Recommendations from the Taskforce on Nature-related Financial Disclosures are a key milestone in the relationship between nature, business and financial capital, positioning nature risk alongside financial, operational and climate risk and helping to shift capital flows to nature-positive outcomes.
AFTER two years of design and development through an open innovation process, the Taskforce on Nature-related Financial Disclosures (TNFD) has today published its final Recommendations for nature-related risk management and disclosure.
An accompanying suite of additional guidance has also been released to help market participants get started with integrated assessment and corporate reporting related to nature.
The Recommendations aim to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes and the goals of the Kunming-Montreal Global Biodiversity Framework.
Led by 40 Taskforce members representing over US$20 trillion in assets under management, the TNFD initiative has drawn on the support and active input of market and non-market stakeholders from almost 60 countries around the world.
David Craig, Co-Chair of the TNFD and founder and former CEO of Refinitiv, said, “Nature loss is accelerating, and businesses today are inadequately accounting for nature-related dependencies, impacts, risks and opportunities. Nature-risk is sitting in company cash flows and capital portfolios today. The costs of inaction are mounting quickly. Businesses and financial institutions now have the tools they need to take action. Building on the language, structure and approach of the TCFD and consistent with the ISSB’s sustainability reporting baseline, the adoption of the TNFD Recommendations represent a step-change in the momentum and capacity for business and finance to identify, assess and disclose their exposure to nature-related issues in a manner consistent with climate-related-reporting.”
The release of the TNFD’s 14 Disclosure Recommendations (see below for summary) and implementation guidance comes at a critical time, with rapidly growing interest across business and finance globally on nature and biodiversity issues. Policymakers, regulators, asset owners, asset managers and leading global companies are all increasing their focus on nature-related risk management and the necessity of mobilising private sector engagement and finance to tackle nature loss and scale-up nature-based solutions.
The Recommendations released today build on those of the Task Force on Climate-related Financial Disclosures (TCFD) and are consistent with the global sustainability standards of the International Sustainability Standards Board (ISSB) and the impact materiality approach used by the Global Reporting Initiative (GRI) and incorporated into the new European Sustainability Reporting Standards. This provides reporting organisations 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 TNFD 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 now to align their corporate reporting with global policy goals as they are now doing on climate related issues.
Elizabeth Mrema, Co-chair of the TNFD and Deputy Executive Director of UNEP, said, “Nature degradation is increasing and with six of the nine planetary boundaries already breached, nature risk is financial risk. Yet to date, businesses have mostly
considered nature to be an unlimited and free provider of critical inputs into their operations and value chains.
“Scaling up action to restore the resilience of nature is now a global policy and regulatory priority, and it is business-critical, posing significant long-term financial impact if not acted upon. Increasingly extreme weather events, the collapse of ecosystems and the extinction of species presents physical risks to business. Policy making and regulatory attention stemming from growing community concern about nature loss also creates elevated transition risks. 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 (CSR) issue. It is now squarely a central and strategic risk management issue.”
The TNFD will now encourage and support voluntary market adoption of the Recommendations launched today. Following the example of the Task Force on Climate-related Financial Disclosures, the TNFD will track voluntary market adoption on an annual basis through an annual status update report beginning in 2024.
The TNFD is anticipating companies to start announcing their intention to adopt the Recommendations from as early as this week. At TNFD’s final Recommendations launch event today, GSK announced they are committed to publishing their first TNFD disclosures from 2026, based on 2025 data. Others are anticipated to signal similar intentions in the coming weeks and the TNFD will announce an inaugural list of TNFD Adopters – companies that have indicated their intention to start adopting the Recommendations – at the World Economic Forum at Davos in January 2024.
The delivery of today’s Recommendations follows extensive global engagement by market participants, scientific and standards organisations and other stakeholders in their design and development.
The TNFD’s open innovation approach crowded-in the expertise of 19 knowledge partners, input from over 1,200 institutions in the TNFD Forum from almost 60 countries and territories; and included pilot testing by over 200 companies and financial institutions across sector, biomes and geographies.
President Emmanuel Macron of France said, “Nature provides irreplaceable services to societies and businesses. I applaud the TNFD’s efforts in publishing today a framework that can be utilised to identify, assess, manage and disclose dependencies and impacts on nature, as well as risks and opportunities for organisations. The integration of biodiversity by all relevant sectors is what will ensure the shift in global financial flows toward sustainability.”
Driving meaningful changes through progressive adoption
The final Recommendations 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:
1. Governance: The governance processes, controls and procedures the organisation uses to monitor and manage nature-related issues
A. Describe the board’s oversight of nature-related dependencies, impacts, risks and opportunities.
B. Describe management’s role in assessing and managing nature-related dependencies, impacts, risks and opportunities.
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.
2. Strategy: The approach the organisation uses to manage nature-related issues
A. Describe the nature-related dependencies, impacts, risks and opportunities the organisation has identified over the short, medium and long term.
B. Describe the effect nature-related dependencies, impacts, risks and opportunities have had on the organisation’s business model, value chain, strategy and financial planning, as well as any transition plans or analysis in place.
C. Describe the resilience of the organisation’s strategy to nature-related risks and opportunities, taking into consideration different scenarios.
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.
3. Risk & Impact Management: The process used by the organisation to identify, assess, prioritise and monitor nature-related dependencies, impacts, risks and opportunities
A (i) Describe the organisation’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its direct operations.
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).
B. Describe the organisation’s processes for managing nature-related dependencies, impacts, risks and opportunities.
C. Describe how processes for identifying, assessing, prioritising and monitoring nature-related risks are integrated into and inform the organisation’s overall risk management processes.
4. Metrics & Targets: The metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities.
A. Disclose the metrics used by the organisation to assess and manage material nature-related risks and opportunities in line with its strategy and risk management process.
B. Disclose the metrics used by the organisation to assess and manage dependencies and impacts on nature.
C. Describe the targets and goals used by the organisation to manage nature-related dependencies, impacts, risks and opportunities and its performance against these.
These are intended to serve as a starting point for companies to begin identifying, assessing and disclosing the nature-related issues in their own time, and subject to their own strategy, materiality, cost and capability considerations.