TNFD Launches Final Recommendations
The Taskforce on Nature-related Financial Disclosures (TNFD) was launched in June 2021, with final recommendations released on 19th September 2023.
The TNFD framework draws heavily on its precursor TCFD and is designed to enable companies and financial institutions to assess, manage and disclose nature-related risks and impacts, alongside climate considerations, in an integrated way.
Recognising the complexities of assessing nature and biodiversity impacts, the taskforce has adopted the philosophy of “let’s get started”, encouraging all sectors and company types to start wherever they are, with a view to building-up as data and knowledge improve.
Compatibility and consistency are central to the new framework. The final recommendations have been developed in close collaboration with the market, integrating existing frameworks like TCFD, CDP and GRI, and aligning with existing frameworks like the Global Biodiversity Framework (GBF) and the Paris Agreement as well as forthcoming regulations and standards like ISSB and CSRD.
The recommendations also allow for different interpretations of “materiality”, both in terms of financial materiality (used by TCFD) and double materiality (used by ISSB and GRI).
TNFD uses all 11 of the TCFD recommendations, plus three additional recommendations:
Governance pillar: C. Describe the organisation’s human rights policies and engagement activities, and oversight by the board and management, with respect to Indigenous Peoples, Local Communities, affected and other stakeholders, in the organisation’s assessment of, and response to, nature-related dependencies, impacts, risks, and opportunities.
Strategy pillar: D. Disclose the locations of assets and/or activities in the organisation’s direct operations and, where possible, upstream and downstream value chain(s) that meet the criteria for priority locations.
Risk management pillar: A(ii) Describe the organisation’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its upstream and downstream value chain(s).
This recommendation is distinct from A(i) in the same pillar, which addresses “dependencies, impacts, risks and opportunities in direct operations”.
Financial institutions
The TNFD has created additional guidance for financial institutions. This provides adapted metrics, and asks financial institutions to specifically identify:
The sectors they invest in/lend to, helping to indicate the percentage of their portfolios connected/exposed to sectors which have significant dependencies or impacts on nature; and
The location of their investments, helping to identity investors’ connection and exposure to activities located in nature sensitive regions.
Getting started
The TNFD have published guidance on getting started, recommending the following steps:
Deepen your understanding of the fundamentals of nature.
Make the business case for nature and gain buy-in from the board and management.
Start with what you have, leveraging other work.
Plan for progression over time and communicate your plans and approach.
Encourage collective progress through engagement.
Monitor and evaluate your own adoption progress.
Register your intention to start adopting the TNFD recommendations.
TNFD is currently voluntary. In January 2024, the taskforce will publish lists of TNFD Adopters for FY2024 and FY2025 reporting.
For more information and help getting started with TNFD, please get in touch.