To support these efforts, the Taskforce on Nature-related Financial Disclosures (TNFD) was established as a voluntary initiative to assist businesses and financial institutions in understanding and addressing their nature-related dependencies, impacts, risks, and opportunities.
The TNFD is comprised of 40 senior executives from financial institutions, corporates, and market service providers from all over the world and various sectors. Building on the foundation established by the Taskforce on Climate-related Financial Disclosures (TCFD), the TNFD seeks to provide organizations with a standardized framework for disclosing their interactions with nature and biodiversity.
This framework aims to enhance transparency around nature-related financial risks and opportunities and help organizations incorporate these risks and opportunities into strategic planning, risk management, and asset allocation decision-making. The TNFD's target audience is broad, encompassing corporations, financial institutions, regulators, stock exchanges, and accounting firms who play critical roles in shaping the future of our natural world.
TNFD Disclosure Recommendations and Guidance
At the core of TNFD are its disclosure recommendations, which provide a structured approach for organizations to assess and report on nature-related risks and opportunities. These recommendations are organized around four key pillars: governance, strategy, risk management, and metrics and targets.
The framework guides companies in identifying, assessing, and managing risks associated with nature, such as deforestation, water scarcity, and biodiversity loss. It encourages organizations to integrate nature-related strategies and metrics into their governance structures and management plans, ensuring that nature is a core component of decision-making processes.
Some examples of nature-related strategies and metrics are describing processes for monitoring nature-related risks in management plans and identifying locations of activities that are particularly vulnerable to biodiversity loss.
Finally, TNFD offers guidance on setting and tracking performance against nature-related targets, helping organizations measure their impact and progress over time. While there are many TNFD recommendations to consider, organizations can start disclosing information they already have to get started and plan for progression over time.
Integration with Other Reporting Frameworks and Regulations
The TNFD does not operate in isolation; it is designed to complement existing reporting frameworks and emerging sustainability regulations. For instance, TNFD uses the same terminology and concepts utilized by the TCFD, which has become a widely adopted framework for climate-related financial disclosures.
TNFD expands this approach by focusing on nature, enabling organizations to address a broader range of environmental issues. Similarly, TNFD aligns with frameworks like the CDP (formerly the Carbon Disclosure Project) and can be used to help answer questions about biodiversity in the latest CDP disclosure.
The TNFD is also highly relevant in the context of new and emerging regulations, such as the Corporate Sustainability Reporting Directive (CSRD) in the European Union and the California Rule in the United States. These regulations are pushing for greater transparency and accountability in corporate sustainability reporting in nature-related risks and opportunities, and TNFD provides a valuable tool for companies to meet these new requirements.
Status of the TNFD Guidance
The Taskforce has already published multiple documents and materials since its foundation in 2021. The Taskforce released its first beta framework in March 2022, which has since undergone multiple rounds of public consultation. The final TNFD Recommendations document was published in September 2023 and final sector and biome guidance documents were published in June 2024. There is even a series of training modules called TNFD in a Box with publications, webinars, and supplemental resources to support practitioners through the TNFD process.
These are major milestones, marking the availability of a fully-fledged framework that organizations can begin to implement. Some organizations have even begun to adopt the TNFD and incorporate nature-related issues into their decision making. As of January 2024, 320 companies and financial institutions have committed to publishing TNFD-aligned disclosures as part of their annual reporting for fiscal years 2023, 2024, and 2025. As more organizations engage in TNFD disclosures, additional examples will become available to guide others in completing their own TNFD reporting.
Conclusion
The introduction of the TNFD framework represents a significant step forward in the evolution of sustainability reporting. By focusing on nature-related dependencies, impacts, risks, and opportunities, TNFD complements existing frameworks and regulations, providing organizations with the tools they need to manage and disclose their impacts on the natural world.
As the final framework and sector guidance are set to be published soon, businesses and financial institutions should prepare to integrate TNFD's recommendations into their reporting processes. In doing so, they will not only meet emerging regulatory requirements but also contribute to the preservation of nature, ensuring that our economic activities remain within the boundaries of what the planet can sustain. The TNFD is more than just another reporting framework; it is a call to action for a future where nature and business can thrive together.
