 Yn ni'n fath o hwn yma yw'r cyfrifol, felly, i fynd i'r gael efo'r cyfrifol am gweithio i ddod o'r Llyfrgell, yn ystafelio'r dros rydych. Mwyn fydd rhaid i'w ddod o'r cyfrifol i gweithio i gyd yn ei fath o ddod. Gweithio'r cyfrifol i gael David Craig yn ei fath o'r cyfrifol i gael ystafelio. Fe wnaeth hyn yn ei wneud ar y panel. David wedi ei wneud o'r cyfrifol awdraethol yn ni'n gwneud o'r llwyf i'r rhaid, arbennig, fel hyn be mae'n gweithio'r sguir ymgyrchu ffaith arweithio y teimlo ffaith, i wneud ydw i 40 arbennig o'r secter yn ei arbennig y cyfan sy'n hyn pam rodi共yfaint 20 trayllion anoddyn arddangos. Felly, tŷn ffordd cydwyr wych ar gael gweithau y brifysg gan ffraith, oherwydd mae'n gynhygr hyn o gael agonor mewn gweithio. Mae withwch yn gallu bobl o'r cyffredinol ymgyrchawd ysgolol iawn ddiol 묺en a'r a data has few equals. He was the founder and CEO of a company that became Refinitif, a bedrock of the financial information architecture around the world. About two and a half, three years ago Refinitif came together with London's stock exchange group, as many will know, and David stayed there for a while and then around about two years ago left to, as he said to me in the lunch break, well, to do a few part-time jobs like TNFD, which was sold to you, I think, David, as a two-day-a-month job, which is currently evidently about a four-day-a-week job, amongst the other sort of seven or eight things that you're trying to cram in. But, David, it is absolutely wonderful to have you with us today and look forward to the latest update from TNFD. Thank you, David. Well, thank you very much, Rowan. It's a pleasure to speak to you all today on the topic of assessing nature-related financial risk. I don't think I qualify as a big hitter, as Rowan described me, but I'll try and do my best to explain this challenge and this problem and how we're breaking down this challenge so it's fixable. I really welcome the work of the CDFI in establishing, helping to establish the UK as a centre of expertise for greening the financial system. I hope this morning's sessions, which, unfortunately, I couldn't make on net zero transition planning scenarios, were productive. I thank you for the chance to speak today, specifically around the nature and data challenges. I'm really looking forward to joining the panel in a moment and taking part in that. I do worry that the topic of nature and becoming nature positive is too often after lunch. The morning is all about climate and how we're doing on transition plans, and then someone rings me up and says, well, we want to do the next things now. We think that nature's next. It's as if these are sequential issues, and we look at planet Earth and Mother Earth, and Mother Earth doesn't put these as sequential issues. They're both happening at the same time. Of course, we live in a practical world where we fill the morning's agenda first, and then the afternoon, and we're squeezing in busy agendas. But it is coming clear to many of us, to business and finance, that the idea that nature and climate are separate, and you can do one before the other, is flawed thinking. We cannot be net zero unless we're nature positive, and it is clear that we are possibly at or beyond the limit of destroying the very natural ecosystems that are fundamental infrastructures to our economies and financial markets. It's not just the scientists that are clearly warning us, but it's the economists and central bankers that are also doing that now, too, as you heard from the ECB last week. We really need to start thinking, as Professor Dysgwpter told us to, of nature as an infrastructure, as an asset that we need to value, we need to invest in and we need to stop destroying. But why are people realising this? And people are realising this because nature risks are materialising faster and quicker than many of the climate-only scenarios predicted. Think of the examples that hit the front page of the newspapers every day, droughts, adverse weather in Europe, North Africa, California. These are damaging food production, harvests, food prices, food inflation, chronic water shortages from the Colorado Basin to now Scotland, to European rivers that impact logistics or cooling of nuclear power stations. Pretty much every day we're seeing the issues arising that are not just natural issues but are economic issues because that natural ecosystem that we rely on so much is underfunded and underresourced. And I've had conversations with UK banks this week, last week, about their worry of their exposure to UK farming and how this is going to manifest itself out. And I think there's a beginning to be a massive awareness of this as a problem here in the UK, in the Netherlands, in Australia, in the US, around the world. Many companies, including those on the task force, are finding that these physical and transition risks are materialising faster than we expected with the detrimental impacts that I described. We're also learning something else. We're learning that nature is our strongest tool and weapon to fight climate change. In March 22, the IPVS body of scientists estimated that preserving nature, changing how we cultivate and use the land, how we farm, how we produce and consume our food and what food we take, how we look after livestock, they estimated that if we took relatively low cost measures on a global scale, we could absorb or reduce the emissions of 13.5 gigatons of greenhouse gas emissions by 2030. That's a big number. It's 13 times what they estimated we could achieve by decarbonising transport. And it's more than all of the changes to industry and buildings, built manufacturers together. So they're basically saying we're destroying the most valuable asset that we have to fight climate change. Yet where's the money going? Is the money going into physical assets or is it going into our natural ecosystem and that infrastructure as an asset that I talked about? Just one example, if you took just the top few centimetres of soil around the world, a big amount of soil, and you treated it properly, it could actually absorb all of the man-made carbon. It could do so if we took the right methods and we provided the right financial incentives to do so. But the investment is not going in that. A fraction of investment flows into alternative production methods and a small fraction, around 20% of the estimated 800 billion per year required to preserve natural systems is in place today. And this is because our financial system, which many of us work in and many of us believe in, has a flaw. Natural ecosystems that asset class I talked about are priced to effectively zero, whilst a forest, a bed of seagrass or a peak area can contribute huge value to our economic system. It costs little or nothing to remove or destroy them and you'll rarely see them at all on the balance sheet. And the second flaw is that our rather short term investment strategies value more dependable revenues, not important innovation and change. And yes, I do think this issue is important, people say, but maybe I'll deal with it in the next financial year, not this one. Yet shareholders, asset managers, fund owners are beginning to realise they're sitting on unquantified and major external risk and they're sitting potentially having invested in a whole bunch of stranded assets. So this is the primary goal of the TNFD. We want to create a global framework to help these companies and financial institutions assess, manage and report on nature related financial risks and opportunities, ultimately being able to redirect financial flows away from things that harm our natural ecosystem and that infrastructure, but to what we call nature positive outcomes. And of course we have to address this sometimes perceived but sometimes real issue of complexity. After all riding a bike can be incredibly complex but we break it down, we learn by doing and we achieve this huge goal. So we have to stop the excuse that I hear time and time again that, oh it's just too complicated. Why isn't there one metric for nature? And there's not enough data. These are excuses that TNFD is trying to break down and show people that actually riding a bike whilst physically very complicated is actually more simple to do. And how to do that? We're supported by amazing Governments around the world, UN agencies, several philanthropic organisations, they fund us, but we're run by the market for the market. We're supported by the GFI platform, who do a tremendous job sporting a small central global team, but a team that has enormous reach. And we're creating something that is designed, that is validated and tested by market participants around the world and market participants who are stepping forward and putting themselves on the front line of this challenge. And we've made substantial progress since our start in September 2021, just 18 months ago. We have now completed the official consultation on June 1 for our fourth beta release. We released four releases in a very fast, rapid software type iteration. Much of the work was done online. We've established over 1100 forum member organisations, 1100 companies and scientific bodies, financial institutions inside the TNFD with a task force of 40. We're carrying out over 200 pilot tests here in the UK supported by the GFI in Brazil, in Asia, in Latin America, in the US, many, many parts of the world looking at areas like palm oil, mineral extraction, agriculture, textiles, with fascinating learnings and feedback about what it takes to do this. We have three and a half thousand pieces of feedback analysed. We've had nearly a million downloads of the framework, so clearly we've got a huge amount of momentum and that feedback is being considered, evaluated ahead of the publication in September 2023. In fact, the team and the task force are all in Paris for two days this week. Opening up this feedback and trying to understand what are things that are designed to try and make this perfect versus what are things that we need to do to ensure adoption. The support on capability building will continue. One of the lessons we learned from TCFD, we modelled ourselves on our cousin, borrowing the framework and the lessons and the tools that they had developed, was that actually addressing things like capability building earlier on were really important. If we spent as much time on training as we did arguing about taxonomies, I think we'd have a much faster approach to net zero than we do today. But we also recognise the importance of data. I am a self-confessed data geek. I love the stuff. It's amazingly powerful. It can open up all sorts of insights and opportunities. We have over 130 data companies in our data catalyst, understanding where the gaps are, be they spatial gaps or maybe temporal gaps, increasing the approach to standardisation and transparency. How do we measure the state of nature of a piece of land or ocean or shoreline in a consistent way? I'm putting guidance on where to find local data sources so that we can stop the companies and financial institutions who sometimes they sort of expect a refinitive or even a Bloomberg screen to pop up and tell them the nature answer. Well, it's not going to do that. They have to go out and find the data. They have to do the work. I'll finish by saying what's actually in the framework. What will you see when you go online, like many of you I'm sure have, and done this? I looked at this. There are three components plus supplementary guidance. First of all, there's definitional work on how do we talk and describe nature? We talk about four realms of our natural system and 34 distinct biomes, areas of land or water characterised by specific types of ecosystem services. Really important that we have a common language for interfacing between the world of science and nature, business and finance. We then have a methodology to many people, not everyone, nature assessment is new. Many people, many companies have been doing this for many years. We codified their approach. We call it LEAP. It stands for Locate, Evaluate, Assess and Prepare. It helps you step through the approach of looking at your value change and understanding where things have been made and the types of ecosystem services dependencies that you have. Then finally, the recommended disclosures. Modeled on the four TCFD pillars, we've copied them across. Enormosly strong feedback for doing that, but of course added the specific elements of nature like location and supply chains and societal input that are so important. An additional guidance includes guidance on sectors, on biomes, on scenario analysis. There's no point in doing separate climate scenarios. You should do climate and nature together as we are learning and we're working with the NGFS on doing that. I'm a lot of guidance true around setting targets and metrics. We're working with the science-based targets for nature. And breaking down that complexity, those four realms I talked about, atmosphere, land, ocean, fresh water, then break down into 34 biomes. Trying to almost segment the world into those areas based on scientific knowledge of distinct ecosystem characteristics. A coastal system is very different from a savanna, which is very different from high productive agricultural land. Your impact potentially on water or pollution or land change use is very different. So it's really important to have that kind of definitional work to do that. And as you can understand from as I'm speaking, the implications of this are that you have to really understand not what you do as a company or where you're investing, but where those locations really are on a pretty granular level. And therein lies the data challenge that I'm sure we'll cover later in the panel. So TNFD is not a standard. We're a market task force. We're designing something and recommending an approach and a tool for the market by the market. We are then hoping and working to have that built into the standards that emerge through the global standard of the ISSB, through the EU, through national regulations such as the UK or SEC or others around the world. We're also aligning to the global biodiversity framework that was agreed in Cuming in Montreal. I was there. My co-chair, Elizabeth Memmner, is actually the secretariat. So we had a ringside seat to those discussions, and I think it's really important that we don't just celebrate what was achieved there in the landmark breakthrough of those 23 targets, but we have a methodology and a toolset that demonstrates that we can get there. So what happens next? Busy summer, processing all the feedback, supporting more pilot tests, supporting more members, and then in September we'll launch our recommendations to the market. But of course the work doesn't stop there. There will be ongoing pilots and testing. There will be further industry guidance. There will be further collaboration with the ISSB, the EU and others to embody the approach and the TNFD into them. We will also be making recommendations. We are supported by the G20 Sustainable Finance Group. We will be making recommendations for a more open public data sharing approach to accelerate the way that data can be formed. I will also be encouraging and supporting adoption. Many companies and financial institutions have already committed to adopt the TNFD or do so in the future, already starting to even use parts of the early drafts. Companies like AXA, Santander, UBS, corporates such as GSK, Kieran, ABM, they've all indicated their future path to use the framework and it's the start, I hope, of many. I'm a huge believer in financial markets. I think they do immense good. They direct finance and money to invest schools, bridges, infrastructure, the things that we rely on as people. What I hope that we can do through the TNFD is redirect financial markets so they invest into the infrastructure that they've taken for granted for the last 150 years, which is possibly the most important and that's the infrastructure of our natural ecosystem. We can't keep nature to the after lunch slot. We've got to keep it in the morning and we've got to embed climate as part of nature, not the other way round. The planet doesn't see these as separate job titles. If I look at the companies and the financial institutions that are leading, they're merging their climate and nature teams. They're merging their approach to TCFD and TNFD and they're thinking about this in a holistic approach. So I would just encourage all of you to think in an integrated, organised and cohesive approach to nature and climate together and believe in that the financial markets can redirect finance into more nature positive outcomes. Thank you very much. Rowan, I'm happy to take questions here. Thanks so much. We've got time for some questions. I know it is after lunch, but you picked up so many of the things from this morning around, the need to retrain the invisible hand. I also thought you'll comment right at the end about thinking about climate as actually part of nature, the other way round, because obviously there's a very big set of ecosystem services, but it's just one set of natural ecosystem services and I can certainly see that convergence and almost nature takeover, if I may say David, happy. Any questions from the floor? Please don't be shy. I'll kick off with one. Obviously, David, you know here there's an audience of finance sector folks. Thank you. Finance sector folks, academia, NGOs and government. If you've got an ask or two of these communities right now, as you've said, you've just launched the fourth iteration, I think of the any particular asks for the second half of the year to help you and your very busy team. I can see what you're working for days a week, by the way, to help you drive the agenda forward. Well, I think two things, not one for financial institutions and corporations start. We can't let the perfect get in the way of the good. We can't let wait for perfect regulations to arrive that tell us what to do because if you don't start, that will have enormous impact on the risk that you're carrying. It will also mean that you're behind the curve and you won't have hired the talent and the people and done the training that's required. Then for the NGO community and the supporters that we have, recognise too that this is a journey. The TNFD, whilst we've made tremendous progress, is only a start. We can't solve all of the issues and we can't be perfect. We've defined 15 disclosures, one of which is climate, so really 14 in the realm of nature. Many scientific bodies and NGOs would like us to have 3,000 disclosures. They'd like to know what the CEO had for breakfast and that to be disclosed in the morning. I understand sometimes that this mindset of if you disclose everything we'll find you out. The financial industry and corporates will be overwhelmed by that and we'd never have any progress because no one would adopt it. We've got to find that sensible middle. My success is that financial institutions say they're too many and NGOs and scientific groups say there's not enough. We're in that middle ground, but if I can just give you one piece of feedback in the 15 areas, the 14 on nature, resource use, pollution, land use, oceans you can go through and have a look. Very strong feedback. I'm not giving it away that plastic pollution should be as one of those in there. I think there's a very good case and lots of voices that say this is such a critical issue, not just for the environment and our economies, but our own blood streams which is being polluted by microplastics. We should deal with this. So I think that's a good example of where this feedback and input is really working and helping. Thank you, Doug. I think there's a question in the middle there. Yes, thank you. Name an affiliation. Thanks, it's Adam Young, Tech UK. I was just wondering if you had any concerns that this climate first approach that's being pursued could actually have negative implications for nature because certain climate solutions are actually anti-nature solutions. Well it can and it is and it's not just climate first, it's climate only. So if you go and buy an offset which is just replanting a singular forest, it's well known for years and well publicised, that doesn't help by a diversity in nature. It can destroy the downstream ecosystem integrity, all sorts of issues. So you have to think about and particularly in the world of offsets, where you're investing in often natural solutions, how am I thinking about biodiversity in nature in the way that I'm doing it. So climate first, climate only is definitely an issue and leading us to the wrong actions to get there. What people actually are realising, the more enlightened is that actually nature first helps climate and that actually if I think about different ways of farming for example, I can actually really reduce my CO2 and greenhouse gas emissions like methane by using different methods. So we mustn't make this a battle between climate and nature. Mother Earth will be very cross with us if we do that. We have to think about Mother Earth helping us, she's given us this amazing tool to fight the damage that we've done with nature. So we have to think about climate and atmosphere as part of nature. Thanks Benjamin Simpson from Osmos Investment Management. I just wondered if we could interrogate just the framing of nature on the TNFD and as an ecosystem service framing. You mentioned about alignment with the GVF which is obviously great. Do you see any potential conflict into the future with regulations that might serve to consider species that are related to ecosystem services or indeed provide ecosystem services? You just give one example of species not to serve me or all of us. For services? Yeah. Anyone who's got pay for you at the moment is an ecosystem service. Go ahead. Thanks so much. It just comes to the question on table three of them. Dynesia Mendus Newberg on Berman. David first of all thank you very much. Secondly, what's your view on the skills gap that we have across all sectors for the dialogue to take place? I mean I work for a large institutional asset manager. I see the CFA Institute launching certificates and ESG and climate risk that tackle investment, the investment side of it, but I'd like to hear a view on that. There is a panel after this so lots of time. Andrew Ross from Global Garden. As well as describing the problem, are you providing a methodology for valuing nature in terms the institutional financial investors on the bond market can invest in directly? Good three very good questions. I'm going to tackle them in reverse order and I'll do the hay fever one at the end. So we are working closely with a number of groups looking at valuation of natural assets including capital coalition. We haven't tried to step into the complex world of putting a value on a tree or a natural asset because it's very complicated and also because you can get various different answers to the value of that asset depending how you look at it. What we are in effect trying to do is by going through the methodology and the assessment is incorporating the characteristics of that asset on your business model. So what are my ecosystem services that I depend upon and what are the impacts that I might be having? So we've tried to stay more practical. There are some serious brains working on natural capital asset valuation particularly in the asset management world and I think we should let them do their job. We haven't tried to solve that problem. Your question on the bond market is a really interesting one. We have so far looked at essentially the equity market of public companies but of course the framework can be transposed into the bond market in a relatively straightforward way. In fact one government has actually just applied the TNFD approach to value their bond. So one of the things that we will be doing after September is looking at both corporate and government debt and trying to understand how TNFD can be applied and we're also working with the development banks. So trillions of dollars go into development banks around the world. Much of it's actually harmful for nature in the form of subsidies or projects. We're also working with them on how that can be changed. It's a big part of the equation to do it. So hopefully I've answered your question. The training question. Yes I am worried about this because I think if you open the box on many companies let's say one of a lot of our members in the agricultural space are these areas. They've actually been looking at this for a long time and their skills are relatively developed on how to assess at a location based nature related risks and impacts. The mining industry for example, let's face it, doesn't always have a good record on this, has always had to do depending on which part of the world but generally, environmental assessment impact into quite a detailed level. So if you actually talk to our mining members they'd actually say this isn't that new for us. The biggest skills gap is actually in financial markets and that's where in the asset management world in particular there is a big skills gap of this area. One of our members early on said success for me, this is a big US asset manager, was my portfolio managers know enough to understand how to quantify nature related risk in their portfolios. That was a good challenge to us. So I think there's training required and that's where the biggest gap is and I do worry that everyone gets trained on climate because the training companies think that's the next thing to sell and then next year they'll say well that's the training on nature back to this point about climate only. That's why we're working on a platform approach to have third parties work with us to create something comprehensive that is nature and climate together to do it. The detrimental services, the hay fever example, I would not pretend for a moment to be an expert on the natural system to understand where some of those consequences might lie. What I do think though is by going through this approach what we are going to find as financial investors and asset managers is there's no perfect answer and that we're going to have to be making trade-offs. Imperfect information leads to the wrong trade-offs and the wrong decisions by adopting TNFD and going through those assessment metrics there are about 3,000 of them and then the disclosure metrics. You're making visible to the asset managers the trade-offs. Am I trading off destruction of land because I need to mine lithium to fuel electrification of cars but I understand that trade-off and I've minimised it or am I prioritising one thing over another so I think at the moment our biggest challenge is we don't know what trade-offs we're making, they're implicit and we need to make them explicit so we understand that. I don't suffer from hayfeever my son does and it's a very good example of something that could be detrimental. I'm sure when we reverse the bee population decline which is a staggering issue I'm sure some lobby group will say that more people have been stung and going to hospital and there's all sorts of issues but you know such is life right anytime let no good deed go unforgiven is the way that I think about this thank you. David thanks so much for covering all those questions so now as you know risk is about choice senor how some risk the are going to go to two separate channels if you want to carry on with David and others in a panel led by Joanna McRae we're going to be looking at the data requirements for for nature positive finance here in this room on this panel so stay where you are alternatively pop downstairs to the Godfrey Theatre where UKRI will be presenting eight companies who have been members of that group that have been invested in as as partner startups or developing companies in the area of climate and environmental data science so there we go we'll give folks a couple of minutes to make that decision head downstairs and with that Joanna on hand over to you but finally one more round of applause please for David.