NatureFinance has unveiled its specialised guidance designed for financial institutions to aid in identifying and assessing nature-related opportunities, impacts, and risks stemming from sovereign debt exposures.
The guidance provided by NatureFinance for nature-related sovereign debt disclosure aligns with the final recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD). Furthermore, the guidance offers additional in-depth insights particularly tailored for sovereign debt investors.
The guidance predominantly revolves around the TNFD’s LEAP approach when identifying nature-related issues. The purpose of this report, as stated by NatureFinance, is to aid financial institutions in disclosing nature-related details pertinent to sovereign debt in a manner that is both significant and practical.
NatureFinance emphasised the universal benefit for all stakeholders within the sovereign debt sector from efforts made by sovereign issuers in measuring and openly discussing their nature-related concerns.
To formulate this guidance, perspectives were collected from several stakeholders. This was accomplished through calls and a questionnaire targeted at financial institutions, with the collective responses incorporated within the report.
While NatureFinance recognises the intricacies involved in gauging nature-related impacts and dependencies, they also highlight the abundance of available tools and resources. This makes it increasingly simpler for investors to comprehend both the foundational dependencies and impacts, and the financially relevant risks and opportunities.
NatureFinance said, “All stakeholders in the sovereign debt landscape stand to gain from efforts by sovereign issuers to measure and publicly communicate their nature-related issues.” The report mentioned, “By aligning themselves with TNFD guidance, financial firms will be in a stronger position to drive investments towards nature-positive solutions, including via sustainability-linked instruments.”
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