Turning TNFD into a business opportunity

Asian Businesses Poised for
a Shift Towards Nature-Positive Practices


TNFD dedicated SVP, Corporate Sustainability Dept.,
MS&AD Insurance Group Holdings, Inc.
TNFD Taskforce Member

Makoto Haraguchi

Executive Vice President, The University of Tokyo
Professor, Institute for Future Initiatives
Director, Center for Global Commons

Naoko Ishii

Increasing attention is being paid to initiatives related to biodiversity as a new form of corporate sustainability management. In September 2023, the first version of disclosure recommendations by the TNFD was published. This represents the beginning of a full-fledged movement towards promoting nature-positive activities. The movement is expected to have a significant impact on the value and business activities of corporations around the world, including Asia.

Asia is a critical player in the response to biodiversity and natural capital

With the publication of recommendations by the TNFD, Asia is one of the regions expected to experience significant changes in future corporate activities.

As TFND promotes information disclosure related to biodiversity and natural capital, corporations will face increasing demand to shift to business models that promote biodiversity conservation and sustainable resources use. Asia is home to various natural capital, including forests, soil, water, air and bio-resources. As such, Asia will be a critical part of efforts to establish nature-positive business models and supply chains.

What is TNFD and what trajectory should Asia and the rest of the world take amid this developing trend? Discussing these topics are University of Tokyo Professor Naoko Ishii and Makoto Haraguchi. Professor Ishii previously served as CEO of the Global Environment Facility (GEF)*, one of the U.N. Environmental Programs, and has spent her career dedicated to environmental conservation on a global scale. Haraguchi is an executive at MS&AD Insurance Group Holdings, one of Japan’s leading insurance company groups, and was the first Japanese to be appointed to the TNFD.

*An international financial mechanism and its management organization that provides grant funds to global environmental conservation projects in developing countries.

There’s no avoiding TNFD and biodiversity response

Photo: Naoko Ishii

Executive Vice President, The University of Tokyo
Professor, Institute for Future Initiatives
Director, Center for Global Commons

Naoko Ishii

Graduated from the Faculty of Economics, the University of Tokyo. Joined the Ministry of Finance in 1981. Ishii's career includes time as a researcher at the Harvard University Institute for International Affairs; an economist at the IMF Strategy; the World Bank; and Deputy Vice Minister of Finance. Ishii became CEO of the Global Environment Facility in 2012. Ishii has been in her current position since 2020. Ph.D (international development, the University of Tokyo).

―― Please discuss global awareness of biodiversity as an issue and current trends within the Japanese government and corporations from the perspective of the first version of the TNFD disclosure recommendations.

Haraguchi At the most basic level, TNFD recommendations are consistent with the Taskforce on Climate-related Financial Disclosures (TCFD), replicating four disclosure pillars: governance, strategy, risk and impact management, and metrics and targets. Corporations are being asked to disclose information to investors and other external parties regarding their nature-related risk assessment. However, in reality, most companies have no past experience comprehensively evaluating how their business associates with nature. To address this reality, the TNFD represents additional guidance on how to conduct risk assessments and information disclosure, and formulate scenarios.

Ishii TCFD was created in response to climate change, and the development of the TNFD as a continuation of that framework is a logical step forward. In the past, during my tenure as CEO of the Global Environmental Facility from 2012 to 2020, three environmental risks—climate change, nature and biodiversity depletion, and pollution—were globally acknowledged as a triple planetary crisis. So far, there has been a conversation about integrating and aligning countermeasures with economic activity. However, these crises are now seen as equally threatening the Earth's capacity, so they are no longer treated as isolated concerns. The current global trend is to integrate all these issues into economic systems, and I see this as a significant shift in recent years.

Both TCFD and TNFD are rooted in business, and business won't succeed if it fails to address these issues across the entire supply chain. However, as Mr. Haraguchi pointed out, very few companies actually recognize the link between business and nature as an internal issue. That is why it is necessary to adopt this type of framework as a guide for engaging in global initiatives.

Photo: Makoto Haraguchi

TNFD dedicated SVP, Corporate Sustainability Dept.,
MS&AD Insurance Group Holdings, Inc.
TNFD Taskforce Member

Makoto Haraguchi

Since joining the MS&AD Insurance Group, Haraguchi has been involved in consulting related to internal and external sustainable management. In 2008, he promoted the establishment of the Japan Business Initiative for Biodiversity (JBIB) as an advisor. In 2013, he participated in the establishment of the Association for Business Innovation in Harmony with Nature and Community (ABINC). In 2021, he became the first Japanese to be selected as a member of the Taskforce on Nature-related Financial Disclosures (TNFD), and is currently working on creating a framework for information disclosure.

―― What types of businesses and industries are linked to initiatives aimed at conserving biodiversity? Also, what are some key points of caution when advancing such initiatives?

Haraguchi When you take a close look at the relationship between business and nature, situations will vary depending on the industrial sector (business type) and country or region. However, as Professor Ishii indicated, initiatives to address the global environment crisis must be viewed as not only a part of business, but also as an inherent part of daily life. For example, as evidenced by the reality that there are no companies that are completely paperless or waterless, neither business nor daily life is attainable without the blessings of nature. In other words, initiatives aimed at biodiversity conservation are absolutely linked to businesses in all industrial sectors.

Against this backdrop, TNFD will serve as a lens through which companies can analyze the correlation between their business and nature. We must start by using a globally standard lens to examine the relationship between business and nature, and identify the issues that have a negative impact on business or nature. I view this as a key point of caution that should be considered when advancing initiatives.

Ishii I agree with Mr. Haraguchi's opinion. There is no denying that both our lifestyles and businesses are 100 percent dependent on nature. Businesses must consider the direct connection to nature throughout the entire supply chain.

In the Center for Global Commons at the University of Tokyo, I conduct research on the level of impact that each country in the world has on the nature and environment of each country through trade. For example, Japan relies on imports for over 60% of food products, and this has a tremendous impact on nature in the exporting nations producing those primary products. Although Japan claims itself to be an environmentally friendly country that values nature, the reality is that the country has a significant impact on natural environments overseas, particularly in the Global South. And, furthermore, Japan is not paying the type of compensation that enables such countries to maintain sustainable production.

The primary mission of the TNFD is to reevaluate and recalibrate the relationships between business and nature. By thoroughly assessing the value tied to nature and providing appropriate compensation, Japan can economically bolster the people of nations in the Global South who are engaged in production activities closely connected to nature. I believe this is a pivotal point that warrants careful consideration.

Image photo

Risks and opportunities presented to companies by addressing TNFD

―― With TCFD and TNFD, is there a difference in the initiatives required of companies?

Haraguchi TCFD risk assessment and information disclosure is simple in that it requires ascertaining greenhouse gas (GHG) emissions. Originally, TCFD began with requiring information disclosure on levels of GHG emission, a cause of climate change, as a way to mitigate systemic risks associated with the destabilization of global monetary systems due to climate change. However, in a situation where, for example, global warming causes a rise in ocean surface levels, even if island nations in the Global South incur damage, there is no way to link GHG emitted by a specific company as the cause. It has been pointed out that this mechanism is one cause for why in Japan decarbonization was not viewed as an opportunity, and why the country fell behind in such investments.

By comparison, information on the status of nature and biodiversity required for TNFD information disclosure cannot be indicated solely using such measurement metrics. Also, the impact on nature and biodiversity will vary greatly depending on the location, meaning that the level of negative impact caused by the same activities will differ. Furthermore, TNFD considers not only risks but also opportunities. In situations where current activities are having a negative impact on biodiversity, from the onset TNFD indicates merits in terms of how changes can be linked to opportunities. This is a big difference between TCFD and TNFD.

―― What risks and opportunities are presented to companies by responding to TNFD and biodiversity?

Haraguchi Firstly, continuing to impart a negative impact on nature carries the potential risk of lawsuits by the local residents whose lives are dependent on those natural environments or the non-government organizations (NGOs) supporting those people. It is conceivable that local governments could revoke the permits required to conduct business activities.

What kinds of opportunities are presented by responding to biodiversity will depend on the business strategy of the corporation and the decision-making and business decisions of corporate management. There is first a need to abandon or shift away from businesses that earn profit by destroying nature. Furthermore, it is important that companies break away from using corporate social responsibility (CSR) activities as a standard and instead formulate strategy that links business and nature.

Ishii Companies that neglect to address biodiversity issues may face several potential risks, such as the withdrawal of investments by financial institutions and disrupted transactions with customer businesses. Furthermore, even if a company is proactively addressing biodiversity concerns, a failure to do so within its supply chain can still expose it to these risks. Based on the findings from a meta-analysis of over 2,000 empirical studies, there is a correlation between companies' ESG engagement, including their approach to biodiversity preservation, and their financial performance. In simpler terms, embracing the TNFD framework and promoting biodiversity preservation can open doors to investment capital.

―― Are there any examples of corporate initiatives already underway?

Haraguchi For example, a cosmetics manufacturer in Brazil is engaged in the R&D and sales of products that use ingredients derived from plants harvested in the Amazon as the only raw materials for their products while still achieving efficacy equivalent to other products. Contracting farmers in the Amazon to grow the plants used as a raw material promotes the protection of these rich forests while supporting traditional lifestyles in the region and creating a platform for the company’s business growth. Such efforts have been highly praised, and currently the company has grown to where it is now listed as an ADR on the New York Stock Exchange. This is a favorable example of a company seizing on opportunity while promoting a nature-positive business model. This type of initiative would be applicable throughout Asian nations, which are similarly rich in natural capital.

Ensuring fair compensation to Asian nations for natural capital

―― As an academic institution, how can the University of Tokyo Center for Global Commons contribute to biodiversity response by corporations and society?

Ishii The Center for Global Commons (CGC) at the University of Tokyo is an organization engaged in research related to methods of protecting the Earth as a common asset. The CGC was established in August 2020 with a mission to "build a new framework for stewarding the Global Commons for a sustainable future." The Center was established inside the University of Tokyo because academies maintain the most neutral position within society.

On the subject of biodiversity, the Center provides various recommendations from the perspective of research into systems and frameworks for humans and the Earth, and serves as a knowledge partner for the TNFD. In particular, the Center is focused on recommending policy towards establishing a system that ensures fair compensation for the natural capital of Asian nations, which are so closely linked to the supply chains of Japanese companies. Furthermore, we aim to amplify the often-overlooked voices of Asia in the global arena, ensuring that they reach influential business leaders worldwide.

Haraguchi As Professor Ishii states, Japanese companies are highly reliant on the natural capital of Asian nations. Using TNFD will make this reality much more apparent. I hope TNFD can be incorporated as a common language that business operators in Japan and Asia can apply towards a shift to nature-positive business that increases natural capital while also expanding business opportunities.

―― How is the MS&AD Group supporting corporate TNFD responses?

Haraguchi MS&AD InterRisk Research & Consulting where I work has been providing companies in various industry sectors with risk analysis and consulting services related to biodiversity since the 1990s. However, biodiversity response requires a flexible approach, as the conditions facing each business and company along a supply chain will differ. We have many years of experience and knowledge in this area, and are confident in our ability to provide support beyond the capabilities of competitors that only recently got involved in biodiversity support.

In February 2023, the MS&AD Group collaborated with three financial institutions (The Sumitomo Mitsui Financial Group, The Development Bank of Japan, and The Norinchukin Bank) to launch the Finance Alliance for Nature Positive Solutions (FANPS) to support nature-positive activities by companies. I believe this ability to support the requirements of TNFD from our position as a financial institution is a unique strength of the MS&AD Group.

  • Photo
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As part of biodiversity initiatives by Mitsui Sumitomo Insurance, a subsidiary of MS&AD Holdings, the Group has developed green space in the areas surrounding the Surugadai Building and the Surugadai Annex, which are located in Tokyo. This green space has been accredited as "Other Effective area-based Conservation Measures (OECM)" conducted by the Ministry of the Environment.

MS&AD services to provide companies powerful support for TNFD

Providing consulting based on an advanced understanding of biodiversity

Many companies, including consulting companies, have begun providing services to support responses to TNFD and biodiversity issues. Services offered by some of those companies attempted to standardize and apply TNFD using the same methods they use for TCFD. However, accurate evaluations can prove to be difficult due to the reality that the impact on and response to biodiversity will differ with each company.

Conversely, the MS&AD Group is able to provide more customized support to address the issues of each individual company. Basing our support on the LEAP approach (locate, evaluate, assess and prepare) advocated by the TNFD as an integrated assessment process for managing nature-related risks and opportunities, we focus on the regions and ecosystems where operations take place to provide companies with more accurate, high-resolution assessments and recommendations for future measures.

FANPS, an alliance promoting the shift to nature positive

The MS&AD Insurance Group Holdings established the Finance Alliance for Nature Positive Solutions (FANPS), which aims to promote and support nature-positive transformation of businesses. FANPS aims to research solutions that contribute to mitigating nature-related risks and to create mechanisms that provide concrete solutions and finance to support nature-positive businesses. In order for companies to understand and advance their efforts in addressing nature-related risks and opportunities, it is considered a top priority to understand the TNFD recommendations as a future common language.

As specific support services, we now offer the following three services in Japan.

*At present, we do not provide services outside of Japan.

  • FANPS Basic Diagnostic Tool (free)

    Easily diagnose your’ company’s level of response to and preparedness for 14 disclosures required by TNFD recommendations. A report of diagnosis result, a guidance for future initiatives, and steps to take will be sent via email.

  • Online seminar (free)

    TNFD Taskforce member provide online lectures covering basic knowledge for companies that have used the diagnostic tool.

  • TNFD introductory workshop (fee-based: conducted by MS&AD InterRisk Research & Consulting)

    We support independent efforts and learning through classroom lectures and exercise to elevate TNFD understanding to a certain level.


MS&AD Group has declared
its adoption of TNFD disclosure recommendations.