Companies could be forced to report their impact on nature. A new framework aims to help.

The task force – a market-led effort to protect biodiversity but funded by the United Nations – builds on a similar framework for climate emissions, the Task Force on Climate-related Financial Disclosures, which was established in 2015 and ultimately used in the development of standards for mandatory climate reporting.

“Natural risk is financial risk,” said Elizabeth Mrema, co-chair of TNFD. According to the World Economic Forum, some $44 trillion of global economic value depends moderately or heavily on nature, while the World Bank has warned that the collapse of natural systems could wipe out $2.7 trillion a year from the world’s economy. global economy by 2030.

“Businesses today do not adequately consider nature-related dependencies, impacts, risks and opportunities,” said David Craig, the other co-chair of the TNFD. “Natural risk is present in companies’ cash flows and capital portfolios today. The costs of inaction are growing rapidly.

According to consultancy Capgemini, only 20% of companies have studied the effects of their operations on biodiversity, and even fewer have assessed the impact of their entire supply chains..

This is despite growing awareness of the catastrophic effects of biodiversity loss, Capgemini said in a report based on a survey of leaders of large organizations in major economies.

Some companies started using the TNFD even before its final version was published, explains Aurélie Gillon, biodiversity manager at Capgemini Invent France. These include consumer goods manufacturers evaluating their agricultural suppliers and jewelers evaluating their suppliers in the mining industry, according to Gillon. She said the framework would likely be adopted by the COP15 agreement and come into force in regulation.

The TNFD recommendations are currently voluntary, but come as regulations become more stringent regarding degradation of the natural world. Governments meeting last year at the COP15 biodiversity summit in Montreal, Canada, agreed to hold companies accountable and reduce their impact on the natural world. Furthermore, in the EU, many companies already face the obligation to report on their impact on nature under the EU Sustainability Reporting Directive. By 2024, they will also have to prove that products such as coffee, timber and palm oil that they import into the EU have not been produced in a way that led to forest loss , under penalty of severe fines.

Despite the challenges, some companies have already started to include biodiversity in their impact assessments, independent of their analysis of greenhouse gas emissions. Tobacco group Philip Morris International has set a goal by 2033 to ensure that it does not cause any ecosystem loss in anything related to the company’s value chain and to have a net positive impact on nature by 2050. “We recognize that the loss of nature presents both risks and opportunities to our business, today and tomorrow,” said Jennifer Motles, PMI’s chief sustainability officer .

Packaged food giant Nestlé welcomed the recommendations. “We are currently evaluating the framework in its entirety and identifying areas of alignment with upcoming regulations in the European Union and Switzerland,” a company spokesperson said. Unilever,

another major food manufacturer, declined to comment on the TNFD but said it was working to ensure a deforestation-free supply chain and promote sustainable agriculture among suppliers.

Cost remains a major barrier to adequate biodiversity assessment, particularly for small suppliers, Gillon said. “It can be complicated to be really sure that the origin is completely controlled,” she said, noting that luxury brands – with their higher profit margins and relatively local supply chains – can more quickly and easily assess their impact on biodiversity. French luxury group Kering, owner of Gucci and other fashion houses, has pledged to have a net positive impact on biodiversity by 2025, including through a transition to regenerative agriculture for products like cotton , leather and cashmere.

But in other industries, it can be difficult for companies to know exactly where every element of their products comes from. “It’s a pretty big ask for businesses… actually pinpointing where the supply chain impacts nature is going to require a step change,” said Zoe Balmforth, co-founder of UK startup Pivotal, which helps businesses assess the environment. impact through comprehensive surveillance systems, including drone footage and underwater cameras.

“Companies win most easily in areas where they have direct control,” Balmforth said, highlighting places where companies control land or where mining companies own assets.

Write to Joshua Kirby at joshua.kirby@wsj.com