Undertake a TNFD assessment for assets in a range of different sectors using these sector-specific packages.

These packages go through the geospatial stages of the LEAP framework to calculate assessment and disclosure metrics recommended by TNFD.

Workflows included: 'Core Global Metrics: Dependency and Impact'; 'Locate' stage L3 which reports which ecosystems and biomes your asset interfaces with; 'Locate' stage L4 which determines the sensitivity of the ecosystem for that asset; and 'Evaluate' stage E3 which quantifies nature related Dependencies and Impacts.

TABLE OF CONTENTS

• Video Overview
• Sectors
• Workflow Descriptions
  • Locate Stage L3: Interface with Nature
  • Locate Stage L4: Interface with Nature
  • Locate Stage E3: Dependency measurement
    • Ecosystem Integrity Index
  • Locate Stage E3: Impact measurement
  • Core Global Disclosure Metrics: Dependency and Impact
• Ecosystem Service Dependency Adjustments

Video Overview

Sectors

The following table shares the materiality ratings for each sector's dependency on the 21 ecosystem services covered by ENCORE, that are currently supported by a Package in Earth Blox.

The following ecosystem services are currently rated as not material for the sectors that are currently supported by a package in Earth Blox: Flood and storm protection; Filtration; Dilution by atmosphere and ecosystems; Genetic Materials; Water quality; Soil Quality; Pest Control; Disease control; Ventilation; Fibres and other materials; Buffering and attenuation of mass flows; Bio-remediation; Maintain nursery habitats; Mediation of sensory impacts; Animal-based energy; Pollination.

More information about the materiality ratings for different sectors can be found on the ENCORE website.

Workflow Descriptions

Locate Stage L3: Interface with Nature

Having undertaken screening in stage L2, you will need to identify the locations of the activities or assets selected. From here, you must identify which biomes and specific ecosystems they interface with.

An ecosystem is a functional unit of plants, animals, microorganisms, and the non-living environment.

A biome is a global-scale zone defined by the type of vegetation that arises due to the climate in those locations. Ultimately, this is an area that contains common ecological drivers that regulate ecological functions.

This workflow makes use of the Resolve Ecoregions dataset to provide information on the Biomes, whilst the Global Habitat dataset provides information on the IUCN Level 2 Habitat Classification that your asset interfaces with. It also provides information on any indigenous territories that your asset interfaces with. TNFD stresses the need to account for the benefits to Indigenous Peoples, Local Communities and stakeholders in your assessments, so understanding this context is important.

Locate Stage L4: Interface with sensitive locations

Having identified the biomes and specific ecosystems that your assets interface with, you now need to identify which of those assets interface with ecologically sensitive locations.

In this workflow, a range of different datasets are used to determine whether an area is ecologically sensitive, and aligned to the definition within the TNFD Guidance.

• Areas important for biodiversity, including species
  • Biodiversity Hotspots
    • This metric shows the extent of the Earth’s 36 recognised biodiversity hotspots. These meet two criteria, (1) a minimum of 1,500 endemic species, and (2) have lost at least 70% of their primary native vegetation.
    • A score of 1 is given for a location within a biodiversity hotspot
    • The score reduces linearly with distance as the locations are further from the hotspot, and once a location is 100km or more from the hotspot, it is assigned a score of 0
    • A distance of 100km is used because of adjacency and displacement of impacting activities, as well as disruption to species and their range habitats, which may extend beyond the hotspot boundary.
• Areas of high ecosystem integrity, or in rapid decline
  • Biodiversity Intactness Index
    • This metric is a measure of species abundance and compositional similarity in comparison to a baseline.
    • It is scored between 0 and 1, where 1 is equal to a pristine environment.
  • Ecoregion Intactness Index
    • This metric is a measure of habitat loss, quality, and fragmentation, using the level of human modification of a landscape to determine a score relative to a pristine baseline.
    • It is scored between 0 and 1, where 1 is equal to a perfectly intact ecoregion, and 0 is completely modified.
  • Ecoregion Intactness Index Change
    • Change in the ErII is also used to characterise rapid decline between 1993 and 2006.
    • 1 is equivalent to decline, and 0 is equal to no decline, or increase in intactness.
• Areas of high physical water risks
  • WRI Aqueduct Water Risk Atlas
    • This metric combines risk indicators for both physical water quantity and quality.
    • 1 equates to extremely high risk, and 0 is Low risk.
• Areas of importance for ecosystem service provision, including benefits to Indigenous Peoples, Local Communities and stakeholders.
  • Critical Natural Assets Map
    • This metric identifies those natural assets which provide 90% of the total current magnitude of nature's contribution to people.
    • This metric is split into land ecosystems and ocean ecosystems, which we have combined.

These metrics are all normalised to a scale of 0 to 1, allowing them to be combined to give a composite ecological sensitivity score. The maximum score from each of these is taken, as TNFD states that only one criterion needs to be met to constitute a sensitive location.

Locate Stage E3: Dependency measurement

Having identified the environmental assets, ecosystem services, and impact drivers in stage E1, and then the dependencies and impacts in stage E2, this stage of the process asks you to measure the scale and scope of your dependencies on nature.

To measure dependencies, this workflow follows the guidelines of the Nature Risk Profile from the United Nations Environment Programme, in conjunction with S&P Global. This is a methodology for profiling nature-related dependencies.

United Nations Environment Programme (2023). Nature Risk Profile: A methodology for profiling nature related dependencies and impacts. Cambridge, United Kingdom.

An overall Dependency-related risk score is calculated for a specific sector based on the combination of individual dependency scores for 21 different ecosystem services. Not all ecosystem services are material for every sector (so these are implicitly given a score of 0 in the final outcome). Please refer to the Sectors section above.

For a given ecosystem service, the Dependency score is the square root of Reliance (of that process on that ecosystem service) times Resilience (of that ecosystem service).

The Dependency scores for the 21 ecosystem services are then combined using a logarithmic function, to capture the decreasing marginal contribution of additional ecosystem services. The function used ensures that the Overall Dependency score is between 0 and 1.

Reliance is determined through a combination of the Materiality of the reliance on ecosystem services (taken from ENCORE), with the Relevance of that regulating service to the location.

For a given ecosystem service, Reliance is the square root of Materiality times Relevance. Not all ecosystem services have to be adjusted for Relevance, and in this case, the Reliance score is simply equal to the Materiality score.

Relevance is only applicable where the spatial distribution of benefit from a particular ecosystem service is uneven. For example, flood protection is only relevant in areas at high risk of flooding. For the ecosystem services where Relevance is applicable, we have used data layers that capture this uneven distribution. Further information about whether or not an ecosystem service needs to be adjusted for Relevance can be found in Annex 2 of the Nature Risk Profile paper. We have summarised this in the Sectors section below.

Materiality is determined using the sector-specific ratings published by ENCORE. All ecosystem services are adjusted for Materiality.

Resilience is the likelihood of that dependency-related risk materialising and is related to the capacity of ecosystems to continue providing ecosystem services. Resilience is calculated using the Ecosystem Integrity Index, where a low EII score equates to a high resilience risk score.

Not all ecosystem services have to be adjusted for Resilience, and in this case, the Dependency score is simply equal to the Reliance score. Further information about whether or not an ecosystem service needs to be adjusted for Resilience can be found in Annex 2 of the Nature Risk Profile paper. We have summarised this in the Sectors section below.

Ecosystem Integrity Index

The Ecosystem Integrity Index has three components, Structure, Composition, and Function. Structure is determined from the Ecoregion Integrity Index, which is a measure of habitat loss, quality, and fragmentation, using the level of human modification of a landscape to determine a score relative to a pristine baseline. Composition is determined by the Biodiversity Intactness Index, which quantifies the change in species composition as a result of human intervention. Function is determined from the Net Primary Productivity, which is a measure of the carbon balance for a land surface, namely the difference between photosynthesis and respiration. This gives an estimate of how well a particular area is functioning compared to a ‘natural’ ecosystem. The overall index takes the lowest scoring of these three components as the overall integrity of an ecosystem is limited by the lowest-performing aspect of that ecosystem. To calculate the Resilience risk score the EII is then inverted, as a highly resilient ecosystem will have a low risk.

Locate Stage E3: Impact measurement

Having identified the environmental assets, ecosystem services, and impact drivers in stage E1, and then the dependencies and impacts in stage E2. This stage of the process asks you to measure the scale of impacts on nature, whether negative or positive.

To measure impacts, this example workflow follows the guidelines of the Nature Risk Profile from the United Nations Environment Programme, in conjunction with S&P. This is a methodology for profiling nature-related impacts.

United Nations Environment Programme (2023). Nature Risk Profile: A methodology for profiling nature related dependencies and impacts. Cambridge, United Kingdom.

An overall Impact-related risk score is calculated for a specific sector by using a footprinting approach. This score is calculated from the product of Impact Magnitude and Location Significance.

Impact = Magnitude * Significance

Magnitude is determined as condition-adjusted area (in hectares) and is used to characterise your asset's impact on the ecosystem relative to a pristine ecosystem. This is calculated by multiplying the area of your asset (in hectares) by a scaling factor based on the Condition of the ecosystem. The output is an equivalent number of hectares where the condition is effectively reduced to 0.

Impact Magnitude (condition adjusted area) = Area * (1 - Condition)

Condition is determined using the Ecosystem Integrity Index. It is also used to calculate the Resilience score in the Dependency stage, and you can read more about it in that section.

Location Significance is calculated using a similar approach as Ecosystem Sensitivity in the Locate Stage L4. A range of datasets are used to determine whether the area is ecologically significant. This is mostly aligned to the definition of ecosystem sensitivity within the TNFD Guidance; however, it focuses only on those factors which would make the location significant (rather than also potentially at risk, which is a factor of sensitivity). This means the workflow covers whether the location is important for species and biodiversity, whether the ecosystem has high integrity, and whether the location provides important ecosystem services upon which all stakeholders may rely.

• Areas important for biodiversity, including species
  • Biodiversity Hotspots
    • This metric shows the extent of the Earth’s 36 recognised biodiversity hotspots. These meet two criteria, (1) a minimum of 1,500 endemic species, and (2) have lost at least 70% of their primary native vegetation.
    • A score of 1 is given for a location within a biodiversity hotspot
    • The score reduces linearly with distance as the locations are further from the hotspot, and once a location is 100km or more from the hotspot, it is assigned a score of 0
    • A distance of 100km is used because of adjacency and displacement of impacting activities, as well as disruption to species and their range habitats, which may extend beyond the hotspot boundary.
• Areas of high ecosystem integrity, or in rapid decline
  • Biodiversity Intactness Index
    • This metric is a measure of species abundance and compositional similarity in comparison to a baseline.
    • It is scored between 0 and 1, where 1 is equal to a pristine environment.
  • Ecoregion Intactness Index
    • This metric is a measure of habitat loss, quality, and fragmentation, using the level of human modification of a landscape to determine a score relative to a pristine baseline.
    • It is scored between 0 and 1, where 1 is equal to a perfectly intact ecoregion, and 0 is completely modified.
• Areas of importance for ecosystem service provision, including benefits to Indigenous Peoples, Local Communities and stakeholders.
  • Critical Natural Assets Map
    • This metric identifies those natural assets which provide 90% of the total current magnitude of nature's contribution to people.
    • This metric is split into land ecosystems and ocean ecosystems, which we have combined.

These metrics are all normalised to a scale of 0 to 1, allowing them to be combined to give a composite location significance score. The maximum score from each of these is taken, as TNFD states that only one criterion needs to be met to constitute a significant location.

Core Global Disclosure Metrics: Dependency and Impact

TNFD aims to standardise how companies report on their impact on nature and dependence on ecosystem services. As part of this, they have released a small set of core global disclosure metrics that they expect all companies to disclose, or explain why they can't.

There are six categories of Core Global Disclosure Metrics for Dependency and Impact, which have 13 indicators. This workflow provides data on seven of these, of which three are proxies or indicators metrics, rather than being fully aligned to the published requirements. These proxy metrics could be used to prioritise the direct measurement of these metrics, in a situation where complete measurement was impossible. The table below details all 13 indicators, the requirements for TNFD and the workflow's ability to deliver against those, and where not, guidance on how to complete the picture.

Ecosystem Service Dependency Adjustments

Relevance and Resilience are only applicable to some of the ecosystem services. The table below summarises which of the ecosystem services should be adjusted.

Relevance is only applicable where the spatial distribution of benefit from a particular ecosystem service is uneven. For example, flood protection is only relevant in areas at high risk of flooding. For the ecosystem services where Relevance is applicable, we have used data layers that capture this uneven distribution. Further information about whether or not an ecosystem service needs to be adjusted for Relevance can be found in Annex 2 of the Nature Risk Profile paper.

Resilience is only applicable where there is direct resource use. Where the ecosystem service provides maintenance and regulating services, the relationship between the capacity to continue providing the service and the resilience is more complex. Where there is no adjustment for Resilience required, the Dependency score is simply equal to the Reliance score. Further information about whether or not an ecosystem service needs to be adjusted for Resilience can be found in Annex 2 of the Nature Risk Profile paper.