy to the behind-the-scenes negotiations at COP15, admitted that mandatory disclosures would have helped in “levelling the playing field” and demonstrating urgency.
Speaking on the webinar, Pelisson told onlookers the GBF would still help businesses to access data required to accelerate action on reducing negative impacts on nature. Pelisson also welcomed the engagement of businesses at COP15, as well as the rapid growth in momentum surrounding biodiversity and nature.
“We’ve seen this momentum growing so fast from March to December last year,” she said. “We can only expect that it will continue growing now that [the GBF] been adopted.”
September launch and beyond
According to Craig, disclosures are important because they “demonstrate accountability”, but he stressed that they are “meaningless” unless companies take action.
“What’s really important is that companies have invested the time the talent, the knowledge and the skills,” he said. “Don’t underestimate the urgency of the crisis, but also the urgency of the movement,” he added. “The GBF agreement is ambitious [but] it’s real targets will be set by governments and businesses who will see growing pressure and action to align on these targets.”
The TNFD framework builds on the four core pillars of the Taskforce on Climate-related Financial Disclosures (TCFD) for corporates and investors, and is expected to be incorporated into the disclosure standards of existing sustainability standards bodies and national laws.
Alexis Gazzo, Europe West Sustainability Co-leader at EY, told attendees on the webinar that implementation of TNFD guidance will be much faster than TCFD due to the framework “building on the foundations that have been set up for climate”.
The TNFD will run a formal consultation where market participants can submit responses to a full draft of the beta framework from March until 1 June. The pilot testing of the framework, which has been running since 1 July 2022, will also finish on the same day.
The final beta framework is expected to provide additional guidance on disclosure metrics, measurement of impacts, dependencies and risks across supply chains, and the sector-specific reporting requirements, including agriculture, aquaculture and mining.
TNFD’s framework will then be finalised in September 2023.
The next UN Biodiversity Conference (COP16) is scheduled to take place in Turkey in 2024. It will likely see countries providing updates and reviews of their national biodiversity plans targets. Countries will also be expected to develop their national financial plans as a part of their resource mobilisation for implementation.
