Nature Positive Corporate Assessment Guide for Financial Institutions 2025

In total, 88% of the priority actions fall under the categories “avoid”, “reduce” or “transform”, emphasizing the importance of financial institutions allocating funding to support businesses in changing their operations and business models. Nature-related policies allow financial institutions to understand how companies will guide their employees to mitigate overall impact on nature.2.6 Indicator 6: Policies Nature-related policies establish clear guidelines for employees and ensure consistent decision-making and actions across an organization. They allow financial institutions to understand how companies will guide their employees to mitigate overall impact on nature by setting rules, conditions and limitations on nature-related sustainability matters. Financial institutions are interested in understanding the nature policies companies have in place to support the credibility of their nature strategies or transition plans. As a first step in understanding a company’s progress on nature, many financial institutions already assess whether deforestation policies are in place (given that they are the most common environmental policies in the market). Financial institutions seek the following information from companies when assessing this indicator: –Whether nature-related policies such as those relating to deforestation or water are in place and based on international practices including the Accountability Framework Initiative –What the scope of the policy is and how many company segments and locations are involved –Whether the policy specifies commitments and targets for a no-deforestation and/or no-conversion approach, the definition of the intended outcome and cut-off dates, and the implementation mechanisms used (including risk assessment, traceability, supplier engagement strategies and operationalization) –How policies are enforced Existing frameworks that companies maybe using: –Accountability Framework Initiative’s How to Write a Strong Ethical Supply Chain Policy: This user guide outlines the process by which companies can apply the Accountability Framework to create or update an ethical supply chain policy aimed at safeguarding forests and other natural ecosystems, and upholding human rights.78 –TNFD’s Discussion paper on nature transition plans: This paper includes policies and conditions within its transition plan implementation strategy.79 –Nature benchmarking initiatives state expectations around nature policies of companies such as Nature Action 100.80 How financial institutions can get started: Many companies already have deforestation policies in place. These are currently most observed in the food, beverage and agriculture, manufacturing and materials sectors,81 which have material impacts on forests. The forthcoming EU Deforestation Regulation is expected to further compel companies with customers and supply chains to implement anti-deforestation policies. The regulation prohibits companies from placing commodities or products from land deforested or degraded after 31 December 2020 on the EU market. Financial institutions can, at a minimum, use this information and start assessing whether deforestation policies are in place until other policies become more established. If other issues, such as plastic pollution, are more relevant to a company’s operations, corresponding policies may be prioritized. In the target state, companies will have comprehensive policies covering all material nature and climate topics, as well as interlinked social policies, such as engaging and managing impacts on Indigenous Peoples and local communities. Financial institutions will seek to understand whether companies have the appropriate governance mechanisms in place to approve, implement and monitor progress against their nature ambitions or targets at different levels of the organization. As availability and quality of corporate data on nature have not yet reached target-state levels, governance is one of the key components financial institutions can rely on to assess companies on nature. Many companies already have governance structures in place for climate. Climate and nature- related committees, for example, can be stand-alone committees or integrated into existing committees. 2.7 Indicator 7: Governance Nature Positive: Corporate Assessment Guide for Financial Institutions 34