The TNFD’s latest status report contains an impressive headline: 1,154 organisations are now making at least some disclosures aligned with its recommendations, more than twice as many as a year ago.
Another set of figures points to what comes next. Among investors that had conducted a nature assessment, 73% used it in stewardship and 60% in risk management. Only 23% used it for capital allocation and 10% for portfolio construction.
Nature has established a place in corporate reporting. The next task is to make it more useful in financial decisions.
The TNFD now has 802 formally committed adopters, representing an estimated $26.6tn in assets under management. Reporting spans 56 jurisdictions and almost every major sector.
Most reporters are new to the process. Around 62% are publishing their first TNFD-aligned report, often covering only part of the framework. First-time reporters address an average of 7.4 of its 14 recommended disclosures; by the third report, that rises to 9.5.
Companies appear to be learning by doing: beginning with the information they have, then expanding their analysis as their data and processes improve.
The figures are indicative rather than comprehensive. Organisations can be counted after making only some aligned disclosures, while the TNFD’s analysis relies partly on an evolving AI model. Even so, the increase is substantial. Issues that many companies were barely discussing a few years ago now have a common language and a growing place in corporate reporting.
Regulation is not the only force behind this growth. Among the investors surveyed, 88% cited understanding portfolio risk as a reason for focusing on nature, compared with 24% for international regulation and 15% for national requirements.
The sample is small and likely weighted towards organisations already engaged with nature. But it suggests that commercial concerns are helping to drive activity.
For now, the clearest applications are in stewardship and risk management. Investors are using nature assessments to identify exposed sectors and ask portfolio companies better questions about their operations and supply chains.
Capital allocation requires more. An investor does not need a precise valuation to ask how a company manages water scarcity or deforestation. Changing its position in a portfolio requires a clearer view of how those issues could affect costs, cash flows or asset values.
Investors increasingly know which questions to ask. They now need answers that are consistent and financially relevant enough to influence decisions.
The main obstacle is not simply a lack of environmental data. It is connecting that data to a particular business.
A global water footprint might show that a manufacturer withdraws millions of cubic metres a year. Its financial exposure depends on where its facilities and suppliers are located, the condition of the relevant basins, competing demand, local regulation and whether production can move elsewhere.
The same quantity of water can present little risk in one location and material risk in another. The same principle applies to land use, pollution and reliance on ecosystem services.
Investors understand the importance of this context. Some 97% of those surveyed said they need location-specific information on companies’ nature-related dependencies, impacts, risks and opportunities. Most already use it in risk assessment, while 45% use it in capital allocation.
Nor are they looking for a single nature score. Nearly three-quarters use a combination of cross-sector and sector-specific metrics. Comparable measures can support screening, but assessing financial significance also requires information about location, industry, value chains and the company’s ability to respond.
This is where the data remains weakest. Metrics covering water, waste and pollution are increasingly common. In the LSEG data reviewed by the TNFD, however, nature-related physical-risk information was available for only 10% of organisations and transition-risk information for 1%.
The report points to broad support for regulation, provided it brings greater consistency. Some 88% of respondents expect nature-related reporting requirements to increase over the next five years, while more than 90% of investors support standards being introduced within the next one to three years.
Mandatory reporting is seen as useful by 83% of investors and 68% of report preparers. Investors want comparable information; companies want clarity about what is expected of them. Both groups favour globally consistent requirements that build on the TNFD and align with existing climate-reporting standards.
Work by the ISSB and ISO could help bring that consistency. But standards cannot perform the underlying analysis. They can require a company to identify its dependencies and exposures; they cannot determine whether a drought will close a factory, whether a commodity can be sourced elsewhere or whether higher costs can be passed to customers.
TNFD has established a common language and encouraged companies to build their assessment capabilities. The next measure of progress will not simply be how many organisations report, but how often that information changes a sourcing, lending, underwriting or investment decision.