The Taskforce on Nature-related Financial Disclosures (TNFD) has released the second beta version (v0.2) of its framework for nature-related risk and opportunity management and disclosure.
This follows the first iteration release last March and features TNFD’s approach to metrics, together with additional guidance for market participants to start pilot testing.
The TNFD was established in June 2021 to develop an integrated risk management and disclosure framework for organisations to report and act on evolving nature-related risks. The ultimate aim is to support a shift in global financial flows, away from nature-negative outcomes towards nature-positive outcomes.
Its 34 members are senior executives from financial institutions, corporates and market service providers, representing sectors with the largest impacts and dependencies on nature, including agribusiness and infrastructure.
The TNFD’s first iteration release incorporated draft disclosure recommendations, core concepts and the `Locate Evaluate Assess Prepare’ (LEAP) assessment approach. This second iteration includes several enhancements and additional elements – partly in response to feedback – and includes:
- a draft architecture for metrics and targets, and an illustrative set of assessment metrics to support pilot testers;
- further guidance on how to undertake dependency and impact evaluation, as well as the identification of priority locations, as part of the LEAP approach;
- an overview of the TNFD’s approach to the future development of additional guidance for market participants, including sector classification aligned with the approach taken by the International Sustainability Standards Board (ISSB), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD);
- enhancements to the LEAP approach for financial institutions (LEAP-FI) first released in March;
- additional practical guidance for market participants interested in starting to pilot test the beta framework from 1 July 2022 to 1 June 2023.
In its approach to the measurement of nature-related dependencies, impacts, risks and opportunities, the TNFD said it is seeking to strike a balance between the complexity of the science and the needs of market participants for clear, simple and comparable information to inform strategy, governance, risk management and capital allocation decisions.
It said the first beta version generated an overwhelmingly positive response from market participants, with over 500 feedback contributions from more than 130 market participants and stakeholders across 37 countries around the world. Market feedback will continue to be used to support the framework’s design and development.
TNFD co-chairs Elizabeth Mrema and David Craig said: “The Taskforce has continued to work at great pace, listening to feedback and building on the first iteration of the beta framework released in March. We are delighted with the level of market interest and feedback in the process and will continue to develop a science-based, practical approach aligned as much as possible with other standards-setting, regulatory and policy developments globally as they evolve.”
The TNFD has initially focused on a cross-sector approach to metrics, but intends to develop additional sector-specific metrics as part of specific guidance in future releases.
Future updates are scheduled for November 2022 and February 2023, with TNFD’s recommendations due to be published in September 2023.