How financial institutions use ENCORE for TNFD risk assessments

Two years since the Taskforce on Nature-related Financial Disclosures (TNFD) published its guidance for assessing nature-related dependencies, impacts, risks and opportunities, a new report by Global Canopy examines how financial institutions use ENCORE to assess dependencies and impacts on nature.

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Global Canopy’s review of 50 TNFD-aligned disclosures by financial institutions found widespread ENCORE use, with 80% of assessed reports using the tool. 

ENCORE is a free online tool developed by Global Canopy, UNEP FI and UNEP-WCMC, that helps organisations explore their exposure to nature-related risk and take the first steps to understanding their dependencies and impacts on nature. ENCORE analysis is often the starting point of a TNFD LEAP (Locate, Evaluate, Assess, Prepare) assessment. Our research indicates that organisations applying the LEAP approach are generating useful insights, disclosing these in annual reports, and integrating them into nature strategies. 

For example, ENCORE has enabled organisations to identify sectors and clients with the greatest exposure to nature-related dependencies and impacts. They assessed and, in some cases, quantified the materiality of specific risks and opportunities, such as water scarcity risks relating to industrial operations, or regulatory risk linked to protecting biodiversity. This information could be used to engage clients and guide investment strategies.

Banks, investors and insurers all depend on and impact nature through their financing. It’s encouraging to see ENCORE and the LEAP approach are helping organisations understand these links and appreciate risks linked to nature loss.

Helen Beddow, Education and Learning Director, Global Canopy

These analyses are a useful starting point to support not only disclosures aligned with the TNFD framework, but also further action by the finance sector. As financial institutions move toward  target-setting and the implementation of credible nature transition plans, ENCORE-enabled analyses have a critical role to play. 

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ENCORE (Exploring Natural Capital Opportunities, Risks & Exposure) is developed and maintained by Global Canopy, UNEP FI and UNEP-WCMC. Global Canopy is a founding partner of the TNFD, and was an official piloting partner for the TNFD prior to the launch of the TNFD Final Recommendations in September 2023. We continue to provide technical expertise to the TNFD, and to build capacity among companies and financial institutions, preparing them to adopt the TNFD recommendations.