The Taskforce on Nature Related Financial Disclosures (TNFD), a group of corporate leaders developing a reporting tool on biodiversity, launched its final recommendations today.
Intended to support annual reporting by corporations and financial institutions, they are structured around a set of strategic disclosures on governance; strategy; risk and impact management; and targets and metrics.
These are guided by an assessment of risk, opportunities, impacts and dependencies relating to natural resources and ecosystems.
“The TNFD’s aim is to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes”, said David Craig, TNFD co-chair.
Led by 40 taskforce members from financial institutions, corporations and market service providers with a market capitalisation of over $2.3trn, the initiative has drawn on the input of stakeholders from almost 60 countries. It has also been pilot tested by diverse institutions across the world.
New information published at the same time as the final framework, which was produced following a series of consultations, includes special guidance for financial institutions, and changes within disclosure categories.
The TNFD activities coincide with legislation on nature-related disclosures mooted in some countries. In the European Union, those rules have been introduced through the Corporate Sustainability Reporting Directive (CSRD), which includes requirements on nature-based disclosures.
At the same time, the Global Biodiversity Framework, agreed at a landmark United Nations conference in Montreal in December 2022, targets an assessment and disclosure of nature-related risks, impacts, and dependencies to enable companies to align their corporate reporting with global biodiversity policy alongside climate-related goals.
TNFD executives believe this policy background, some of which has been promoted by its knowledge partners, supports the development of the tool for adoption by governments and financial regulators. However, the taskforce itself is not lobbying for nature-based reporting to become compulsory.
“It is up to governments to decide when they might want to bring TNFD recommendations into mandatory requirements,” said Craig.
Rather, it is calling for voluntary adoption across the world. “We are encouraging people who would like to get started and join an inaugural group of TNFD adopters to signal their intentions to us”, he added.
The group that it hopes to attract from all economic sectors in both developed and developing countries will be announced early in 2024. Corporates that have already stated they are using the framework include pharmaceutical giant GSK and real estate developer Swire Properties.
As its name would suggest, the TNFD states that it is modelled on the language, structure and approach of the Taskforce on Climate-Related Financial Disclosures (TCFD), the framework that has been integrated into reporting legislation in several countries.
Its recommendations are also designed to be consistent with the International Sustainability Standards Board (ISSB) to enable integrated climate- and nature-related reporting.
Despite similarities with the TCFD, the TNFD at present falls short of the status reached by the TCFD from the outset.
Following a request from the G20, this was launched by the Financial Stability Board (FSB), a panel of financial regulators that monitors the global financial system.
Nevertheless, TNFD taskforce executives emphasised the international high-level support for its framework at the launch.
“When the TNFD initiative started, it was written into action plan of the G20 roadmap. We are not in the same place in terms of the FSB but have the backing of the G20, which the FSB will report into”, Craig noted.
The TNFD launch could increase momentum towards greater integration between CO2 and biodiversity disclosures because ecosystems help adapt to and mitigate climate change
However, reporting policy has developed separately. Leading non-profit the CDP, a TNFD knowledge partner, is one organisation that has today announced that it will align its CO2 disclosure platform with the TNFD framework.
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- Climate change
- Corporate governance
- Corporate Sustainability Reporting Directive (CSRD)
- Impact investing
- International Sustainability Standards Board (ISSB)
- investment strategy
- risk management
- Task Force on Climate-Related Financial Disclosures
- Taskforce on Climate-related Financial Disclosures (TCFD)
- Taskforce on Nature-related Financial Disclosures