The Taskforce on Nature-related Financial Disclosures (TNFD) has published its final recommendations for companies and asset managers to report on and manage nature-related risks.
The framework, which took two years to finalise, involved 40 members representing over $20trn in assets under management from 60 countries.
They were published alongside guidance in order to help market participants begin integrating assessments and corporate reporting related to nature.
The 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”, the taskforce said.
The 14 recommendations are divided into span four main areas: governance, strategy, risk and impact management, and metrics and targets.
Under the framework, companies and asset managers will be asked to voluntarily disclose their organisation’s governance of nature-related dependencies, impacts risks and opportunities as well as the effects these have on their business model, strategy and financial planning.
In addition, it covers the way the business identifies, assesses and monitors nature-related risks; and what metrics and targets are used to manage such risks.
The TNFD explained its recommendations were built on the ones released by the Taskforce on Climate-related Financial Disclosures (TCFD), and are in line with the global standards of the International Sustainability Standards Board (ISSB) as well as the Global Reporting Initiative and the EU’s Sustainability Finance Disclosure Regulation (SFDR).
At first, market adoption of the recommendations will be on a voluntary basis, which the taskforce will track every year via the publication of an annual report, beginning from 2024.
The TNFD said it expects companies to start announcing their intention to adopt the disclosure and reporting framework as early as this week – with GSK having already pledged its adoption – while a list of adopters will be released at the World Economic Forum in Davos in January 2024.
“Nature loss is accelerating, and businesses today are inadequately accounting for nature-related dependencies, impacts, risks and opportunities,” said David Craig, co-chair of the TNFD and founder and former CEO of Refinitiv.
He added, “Nature-risk is sitting in company cash flows and capital portfolios today. The costs of inaction are mounting quickly.
Building on the language, structure and approach of the TCFD and consistent with the ISSB’s sustainability reporting baseline, the adoption of the TNFD recommendations represents a step-change in the momentum and capacity for business and finance to identify, assess and disclose their exposure to nature-related issues in a manner consistent with climate-related reporting.”
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