What is TNFD: The Taskforce for Nature-related Financial Disclosures

Why is TNFD needed?

Nature loss is threatening the foundations of our economies, livelihoods, food security, health and quality of life worldwide.

With a staggering 55% of the world’s GDP (US$58 trillion) moderately or highly dependent on nature, this is a problem that business cannot ignore. Those that fail to understand how they depend on and impact nature face major risks.

According to the World Economic Forum, environmental risks are now the most significant risks identified by global executives for the next decade. However, they are also the risks for which businesses are least prepared.

Analysing, understanding and reporting effectively on nature is a complex task. Luckily the Taskforce for Nature-related Financial Disclosures (or TNFD) is here to help. The TNFD exists to provide recommendations and guidance for organisations reporting on their nature-related dependencies, impacts, risks and opportunities. The TNFD is a market-led, science-based and government-supported global initiative.

What is TNFD?

If TNFD sounds familiar, you’re probably thinking of its older sibling, TCFD, the Taskforce for Climate-related Financial Disclosures. The similar names are deliberate and significant. Since 2017, TCFD has driven remarkable global uptake and improvements in climate reporting. The TNFD is looking to follow suit, for nature.

In practical terms, this means that TNFD reporting is based around the familiar four pillars; Governance, Strategy, Risk Management and Metrics & Targets.

Is TNFD mandatory?

No, TNFD is a currently a voluntary framework and is not mandatory. 320 organisations globally have signed up as TNFD early adopters which means that we will see the first TNFD reports coming through from FY24 and FY25.

If it’s not mandatory, why would I use it?

Three reasons. To better understand the potentially paramount role of nature in your business, to prepare for future reporting requirements and to stay ahead of market expectations.

1. Understand nature: Understanding your interface with nature will allow companies to mitigate risks, reduce negative impact and unlock value creation opportunities.
2. Reporting requirements: Though TNFD isn’t mandatory, nature reporting is required under frameworks including the EU CSRD. With major interoperability between the ESG reporting frameworks, starting on TNFD today positions you for the future.
3. Market expectations: If you operate in an industry that is highly dependent on nature then stakeholders and investors will want to understand how your business is dealing with the threats faced by and from nature.

Where do I start?

As a first step, we encourage our clients to ask themselves; “How is your businesses dependent on nature?”. Our experience is that businesses are often shocked by the results. Indeed, following TNFD piloting, many organisations found that nature risks were more significant than climate risks.

We provide services on TNFD in three key ways, firstly providing corporate education and learning to help generate buy-in and understanding, secondly supporting with TNFD analysis and reporting and thirdly, building value-additive nature strategies.