Natural environment

This resource sets out elements of credible corporate climate transition plans, which aim to align with the temperature goal of the Paris Agreement.

Use this resource to:

• Obtain a comprehensive overview of existing transition finance approaches, identifying the main challenges and solutions.

The Protocol sets out the UN-convened Net-Zero Asset Owner Alliance Alliance’s approach to target setting and reporting. The first edition of this Protocol focused on the period 2020–2025. This second edition also outlines the ambition towards 2030.

Use this resource to:

• Set targets and plan: Set science-based targets on financed emissions using short-term targets for a 1.5 degree Celsius aligned, net-zero world by 2050. 

Guidance that contains disclosure recommendations for information on the material financial impacts of climate-related risks and opportunities, including those related to the global transition to a lower-carbon economy. The TCFD recommendations are structured around the four pillars of Governance, Strategy, Risk Management, and Metrics and Targets.

Use this resource to:

• Communicate: Follow recommendations to structure climate-related financial disclosures. Other voluntary standards can be used in conjunction with TCFD recommendations.

Regulation that sets out performance thresholds for organisations to classify their economic activities as “sustainable” according to European policy objectives.

Use this resource to:

• Identify: Find the economic activities that correspond to the financial institution’s activities and review what the taxonomy says about likely impacts on sustainability. This can be an input into identifying sustainability topics to measure. This regulation is based on research connecting economic activities to likely significant impacts on six environmental objectives. Currently, research related to objectives of climate change mitigation and adaptation are most developed.
• Measure, assess and value: Assess whether underlying assets are sustainable. Underlying assets that fall under the taxonomy regulation will report on the portion of their revenue, capital expenditure and operational expenditure that are ‘taxonomy aligned’, and therefore considered a ‘sustainable investment’ according EU policy objectives.
• Set targets and plan: Set objectives for a portion of the portfolio to be ‘taxonomy-aligned’. Regulation provides investors with a set of performance thresholds that have to be met for an underlying asset to be viewed as operating sustainably in relation to one the EU’s six environmental objectives. Underlying assets that are ‘taxonomy aligned’ are generating sustainable outcomes and are therefore also ‘Benefiting stakeholders’.

The EU Climate Transition Benchmarks (CTB) and Paris-Aligned Benchmarks (PAB) are examples of portfolio impact benchmarking techniques being employed in regulation. The regulation sets out requirements for index providers to construct investable indexes that are on a 7% decarbonisation trajectory.

Use this resource to:

• Measure, assess and value: Review EU’s proposed approach for establishing benchmarks, which incorporates greenhouse gas emissions at portfolio level. A climate benchmark serves as an investment performance benchmark for GHG emission-related strategies; an engagement tool and a policy benchmark to help guide strategic asset allocation.

Guidance for setting science based targets related to climate, specifically for financial institutions.

Use this resource to:

• Set Targets and plan: Set a portfolio target for Greenhouse Gas Emissions

Guidance that outlines a process organisations should follow to identify, measure and value their impacts and dependencies on the natural environment.

Use this resource to:

• Strategy: under construction
• Governance: under construction
• Identify: Identify stakeholders in order to set objectives for a natural capital assessment and to map the links between significant impacts and the business activities that affect or rely on them. This process helps organisations determine whether each impacted stakeholder is likely to affect their business model (and therefore enterprise value).
• Measure, assess and value: Value impacts and dependencies on natural capital. This methodology draws on organisational data, data collected from stakeholders and publicly available country- or sector-level data.
• Set targets and plan: Use the guidance on how to identify and engage with stakeholders in order to set objectives for a natural capital assessment.
• Implement: under construction

Guidance that provides a brief introduction to a leading methodology for translating planetary thresholds related to greenhouse gas emissions into company-specific targets. It also provides further links to more detailed implementation guidance.

Use this resource to:

• Measure, assess and value: Assess performance against a company-specific target for greenhouse gas emissions that references an ecological threshold.
• Set targets and plan: Set a company-specific target for greenhouse gas emissions that incorporates an ecological threshold for a given global warming scenario.

Guidance for setting science based targets related to nature. More generally, the SBTN is embarking on a multi-year strategy to develop guidance for translating planetary thresholds and societal goals into company-specific targets for air, water, land, biodiversity and ocean.

Use this resource to:

• Measure, assess and value: Assess performance in context of ecological thresholds.
• Set targets and plan: Set a company-specific target that references an ecological threshold for nature.