Final TNFD Recommendations on nature related issues published

INSIGHT by TNFD

Present and future cashflows depend on the flow of nature’s inputs to business and accelerating nature loss poses a growing risk to businesses and capital providers.

The publication of 14 recommended disclosures and a suite of additional implementation guidance marks the culmination of a two-year consultative development process, including pilot testing by over 200 companies and financial institutions.The Recommendations are consistent with existing and emerging IFRS and GRI reporting standards and aligned with the requirements of the Kunming-Montreal Global Biodiversity Framework.Companies including GSK have started to announce their intention to adopt the Recommendations, and the TNFD is anticipating more companies to follow from as early as this week, with other companies invited to join the inaugural cohort of TNFD Adopters, which will be announced at the World Economic Forum at Davos.After two years of design and development through an open innovation process, the Taskforce on Nature-related Financial Disclosures (‘TNFD’) published yesterday 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. The release of the TNFD’s 14 Disclosure Recommendations 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 yesterday 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 to now align their corporate reporting with global policy goals as they are now doing on climate related issues.

 

 

The TNFD will now encourage and support voluntary market adoption of the Recommendations launched yesterday. Following the example of the TCFD, 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 yesterday, 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 yesterday’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. Through the release of four successive releases of a prototype framework, the Taskforce received over 3,000 pieces of feedback from across the market, science, policymaking and regulators, NGOs and Civil Society Organisations and others. National or regional consultation groups around the world have played a key role in mobilising market participation, including four new groups announced yesterday in Canada, Kenya, South Africa and the United States.

 

 

 

 

 

 

 

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;

2. Strategy: The approach the organisation uses to manage nature-related issues;

3. Risk & Impact Management: The process used by the organisation to identify, assess, prioritise and monitor nature-related dependencies, impacts, risks and opportunities; and

4. Metrics & Targets: The metrics and targets used to assess and manage material naturerelated dependencies, impacts, risks and opportunities.

They 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.

Materials published to broaden uptake and adoption, with more to follow:

Acknowledging the highly-localised character of nature-related dependencies and impacts for companies across geographies, sectors and market segments, the TNFD will be publishing additional cross-sector guidance to underpin the Recommendations. This will aim to broaden uptake and adoption of the recommendations and increase the disclosure ambitions of adopters over time, to meaningfully transition economic activity in favour of nature. In addition, the Taskforce has released a Discussion Paper on sector disclosure metrics for consultation with the market and is also preparing sector guidance for a range of high nature-impact and high-dependency sectors which will be released in time for COP28.

 

1. The final recommendations of the TNFD;

2. ‘Getting started’ with TNFD guidance;

3. Guidance on the identification and assessment of nature-related issues (the LEAP approach);

4. Guidance for financial institutions, which includes draft metrics for feedback;

5. Guidance for business to understand their impacts and dependencies in different types of ecosystems (known as biomes);

6. Guidance on the use of scenario analysis;

7. Guidance on target-setting, developed with the Science Based Targets Network (SBTN);

8. Guidance on engagement with Indigenous Peoples, Local Communities and affected stakeholders;

9. A full glossary of key terms

 

The Taskforce on Nature-related Financial Disclosures (TNFD) was established to design and develop a set of Recommendations for organisations to report and act on evolving nature-related issues, to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes.

After two years of design and development in partnership with 19 knowledge partners and the benefit of extensive consultation with market participants and other stakeholders, the TNFD launched its final Recommendations on September 18th 2023. With the recommendations released, the Taskforce now focuses its efforts on encouraging and supporting voluntary market adoption and supporting efforts to address the knowledge, capacity building and data needs of market participants.