After two years of design and development through an open innovation process, the Taskforce on Nature-related Financial Disclosures (TNFD) – a group of corporate leaders with funding from government and NGOs, and the goal of developing a reporting tool on biodiversity – has published its final recommendations for nature-related risk management and disclosure.
Along with them, the TNFD has released a suite of additional guidance to help market participants get started with integrated assessment and corporate reporting related to nature.
The recommendations by the TNFD, which is modelled on the Task Force for Climate-Related Financial Disclosures (TCFD), aim to inform better decision-making by companies and capital providers, and ultimately contribute to a shift in global financial flows towards nature-positive outcomes and the goals of the Kunming-Montreal Global Biodiversity Framework.
The taskforce’s initiative, led by 40 members representing over US$20 trillion in assets under management, has drawn on the support and active input of market and non-market stakeholders from almost 60 countries around the world.
The final recommendations, the TNFD shares, are science-based and voluntary, building on the market’s experience with, and progress on, climate-related reporting. They are closely aligned to the disclosure framework developed by the TCFD, incorporating the same four conceptual pillars of governance, strategy, risk and impact management, and metrics and targets.
The release of the TNFD’s 14 disclosure recommendations (see below) and implementation guidance comes at a critical time, the group says, with rapidly growing interest across business and finance globally on nature and biodiversity issues.
TNFD disclosure recommendations
Source: Taskforce on Nature-related Financial Disclosures
Policymakers, regulators, asset owners asset managers and leading global companies, the TNFD argues, are all increasing their focus on nature-related risk management and the necessity of mobilizing private sector engagement and finance to tackle nature loss and scale-up nature-based solutions.
The recommendations, the TNFD notes, are build on those of the TCFD and are consistent with the global sustainability standards of the International Sustainability Standards Board and the impact materiality approach used by the Global Reporting Initiative and incorporated into the new European Sustainability Reporting Standards.
This provides reporting organizations, the TNFD points out, with a set of nature-related guidance that enables their reporting requirements across jurisdictions with the different approaches to materiality now in use.
Importantly, the recommendations are also aligned with the requirement of Target 15 of the Global Biodiversity Framework for corporate reporting, which calls for assessment and disclosure of nature-related risks, impacts and dependencies, enabling companies to now align their corporate reporting with global policy goals as they are now doing on climate-related issues.
The recommendations are structured, the TNFD states, to allow companies and financial institutions to get started, building on their climate reporting capabilities over the past decade, and to provide a path to increase their disclosure ambition over time. This is consistent with Target 15 of the GBF, which recognizes that the incorporation of nature-related issues is new to many organizations, but a rapidly growing strategic imperative.
“Nature degradation is increasing; and with six of the nine planetary boundaries already breached, nature risk is financial risk,” says Elizabeth Mrema, TNFD co-chair and United Nations Environment Programme deputy executive director. “Business as usual is no longer an option, and business and finance can no longer consider nature and biodiversity as just a corporate social responsibility issue. It is now squarely a central and strategic risk management issue.”