On September 18, 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) delivered its framework for organisations to report on and address nature-related dependencies, risks, opportunities, and impacts. These guidelines are designed as a starting point for companies to identify, evaluate, and disclose nature-related issues in relation to their own strategies, materiality, and risks. The TNFD initiative garnered support and input of stakeholders from nearly 60 countries worldwide.

What’s inside

The recommendations closely align with the TCFD climate disclosure framework, incorporating the same four pillars: governance, strategy, risk and impact management, and metrics and targets. However, the number of disclosures has expanded from 11 to 14, now encompassing areas of significance for nature-related risks and impacts, such as stakeholder engagement (particularly involving indigenous peoples and local communities), priority locations, and the value chain.

An additional guidance set has been developed, covering topics such as the identification and assessment of nature-related issues (known as the LEAP approach), scenario analysis, target setting, understanding impact on biomes, and engagement with indigenous peoples, local communities, and affected stakeholders. Discussion papers on sector metrics and the value chain are also available.

It is crucial to note that TNFD guidelines are intended to complement, rather than contradict, existing disclosure frameworks. For instance, they exhibit a high degree of consistency with the GRI Standards. These recommendations also align with the global sustainability standards of the International Sustainability Standards Board (ISSB) and the European Sustainability Reporting Standards (ESRS).

Metrics to use

The metrics used in reporting are categorised into core global metrics (for cross-sector comparability), core sector metrics (for inter-sector comparability), and additional metrics (to be used if relevant). Core global metrics are applicable to most companies across various sectors and should be reported on a ‘comply or explain’ basis. While core sector metrics are currently in draft form and open for consultation, their use is strongly encouraged. Once finalised, they will also be implemented on a ‘comply and explain’ basis.

Financial institutions have additional guidance, which is focused on financial exposure to sectors with high nature-related impacts. It is presumed that financial institutions may begin disclosing these metrics initially, with the intention of adding other data over time as it becomes available from clients, customers, investees, and assets under management.

Next steps: agenda for 2023

The TNFD encourages early voluntary adoption of these recommendations. Companies are invited to become part of the inaugural cohort of TNFD Adopters and publish their first TNFD-aligned disclosures alongside financial statements for either the 2024 or 2025 financial year. The announcement of the TNFD Adopters list is scheduled for the World Economic Forum in Davos in January 2024.

The TNFD approach necessitates a significantly broader range of data on nature-related risks, opportunities, and impacts than has been disclosed previously. We recommend that all companies with a substantial impact or reliance on nature gradually integrate the TNFD approach, starting from the 2023 reporting period. We can assist you in getting started from your current position, align the process with your company’s overall reporting journey and develop a step-by-step roadmap to facilitate the full adoption of TNFD disclosures.

Navigating the TNFD recommendations… what’s next?