If you are struggling to stay across the regulation, global frameworks, reports and analysis related to business and climate, you’re not alone. Simplifying the business of sustainability isn’t an easy task, however if there is one regulatory initiative to pay attention to in 2023 it’s the Taskforce on Nature-related Financial Disclosures (TNFD).
The TNFD is an initiative that offers a set of disclosure recommendations and guidance for organisations. Its main goal is to allow businesses and financial entities to report and act on their nature-related dependencies, impacts, risks, and opportunities. By integrating these guidelines, organisations can ensure they make informed decisions, promoting a transition from nature-negative outcomes to nature-positive ones. In essence, the TNFD provides the tools for businesses to quantify and communicate their environmental impact in financial terms. It’s important to note adopting these recommendations aren’t mandatory (yet).
Nature is deteriorating globally at an unprecedented rate. With the global economy already trespassing six of the nine planetary boundaries, we are operating outside the safe zones for earth’s stability. The TNFD offers a framework that helps organisations understand and report on their nature-related risks and, ultimately, shift global financial flows toward nature-positive outcomes.
While climate has been at the forefront of sustainability discussions, nature and biodiversity are emerging as key environmental risks. With the TNFD modelled on the successful Taskforce for Climate-based Financial Disclosures (TCFD) and the increasing focus of ISSB on nature-related topics, corporate awareness of nature risks is expected to intensify. Organisations are now required to think beyond just climate risks and address the broader environmental impact of their operations.
The Kunming-Montreal Global Biodiversity Framework (GBF), (which recognises that biological diversity is about more than plants, animals and micro-organisms and their ecosystems – it is about people and our need for food security, medicines, fresh air and water, shelter, and a clean and healthy environment in which to live) has set out ambitious targets for harmonising human activities with nature by 2050.
TNFD specifically addresses the GBF's Target 15, guiding corporations to identify, measure, and disclose their nature-related risks. In essence, while GBF provides the 'what', TNFD offers the 'how'.
The TNFD employs the LEAP assessment approach which involves:
By offering a robust methodology, TNFD makes it easier for businesses to assess and communicate their dependencies on nature.
The TNFD is not working in isolation. Its framework intentionally mirrors the TCFD to ensure a smoother transition for companies already familiar with climate disclosures. Moreover, the TNFD aligns with initiatives like the Science-Based Targets Network (SBTN), focusing on actionable steps and accountability.
Although the adoption of the TNFD recommendations is currently voluntary, there’s a strong chance that they might become mandatory in various jurisdictions, similar to the TCFD. As nature continues to decline and financial risks associated with this decline become more evident, the TNFD will likely be instrumental in shaping the way businesses operate and disclose their nature-related impacts.
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