The Taskforce for Nature-related Financial Disclosures (TNFD) has released the first draft framework for companies to report on their impact on nature, marking the beginning of an 18-month consultation process before it is finalised for the September 2023 deadline.
Recognising the link between climate change and nature loss, the framework is in line with the requirements of the Taskforce for Climate-related financial Disclosure (TCFD), which is being rolled out for many companies across the UK this year.
The draft framework incorporates three components: foundational guidance, including key concepts and definitions; disclosure recommendations aligned to the TCFD and ‘how to’ guidance for nature-related risk and opportunity analysis.
It is also designed for future alignment with the global baseline for sustainability standards being developed by the International Sustainability Standards Board (ISSB) and set to be published in the second quarter of this year.
In addition, it provides flexibility for organisations that need to report to different materiality thresholds and/or meet regional regulatory requirements.
The aim is to respect calls from market participants for a consistent approach and language across sustainability reporting.
The TNFD statement highlighted half of the world’s GDP is moderately or highly dependent on nature and its services, financial institutions and businesses can no longer afford to overlook nature in strategy, risk management and capital allocation decision making due the risks posed businesses, investors, and lenders.
However, there are also new business opportunities related to contributing to nature-positive outcomes.
“With climate change and nature-related impacts and risks increasing, it is essential companies incorporate natural assets into their strategic planning and risk management if they are going to succeed,” said David Craig, co-chair, TNFD.
He adds, “The approach we are taking of developing this guidance with market participants through an iterative, open innovation process over the next 18 months will help to ensure our final recommendations are both science-based and practical to implement. We invite all market participants and stakeholders to review this first prototype of the framework and share their feedback.”
Elizabeth Maruma Mrema, co-chair, TNFD, added: “My hope is that governments agree on an ambitious and effective post-2020 Global Biodiversity Framework, the negotiations of which are taking place this week in Geneva, that can then inform the metrics and targets work the Taskforce will continue to develop in the coming months.
“The process towards the Global Biodiversity Framework, and the TNFD are two key initiatives, among others, that support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.”
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