CDSB is a signatory of the Natural Capital Finance Aliance, a finance-led initiative to integrate natural capital considerations into loans, equity, fixed income and insurance products, as well as in accounting, disclosure and reporting frameworks.
The Natural Capital Finance Alliance (NCFA) is a global CEO-led statement demonstrating the commitment of the financial sector to work towards integrating natural capital criteria into financial products and services. The Natural Capital Finance Alliance was launched at the UN Conference on Sustainable Development (Rio+20) in 2012. It has been signed by the CEOs of more than 40 financial institutions, and demonstrates their commitment to the integration of natural capital considerations into private sector reporting, accounting and decision-making by 2020.
CDSB became a signatory of the NCFA in 2013 and is working alongside others as a member of Working Group 4 to investigate how to increase the level of transparency, disclosure and external reporting about the use of natural capital within operations and the ‘value chain’ of financial institutions.
CDP, along with CDSB, is leading the work stream with support from NCFA signatories and supporters including:
- International Finance Corporation;
- Mutualista Pichincha;
- VicSuper and supporters;
- Global Reporting Initiative;
- International Institute for Sustainable Development;
- Natural Value Initiative;
- Social Investment Organisation;
- Stakeholder Forum;
- TEEB for Business;
- US Social Investment Forum; and
- World Business Council for Sustainable Development.
Deliverables for Working Group 4 on disclosure and integrated reporting
Work stream 1: Disclosure
Research and development to enable and promote appropriate disclosure by financial institutions on their exposure to natural capital through financial ‘activities’. Disclosure guidance could include sources of data and indicators that Financial Institutions could use to assess risks associated with their reliance on natural capital or the way in which their activities affect natural capital (which is most relevant may be sector specific). Outputs in terms of disclosures by financial institutions can inform the work of the second work stream. Develop reporting indicators for natural capital disclosure and reporting for financial institutions in association with WG4 members, WG3 and relevant bodies such as SASB and the International Integrated Reporting Council, among others (see below).
Work stream 2: Natural capital in Integrated Reporting by financial institutions (CDSB-led)
Work package 1: Supplementary guidance/framework (2014-16)
CDSB to develop guidance on including natural capital information in mainstream financial reports, including integrated reports. Information disclosed under the disclosure programme (work stream 1) can be filtered to identify relevant information for primary/financial reports. CDSB will develop supplementary guidance to the CDSB Reporting Framework for environmental information and natural capital specifically for use by FIs to support the identification of natural capital risks and opportunities in portfolios and conduct a pilot project to test the guidance with a group of NCFA signatories, evaluate results and report on findings.
Work package 2: Report on natural capital and IR in the financial sector
The IIRC Framework sets out three fundamental concepts that underpin Integrated Reporting. They are the capitals, the organisation’s business model and the creation of value over time. All three fundamental concepts equally affect natural capital and Integrated Reporting. This work stream seeks to publish an NCFA/CDSB report on Natural Capital and Integrated Reporting with specific focus on the financial sector.