Disclosure under the Taskforce on Nature-related Financial Disclosures recommendations
Reporting entity
East Capital Group (East Capital and Espiria)Scope of disclosure
Listed equity & fixed income holdings, group-wideReporting date
Holdings as at 02 January 2026Coverage
466 holdings across 59 countries
About this report
This is East Capital Group's first nature-related disclosure aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD). It covers East Capital and Espiria, the two asset management brands within East Capital Group, and applies group-wide ESG and sustainability commitments as set out in our ESG Policy. We have followed the TNFD's four pillars — Governance, Strategy, Risk & impact management, and Metrics & targets — and applied the LEAP approach (Locate, Evaluate, Assess, Prepare) at a portfolio-level scoping depth appropriate for a first-year disclosure. We expect coverage and granularity to deepen in subsequent reporting cycles.
Our underlying belief: the diversity of life on earth is critical to the quality and resilience of our global ecosystem. The IPBES Global Assessment concluded that current trends in biodiversity loss are projected to undermine progress towards 80% (35 of 44) of the assessed UN Sustainable Development Goal targets related to poverty, hunger, health, water, cities, climate, oceans and land.1 The more recent IPBES Nexus Assessment reinforces this picture, finding that biodiversity loss compounds with water, food, health and climate-change crises in ways that put the SDGs, the Kunming-Montreal Global Biodiversity Framework and the Paris Agreement at risk unless they are addressed jointly.2 On that basis, we believe nature-related risks must be properly assessed and managed alongside climate, social and governance considerations.
1. Governance
Our governance of nature-related dependencies, impacts, risks and opportunities sits within the existing ESG governance structure of East Capital Group, set out in our ESG Policy. The Policy applies across all strategies and is built on four pillars: (1) Sector exclusion, (2) Controversy (norms-based) analysis, (3) Proprietary ESG and sustainability analysis, and (4) Active ownership.
Disclosure | East Capital Group response |
A. Board oversight | The Board of East Capital Holding, the mother company of East Capital Group, has ultimate oversight of all material ESG risks and opportunities, including nature-related issues. Portfolio ESG metrics (Red Flag counts, ESG Scorecard outcomes, controversies, the proportion of investments classified as sustainable under SFDR Article 2(17), and engagement and voting activity) are reported quarterly to the Boards of various entities of East Capital Group, including East Capital Holding AB. Climate- and nature-related risks are monitored on an ongoing basis as part of the Board's risk oversight, with material developments escalated as they arise. |
B. Management's role | Executive oversight is performed at the investment committee level supported by the Group ESG Team. Investment teams use proprietary ESG analysis tools to analyse new holdings which includes material nature-related items that feeds the Three-Step-Test for SFDR sustainable investments. Coverage, ESG scores and any breaches of internal thresholds (e.g. "ESG laggards") are reviewed quarterly by the Investment Committee. Nature is integrated into the same governance framework as climate, rather than being managed as a parallel process. |
C. Human rights & stakeholder engagement | Our norms-based screening (Pillar 2) is anchored in the UN Global Compact, the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. We address human-rights aspects of nature-related issues — including impacts on Indigenous Peoples, Local Communities and other affected stakeholders connected to deforestation and land-use change — through engagement (individually and collaboratively via, e.g., the Investor Policy Dialogue on Deforestation and Nature Action 100) and through escalation to Watchlist or Non-Compliant status where engagement is unsuccessful. |
2. Strategy
A. Nature-related dependencies, impacts, risks and opportunities
As an asset manager, our direct operations have very limited nature impacts and dependencies — consistent with TNFD's observation that for financial institutions the material nature exposure typically sits in the downstream (financed) value chain. Following the LEAP "Locate" step, we screened our 466 group-wide holdings against the TNFD's guidance on potentially material sectors for nature, drawing on the SASB/SICS sector taxonomy that TNFD recommends and on the high-impact sectors highlighted in the TNFD Additional Guidance for Financial Institutions and supporting references (e.g. ENCORE).
Based on this screen, 41 of our 466 holdings (around one in eleven) sit in sectors identified as high-risk in a reference report that the TNFD Getting Started guide lists for nature-related sector prioritisation. This sector classification is supplemented by company-level analysis through our proprietary ESG tools.
Sector identified as having elevated nature-related impacts/dependencies | Holdings | Example portfolio companies | Primary nature interface |
Metals & Mining | 7 | Norsk Hydro, Boliden, Sandvik, Altyngold | Land/freshwater-use change; ecosystem condition; pollutants |
Oil, Gas & Consumable Fuels | 6 | Motor Oil Hellas, Metlen Energy & Metals | GHG; land use; pollution |
Automobiles | 5 | Volvo Car, Hedin Mobility, Geely, Volkswagen | Resource use; pollution; supply-chain land use |
Beverages, Food & Agriculture | 5 | Nestlé, Coca-Cola Ïçecek, Leroy Seafood, Varun Beverages | Land-use change; water; deforestation-linked commodities |
Pharmaceuticals | 5 | Hikma, Hansoh, Jiangsu Hengrui, Hansa Biopharma | Wastewater; pollutants |
Semiconductors | 4 | Taiwan Semiconductor, Hynix, Samsung Electronics, ON Semi | Water withdrawal; energy; pollutants |
Transport, Shipping & Airlines | 3 | Turkish Airlines, Himalaya Shipping, Zinka Logistics | GHG; marine ecosystem disturbance |
Paper & Forest Products | 2 | SCA, BillerudKorsnäs | Land-use; forest ecosystems |
Construction Services | 2 | Skanska, NCC | Land-use; resource use |
Construction Materials | 1 | Titan Cement | Resource extraction; pollutants |
Utilities & Power | 1 | (single holding) | Water; ecosystem disturbance |
Total holdings in sectors flagged as elevated nature-impact | 41 | — |
Sector × nature-driver heatmap (top 6 sectors by number of holdings)
To provide a more granular view of how each high-exposure sector interfaces with nature, we have produced an indicative heatmap of the top six sectors against the principal categories of impact and dependency identified in the TNFD framework. The ratings below are our own first-year judgement, informed by publicly available sector-level analyses (including ENCORE), and are intended to support engagement priority-setting rather than to serve as a quantified risk measure.
Sector | IMPACTS on nature | DEPENDENCIES on nature | ||||
Land-use change | Water use | Pollution | Water | Ecosystem services | Climate regulation | |
Metals & Mining | ••• | ••• | ••• | ••• | ••• | ••• |
Oil, Gas & Consumable Fuels | ••• | ••• | ••• | ••• | ••• | ••• |
Automobiles | ••• | ••• | ••• | ••• | ••• | ••• |
Beverages, Food & Agriculture | ••• | ••• | ••• | ••• | ••• | ••• |
Pharmaceuticals | ••• | ••• | ••• | ••• | ••• | — |
Semiconductors | ••• | ••• | ••• | ••• | ••• | ••• |
Materiality scale: ••• Very high ••• High ••• Medium — Not material / not assessed. Source: Indicative rating by East Capital Group, informed by publicly available sector-level analyses (including ENCORE) referenced in TNFD's LEAP guidance. First-year disclosure; not a quantified risk measure. | ||||||
B. Effect on business model, value chain, strategy and financial planning
Nature-related considerations have shaped East Capital Group's investment universe, capital allocation and product offering in three concrete ways.
First, on the investment universe: under Pillar 1 (sector exclusion), our Article 9 sub-funds and Espiria sub-funds exclude activities with severe environmental impact, including fossil fuels, and the Three-Step-Test for SFDR sustainable investments rules out companies with environmental Red Flags. This narrows the eligible universe at the strategy level rather than only at the individual stock level.
Second, on capital allocation and stock selection: our proprietary ESG tools (Pillar 3) score companies on environmental performance, including disclosure against TCFD, TNFD and CDP, and their actual performance on climate and nature topics. The resulting score is taken into account at the stock allocation stage, so nature performance directly influences position sizing.
Third, on engagement and product offering: Pillar 4 prioritises nature engagement in our largest and Key Active Positions4, particularly in the six sectors flagged internally as materially nature-exposed (Extractives & Minerals Processing, Consumer Goods, Food & Beverage, Infrastructure, Energy and Transportation). Dedicated Article 9 sustainability funds (East Capital Global Emerging Markets Sustainable, East Capital Emerging Markets ex-China, Espiria Hållbar Framtid) channel capital specifically towards nature-positive activities.
In practical terms, this translates into three pathways for nature integration in the portfolio:
Invest in solutions: targeted sustainability strategies and Article 9 funds channel capital towards nature-positive activities. Support change: engagement and active ownership on identified high-risk holdings, individually and via collaborative initiatives (IPDD, DIG, Nature Action 100, CDP NDC). Divest from adverse exposure: escalation to Non-Compliant and ultimately divestment where engagement on material nature risks fails to deliver remediation.
We have not yet quantified the financial impact of nature-related dependencies, impacts, risks and opportunities on revenue, expenses or asset values at portfolio or fund level. Building out quantitative financial-impact assessment, alongside the broader maturation of nature-related scenario analysis, is an area we expect to develop further as portfolio-company TNFD reporting and external methodologies mature.
C. Resilience and scenario considerations
As a first-year discloser we have used a qualitative scenario assessment based on TNFD's recommended structure, examining nature-related risk along two axes: ecosystem degradation (limited vs. severe) and coordination between governments, regulators and market actors (strong vs. weak). The four resulting scenarios are summarised below.
Strong coordination | Weak coordination | |
Limited degradation | Scenario 1 — Orderly transition. Stable physical risk, moderate transition risk as policy and market expectations align early. Opportunity: clear price signals for nature-positive investment. | Scenario 2 — Late but limited damage. Lower physical risk but rising transition risk from late, fragmented policy. Risk of stranded assets in laggard jurisdictions. |
Severe degradation | Scenario 3 — Forced transition. Severe physical risk drives sharp, reactive policy response. Transition risk concentrated in shock-affected sectors and geographies. | Scenario 4 — Most likely outcome. Severe physical risk combines with weak coordination. Both physical AND transition risk are elevated; nature-related disruption to supply chains, water access and commodity availability becomes a material driver of returns. |
Our internal assessment is that Scenario 4 — severe degradation combined with weak coordination — is the most likely outcome on current trajectories, consistent with the conclusion reached by other Nordic institutions which are TNFD Early Adpoters. This implies potential elevated physical and transition risk for the portfolio, particularly in the high-impact sectors and, on a domicile-proxy basis, in the regions discussed under Priority locations below. A quantitative scenario assessment with explicit pathways is on the roadmap for the next reporting cycle.
D. Priority locations
Our direct operations are limited to office locations (predominantly Stockholm) and are not in priority locations as defined by the TNFD. For our financed activity, the TNFD framework asks for an analysis of how clients' and investees' interface with sensitive locations — defined as areas of biodiversity importance, high or rapidly declining ecosystem integrity, high physical water risk, or importance for ecosystem service provision (LEAP guidance, L4). Our holdings data captures country and region of domicile, not asset-level operating sites, so for this disclosure we are limited to a domicile-based proxy.
Of our 466 holdings, 117 are domiciled in regions where parts of the country/region are widely identified as containing water-stressed catchments and/or biodiversity-sensitive biomes — Greater China (54), South Asia (16), Middle East (16), ASEAN (15), and selected jurisdictions in LatAm/Africa (~16). This country-of-domicile proxy does not, by itself, indicate that the underlying companies operate in or source from sensitive locations. Moving from this proxy to an asset-level view depends on portfolio companies disclosing the locations of their operations and supply chains, which is currently inconsistent.
3. Risk and impact management
Nature-related issues are considered within the existing investment risk and ESG processes set out in our ESG Policy. For this TNFD disclosure, that integration is partial — nature factors are picked up indirectly via the broader environmental criteria in our Red Flag Analysis and ESG Scorecard, rather than as a separately codified category — and we expect the explicit treatment of nature to deepen in subsequent cycles.
Direct operations [A(i)]: Office-based activities are not material from a nature perspective. No nature-related dependencies or impacts have been identified.
Downstream / portfolio [A(ii)]: New investments are subject to (i) sector and norms-based screening (Pillars 1 and 2), (ii) Red Flag Analysis covering severe and systematic environmental controversies and PAI indicators (which include biodiversity-sensitive areas, hazardous waste and water-stressed-area indicators), and (iii) the proprietary ESG tools, which scores environmental disclosure quality and broader ESG performance. Nature-specific factors are picked up indirectly through these environmental criteria; a dedicated nature dimension is on the development list.
Monitoring [B]: Portfolios are reviewed regularly by the ESG Team. Watchlist and Non-Compliant holdings, ESG laggards (positions below internal Red Flag and Scorecard thresholds) and engagement progress are reported to the Investment Committee and to the Board.
Integration into overall risk management [C]: ESG considerations — including environmental and emerging nature-related factors — feed the same governance plumbing as other investment risks. They affect: (a) initial eligibility via Pillar 1 and the Three-Step-Test, (b) position sizing via the ESG score, (c) engagement priority via Pillar 4, and (d) ultimately divestment where sustained engagement fails.
Active ownership scope on nature-related issues
Our active-ownership work that is most directly relevant to nature is concentrated on the highest-impact sectors and on commodity-driven deforestation. The table below sets out the holdings perimeter and the collaborative initiatives we participate in.
We combine individual company engagements with participation in collaborative initiatives such as IPDD, DIG, Nature Action 100 and the CDP Non-Disclosure Campaign, and use our vote where disclosure or governance is materially deficient.
Engagement scope | Holdings (count) | Status (2025) |
Holdings in sectors flagged as elevated nature-impact (engagement priority pool) | 41 | Identified as the priority pool for nature-related engagement; reviewed by the Investment Committee. |
Holdings in commodity-linked deforestation-risk sectors (food & beverage, agriculture, paper & forest products) | 9 | Subset where deforestation policy commitments and DIG/IPDD-style engagement are most relevant. |
Collaborative initiatives we participate in on nature/deforestation | — | Investor Policy Dialogue on Deforestation (IPDD), Deforestation Investor Group (DIG), Nature Action 100, CDP Non-Disclosure Campaign. |
Holdings escalated to Watchlist / Non-Compliant on nature-related grounds in 2025 | 0 | No nature-driven escalations recorded in the reporting period; tracked alongside controversy-driven escalations. |
4. Metrics and targets
A & B. Metrics
This disclosure prioritises the TNFD core global metrics for risks and opportunities (C7.0–C7.3) and the two TNFD core sector metrics for financial institutions. For most TNFD core metrics for dependencies and impacts (e.g. spatial footprint, water withdrawal, pollutants released), a financial institution's direct operations are not expected to be material — disclosure for portfolio companies is constrained by data availability and is planned to deepen as issuers’ TNFD reporting matures.
Reference | Metric (East Capital Group framing) | 2025 baseline (group-wide) |
C7.0 (transition) | Number of holdings sitting in sectors flagged as elevated nature-impact (used as a first-year proxy for nature-related transition-risk exposure) | 41 of 466 group-wide holdings. The TNFD framework expresses this metric as a value/proportion of assets; we report it as a count of holdings, given that financial-value weighting requires assumptions about company-level vulnerability that we have not yet made for this first-year disclosure. |
C7.1 (physical) | Number of holdings domiciled in regions widely identified as containing water-stressed catchments and/or biodiversity-sensitive biomes (domicile-based proxy) | 117 of 466 holdings (see Strategy D). This is a country/region of domicile proxy and does not, by itself, indicate that the underlying companies operate or source in sensitive locations. |
C7.2 | Significant fines/penalties received in the year due to negative nature-related impacts | EUR 0 — none identified at East Capital Group entity level for the reporting period. |
C7.3 | Capital deployed towards nature-related opportunities | Tracked indirectly via the SFDR sustainable-investment proportion, the Three-Step-Test and our SDG Value Chain Assessment. We do not currently isolate a nature-specific opportunity bucket; sustainable strategies (Article 9 funds) are the principal vehicles where nature-positive activity would be captured. |
Sector exposure | Exposure to sectors flagged as elevated nature-impact (per TNFD Additional Guidance for Financial Institutions) | 41 of 466 holdings — see Strategy A sector table and sector × driver heatmap. |
Sensitive locations | Exposure to companies with activities in sensitive locations as defined by TNFD LEAP, L4 | Not directly measured. Indicative domicile-based proxy: 117 of 466 holdings (see C7.1). Asset-level exposure depends on portfolio-company disclosure of operating locations. |
C. Targets and goals
As a first-year discloser we are not setting quantitative nature-specific targets at this stage; doing so would require a more developed measurement baseline than we currently have. The table below sets out the nature-related goals and commitments embedded in our existing ESG governance and engagement work, alongside their status. We will revisit whether to set quantitative nature-specific targets as our measurement approach matures.
Nature-related goal / commitment | 2025 status |
Address commodity-driven deforestation risk in our investment process and engagement (palm oil, soy, beef/leather, pulp & paper) | Active member of the Investor Policy Dialogue on Deforestation (IPDD) and the Deforestation Investor Group (DIG); covered by our deforestation policy commitments. |
Encourage portfolio companies to disclose in line with TCFD and TNFD recommendations | Disclosure quality is one input to the ESG Scorecard; supporter of the CDP Non-Disclosure Campaign. |
Participate in collaborative investor initiatives that focus on nature and biodiversity | Member/supporter of Nature Action 100, IPDD, DIG and the CDP Non-Disclosure Campaign. |
Develop the depth of nature-specific analysis in our investment process beyond the broader environmental criteria already embedded in Red Flag and proprietary ESG tool reviews | Roadmap item — to be progressed in subsequent reporting cycles. We have not yet committed to a specific external dataset or tool. |
5. Learnings and next steps
This first TNFD-aligned disclosure has led to three take-aways. First, our existing ESG framework provides a useful starting point but does not yet treat nature as a separately codified dimension; that is the principal area we expect to develop. Second, the largest data gap is at the asset and location level — translating sector and region of domicile into the priority-location exposure the TNFD describes requires operating-site information that portfolio companies do not consistently disclose. Third, comparability of nature-related metrics across companies and data providers is still maturing. Reflecting on this, our next steps are:
Explore options for moving from country-of-domicile proxies to a more granular view of where portfolio companies actually operate and source from. Available reference tools (e.g. WRI Aqueduct for water risk, IBAT and WWF Biodiversity Risk Filter for biodiversity) are pointed to in TNFD's LEAP guidance and may be considered.
Look at how a quantitative TNFD scenario analysis could be structured — most likely starting from areas where data quality is reasonable, such as deforestation-linked supply chains.
Review whether nature should become a separately codified dimension within Red Flag Analysis and the proprietary ESG tools, rather than being captured indirectly through broader environmental criteria.
Strengthen disclosure expectations for portfolio companies via engagement, supporting the CDP Non-Disclosure Campaign and Nature Action 100, and via voting where disclosure or governance is materially deficient.
1 IPBES (2019), Global Assessment Report on Biodiversity and Ecosystem Services
2 IPBES (2024), Thematic Assessment Report on the Interlinkages among Biodiversity, Water, Food and Health (Nexus Assessment)
3 Getting started with the TNFD Recommendations – TNFD
4 Only East Capital uses Key Active Positions (“KAPs”), where a holding is either overweighted or underweighted relative to the index. This is not applicable to Espiria sub-funds.
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