The manager of Norway’s huge sovereign wealth fund has given its opinions in two sustainability-related consultations, and said the GRI Biodiversity Standard would do well to take more account of positive impacts – rather than just the negative side of corporate behaviour that it now focuses on.
Responding to the Global Sustainability Standards Board’s (GSSB) public consultation on the exposure draft of the revised GRI Biodiversity Standard, Norges Bank Investment Management (NBIM) said on Friday that while the GRI defined impact as both positive and negative in its glossary, the standard itself was focused on the reporting of negative impacts.
“We would encourage the GRI to consider how the standard can more fully take positive impacts and biodiversity gains into consideration,” NBIM wrote in a letter to GSSB.
NBIM manages Norway’s NOK14trn (€1.26trn) Government Pension Fund Global.
In the letter signed by Carine Smith Ihenacho, NBIM’s chief governance and compliance officer, Elisa Cencig, senior ESG policy adviser at the Oslo-based manager, and Snorre Gjerde, its lead investment stewardship manager, NBIM also said it encouraged the GRI to ensure interoperability with other frameworks and standards, such as the forthcoming recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).
TNFD was developing a risk management and disclosure framework across all realms of the natural world, NBIM said - land, freshwater, oceans and atmosphere.
“We view the TNFD’s forthcoming framework as helpful guidance for companies in assessing biodiversity-related risks and opportunities, and complementary to the GRI’s Biodiversity topic standard,” the NBIM trio wrote.
NBIM was positive about the revisions to the GRI Biodiversity Standard being proposed, mentioning in particular the introduction of reporting on impacts in the supply chain, with the Norwegian investor saying that was where the most material biodiversity impacts and dependencies were often located.
“We do however note that collecting data from suppliers can be challenging, both due to complex supply chains and lack of direct control over business partners,” wrote Smith Ihenacho and her colleagues.
For that reason, they said, they backed the GSSB’s intention of focusing on the most important drivers of biodiversity loss and on priority locations, because it would be hard to measure and report on every single driver and every single location.
Separately, Smith Ihenacho and Cencig gave their input to the public consultation on the proposed disclosure framework and implementation guidance of the UK Transition Plan Taskforce (TPT).
In a letter to the TPT’s secretariat, they said NBIM expected companies it invested in to disclose a net-zero transition plan addressing climate change risks and opportunities, in a way that was aligned to standards such as the TCFD recommendations.
“We note that existing company disclosure often falls short of this expectation, and therefore welcome the efforts of the UK’s Transition Planning Taskforce in establishing a detailed framework for companies’ transition plan disclosures, aimed at informing future UK regulation,” the NBIM pair wrote.
They welcomed the fact the TPT Disclosure Framework included detailed disclosure on GHG emission reduction targets, but said the disclosure recommendation on objectives and priorities seemed to let entities exclude a relevant scope or category of emissions from its GHG reduction targets, if they said why and how as well as the steps they were taking to enable target-setting for the excluded scopes.
“We believe that the disclosure recommendation could allow for exclusion of scope three from an entity’s targets in this manner, but leave no optionality for excluding scope one or two emissions since these can more readily be influenced by an entity,” they said.
NBIM also suggested the framework refer to third-party verification and science-based targets, which it said was helpful for assessing the credibility of transition plans and comparing them.
The two NBIM women also said in the letter that the TPT should cooperate with other standard-setters and regulators, internationally through IOSCO (International Organization of Securities Commissions) as well as bilaterally, “in order to enhance the consistency and comparability of transition planning disclosure regimes”.
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