The Taskforce on Nature-related Financial Disclosures (TNFD) is moving towards its publication deadline for final recommendations on a framework for organisations to report and act on evolving nature-related risks. TNFD's complete recommendations (v1.0) will be published in September 2023, as part of its mission to help support a shift in global financial flows towards nature-positive outcomes.

In November 2022, the Taskforce released the third version (v0.3) of its TNFD beta framework for market consultation, building on v0.1 released in March 2022 and v0.2 released in June 2022. It includes a number of significant updates and enhancements based on ongoing research and feedback on v0.2 from market participants and other stakeholders, and incorporates for the first time the TNFD's recommended approach to disclosures of dependencies and impacts on nature.

Looking back

TNFD’s mission is to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks and opportunities.

The Taskforce is market-led, government-supported and science-based. It adopts an open innovation approach that encourages market participants to support the development of the framework, with extensive input and feedback from businesses, financial institutions, governments, regulatory and standards setting bodies, civil society organisations and Indigenous Peoples and local communities from around the world.

By taking this approach, TNFD hopes to accelerate the framework’s development, source constructive feedback and steadily improve its relevance, usability and effectiveness.

Together with the previously released draft disclosures on risks and opportunities, v0.3 of the TNFD framework provides a full spectrum of recommended disclosures to support the reporting preferences and compliance requirements of report preparers everywhere.

Feedback and pilot testing

Since the v0.2 release in June, the TNFD Forum, a global consultative grouping supporting the work of the Taskforce, has grown to more than 700 institutions from across five continents. Over 130 organisations have started or announced plans to pilot test the beta framework and more than 100 data providers are now participating in the TNFD’s Data Catalyst Initiative.

The TNFD’s beta framework retains the structure, approach and language of the TCFD, and continues to build around three core components:

  • a set of fundamental concepts and definitions for understanding nature and nature-related risks that the TNFD recommends market participants use when assessing and disclosing their nature-risks and opportunities;
  • a risk and opportunity assessment approach (LEAP) for corporates and financial institutions to support their internal assessments of nature-related risks and opportunities, in turn helping them to prepare for nature-related disclosures aligned with TNFD’s disclosure recommendations; and
  • a draft set of recommended nature-related disclosures that are closely aligned with, and built from, disclosures for climate-related risks produced by the TCFD.

At a glance…what’s new?

Updates to the TNFD beta framework in v0.3 include:

  1. A broadening of the draft disclosure recommendations to incorporate dependencies and impacts on nature alongside risks and opportunities to the organisation.
  2. Proposed new disclosure recommendations related to supply chain traceability, the quality of stakeholders including rights-holders, engagement and the alignment of an organisation’s climate and nature targets.
  3. An adaptive approach to the application of TNFD’s disclosure recommendations to accommodate the varying materiality and reporting preferences and needs of report preparers, and to support early action by companies and financial institutions and encourage increasing disclosure ambition over time.
  4. Additional guidance on risk and opportunities assessment and metrics proposed to support that analysis.
  5. Enhanced practical usability of its proposed risk and opportunity assessment LEAP  (Locate, Evaluate, Assess and Prepare) approach.
  6. Draft guidance on target-setting developed with the Science Based Targets Network (SBTN) and draft disclosure guidance for financial institutions.

As part of this update to the beta framework, the Taskforce has issued two discussion papers — one on scenarios, one on societal considerations relevant to nature-related risk management and disclosure — to solicit further feedback from market participants and other stakeholders as these aspects of the framework continue to be considered.

To facilitate the applicability and update of the TNFD disclosure recommendations when released for market adoption in September 2023, the Taskforce is working on a mechanism to encourage the adaptable application of the TNFD disclosure recommendations.

This can help support early action by market participants and increase disclosure ambition over time. This flexible approach to the adoption of recommended disclosures will likely distinguish between ‘core’ disclosures, which constitute a baseline of TNFD adoption, and additional disclosure recommendations that represent ‘enhanced’ disclosures.

What can you do now?

  1. Educate and plan. Build internal capability and competence by assessing your organisation's capacity for measuring, managing and reporting on nature-related risks and opportunities.
  2. Evaluate your most material nature-related risks and opportunities and develop a clear plan for managing these.
  3. Pilot the TNFD draft framework and provide feedback on the beta version.

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Are you ready for the TNFD framework? Reach out to our professionals for further insights and expertise on preparing for and progressing towards nature-related disclosures.

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