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What is it and who is behind it?
The Taskforce on Nature-related Financial Disclosures (TNFD) initiative was established in 2021 to provide corporates with a framework to measure, manage, and report on their financial nature-related risks and opportunities.
The TNFD recommendations are under development and remain (at least for the moment) a voluntary disclosure framework. That said, the framework follows in the highly successful footsteps of the TCFD recommendations, which are now a mandatory part of the FCA’s (Financial Conduct Authority, the UK’s financial regulatory body) listing rule. Likewise, it’s worth noting that following the adoption of a new Global Framework for Biodiversity at COP-15, all governments are now committed to mandatory disclosures for large enterprise and finance on nature-related risks and opportunities.
What are the requirements?
As noted earlier, the TNFD has taken much of the TCFD (Taskforce on Climate-related Financial Disclosures) framing, something echoed in the requirements for corporates.
The overarching structure recommends disclosures against the following pillars:
The TNFD also provides additional guidance that reflects the additional complexity presented by nature above and beyond climate. In particular the TNFD sets out a framework for how a corporate can go about assessing the risks and opportunities that stem from its relationship with nature, called LEAP:
L - Locate your interface with nature, E - Evaluate impacts and dependencies, A - Assess material risks and opportunities, and P - Prepare to respond and report.
What are the timelines?
The TNFD framework is currently under development, with the Beta 0.3 version available to the public. Version 0.4 is expected by the end of February 2023. Importantly, the finalised framework for potential market adoption will be launched in September of 2023.
How does it relate to other frameworks?
As with TCFD, the TNFD’s main framing is that of risk or opportunity presented by nature to the organisation. It is worth noting that other frameworks, such as SBTN, and to a certain extent GRI, view materiality through a different lens, an organisation’s impact on society. As such the TNFD recommendations can be complementary to SBTN. In particular SBTN will help corporates answer the question of what nature-related targets should be set.
Identify where you should prioritise your efforts, understand your nature impacts and dependencies, disclose to stakeholders and take action.
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