A first look at TNFD

The Taskforce for Natural Related Financial Disclosures is working towards a nature-positive economy. We look at what the TNFD is, and how organisations can act on it.

The recommendations of the Taskforce for Nature-related Financial Disclosures (TCND), aims to guide thinking for organisations to report and act on risks relating to nature. The intention is that this will help shift global financial flows away from nature-negative outcomes and toward nature-positive outcomes. Government departments and businesses have been quick to endorse the ambitions and framework.

This brief article sets out what the TNFD is, what it means for organisations, and how it to act on it. this has been developed in consultation with several Borrowed Time clients.

Why was the TNFD made?

More than half of the world’s economic output – US$44tn of economic value generated – is dependent on nature. Financial institutions and companies don’t have the information they need to understand this dependence, and their relationship with nature.

Changes to nature may affect companies’ immediate financial performance, or the longer-term financial risks that may arise from how the organisation, positively or negatively, impacts nature.

A future economy that aims to have a positive effect on nature needs an accurate flow of nature-related information. Any prosperous business needs this too. The theoretical attraction of the TNFD is that it will lead the market to discover how to incorporate nature into its financial planning, strategic thinking and everyday decision making[1].

What are the core components of the TNFD?

The TNFD framework is in its beta version and other elements are expected to be added before the final version.

The first beta version of the TNFD framework includes three core components:

An outline of fundamental concepts and definitions for understanding nature

Early work has been the identifying and defining a standard set of fundamental concepts to understand, assess and report nature-related risks and opportunities.  

There doesn’t yet exist a standardised business lexicon for nature, as there is for climate change for example. This is necessary to help inform corporate and investment decisions

TNFD’s draft disclosure recommendations for nature-related risks and opportunities

This gives a structure for comparable sustainability and reporting:

Disclose the organisations governance around nature-related risks & opportunities.

Disclose the actual and potential impacts of nature-related risks and opportunities on the organisation's businesses, strategy and financial planning where such information is material.

Risk Management
Disclose how the organisation identifies, assesses and manages nature-related risks.

Metrics & Targets
Disclose the metrics and targets used to assess and manage relevant nature-related risks and opportunities where such information is material.

Guidance for corporates and financial institutions to undertake nature-related risk and opportunity assessments

This offers practical guidance for how to go through a nature-related risk and opportunity assessment process. It is called the LEAP approach and follows the following steps.

Locate your interface with nature

Evaluate your dependencies and impacts

Assess your risks and opportunities

Prepare to respond to nature-related risks and opportunities, and report to stakeholders

Guidance before acting on the TNFD framework

The TNFC framework is still in its beta phase. However, it is likely to follow in the TCFD’s footprints and become a core part of sustainability management and reporting. We offer a few pieces of guidance to consider as TNFD comes into sharper focus.

  • Think about what’s been done already – leverage knowledge and understand from existing climate change, TCFD, and other sustainability work.
  • Think about logical and realistic steps - identify priorities and plan concrete steps over an achievable timescale.
  • Bring people along your journey – communicate and market your ambitions both internally and externally. This creates a higher chance that TNFD will become a mainstream part of business thinking.

What could Borrowed Time do to help?

We can help clients to distil what TNFD means for them, including readiness reviews, gap analyses, and developing roadmaps for action. We have helped many clients assess and sustainability risks and opportunities (including following the recommendations from the TCFD), integrating them into strategic planning and communicating them effectively to stakeholders.

There is much concern for economic-based justifications for nature conservation and regeneration, such as TNFD. Borrowed Time’s view is that they are one of a large set of tools to be used in pursuit of conservation. TNFD should not overwrite and outweigh noneconomic justifications and should respect the intrinsic value in nature.