The consultation provides voluntary nature-related guidance supplementary to GFANZ’s Net-Zero Transition Planning framework

Cali, Colombia, 27 October 2024 – Today, the Glasgow Financial Alliance for Net Zero (GFANZ) launched a consultation paper on voluntary, supplemental guidance for how financial institutions can integrate nature considerations in support of net-zero transition planning. The consultation paper – ‘Nature in Net-Zero Transition Plans’ – builds on and supplements the voluntary recommendations of the existing GFANZ Net-Zero Transition Plan Framework. It aims to provide net-zero committed financial institutions with guidance on the use of nature-related levers to support their net-zero implementation. The consultation has been developed by GFANZ and its practitioner-led workstream on Nature in Transition Planning, with Generation IM and Aviva acting as co-leads.

Of the more than 700 financial institutions that are part of the Net-Zero Alliances, two-thirds have voluntarily decided to set out their individual plans for transition across the five themes of the GFANZ framework, with half of those providing detail on all ten components of the GFANZ framework.

“The guidance provided in the consultation is a vital roadmap for financial institutions to incorporate nature considerations into their transition plans and help them meet their net-zero goals while supporting the development of innovative nature-based solutions,” said Mary Schapiro, Vice Chair of GFANZ. “Nature risk is financial risk, and this consultation helps underscore the critical role nature plays in ensuring the journey to net zero is efficient and comprehensive.”

By expanding on the established framework, the paper aims to help fast-track awareness of nature as a critical tool to effectively contribute to combating climate change. A successful economy-wide transition requires acknowledging the inextricable link between climate and nature: there is no net zero without nature.

Emissions from human activity in agriculture, forestry, and land use alone currently contribute 22% of global GHG emissions, which must be reduced to meet net zero. At the same time, terrestrial and marine ecosystems are responsible for absorbing over half of anthropogenic carbon emissions today, and nature-based solutions could contribute over one-third of the 2030 emission reduction goals.

Recognising the huge potential for nature to be part of the solution, companies should account for their actions that disrupt or protect nature as part of their transition planning and disclosure processes.

The proposed guidance in this paper focuses on three main actions:

• The reduction of nature-related GHG emissions as per 1.5 degrees-aligned pathways;
• The protection and increase of nature-related GHG sinks (natural climate mitigation);
• Embedding nature-related considerations into approach and planning.

Nature-related levers are additional tools for financial institutions to achieve net-zero commitments and identify further potential net-zero financing opportunities.

The consultation paper was launched at a joint session hosted by GFANZ and the Taskforce on Nature-related Financial Disclosures (TNFD) on nature in transition planning. The TNFD also launched its discussion paper on nature transition plan preparation and disclosure. The TNFD’s paper is complementary to GFANZ’s, and together, the two pieces of work, alongside other work in the nature space, cover the broad set of nature and biodiversity loss drivers, including land and water use, resource use, climate change, pollution, and invasive alien species.

“I applaud GFANZ for recognising the critical importance of nature in net-zero transition plans. Our respective work is highly complementary, with GFANZ focused on nature in net-zero transition plans and TNFD looking at nature transition planning more broadly,” said Emily McKenzie, Technical Director at TNFD. “The TNFD’s work on nature transition plans builds on GFANZ’s Net-Zero Transition Planning framework to support an integrated approach.”

The consultation on the Nature in Net-Zero Transition Plans paper is open until 27 January 2025, and feedback received will inform the final paper, which will be released in Q1 2025. Feedback from all stakeholders will be considered and can be provided here.

Leah Ramoutar, Director of Environmental Sustainability at Aviva said, “It is clear that without nature there is no net zero, but to date there has been a guidance gap for industry on how to consider nature as an enabler to achieve Net Zero ambitions. This is why we’ve worked closely with our GFANZ colleagues to address this gap and support the integration of nature into Net Zero transition plans. We hope this guidance can encourage and support our peers to take clear action on nature to deliver a net zero and nature positive transition.”

“Investors have many reasons for taking action on nature to manage risks and opportunities in their portfolios. GFANZ alliance members will be particularly focused on the nature-related aspects of their net zero commitments, with other drivers including adoption of TNFD recommendations, emerging legislation, and requirements under disclosure standards, like IFRS/ISSB. Financial institutions need to focus on eliminating ecosystem degradation and associated emissions, alongside unlocking finance to support nature and livelihoods – this report provides a needed framework to organizations getting started as well as those who are more advanced in their efforts,” said Hans Mehn, Partner at Generation Investment Management.