The Taskforce on Nature-related Financial Disclosures (TNFD) has published its final recommendations for nature-related risk management and disclosures for companies and financial institutions.

As reported by our sister publication European Pensions, alongside the recommendations, the TNFD published additional guidance to help companies and financial institutions get started with integrated assessment and corporate reporting.

The TNFD said that its recommendations were a “key milestone” in the relationship between nature, business and financial capital, positioning nature risk alongside financial, operational and climate risk, and helping to shift cashflows to nature-positive outcomes.

Following a two-year consultive process, including pilot testing by over 200 companies and financial institutions, the TNFD has published 14 recommended disclosures and a ‘suite’ of additional implementation guidance.

Its recommendations, which build on those of the Task Force on Climate-related Disclosures (TCFD), are consistent with the global sustainability standards of the International Sustainability Standards Board (ISSB) and the impact materiality approach used by the Global Reporting Initiative (GRI) and incorporated into the new European Sustainability Reporting Standards.

The TNFD said this would provide reporting organisations with a set of nature-related guidance that enables their reporting requirements across jurisdictions with the different approaches to materiality now in use.

Furthermore, the recommendations are aligned with the requirement of Target 15 of the Global Biodiversity Framework for corporate reporting, which calls for the assessment and disclosure of nature-related risks, impacts and dependencies.

The TNFD is led by 40 members representing over US $20trn in assets and it is encouraging voluntary market adoption of the recommendations.

It will track market adoption on an annual basis and is anticipating companies and financial institutions to start announcing their intention to adopt the recommendations as early as this week.

“Nature loss is accelerating, and businesses today are inadequately accounting for nature-related dependencies, impacts, risks and opportunities,” commented TNFD co-chair and Refinitiv founder, David Craig.

“Nature-risk is sitting in company cash flows and capital portfolios today. The costs of inaction are mounting quickly. Businesses and financial institutions now have the tools they need to take action.

“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 represent 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.”

Also commenting on the publication of the recommendations, French President, Emmanuel Macron, said: “Nature provides irreplaceable services to societies and businesses. I applaud the TNFD's efforts in publishing today a framework that can be utilised to identify, assess, manage and disclose dependencies and impacts on nature, as well as risks and opportunities for organisations.

“France, along with various French market actors, has been actively supporting TNFD's prefiguration and work, especially since its launch in Paris in October 2021. I wish to thank the two co-chairs, Elizabeth Maruma Mrema and David Craig, as well as market actors, scientists, public authorities, and NGOs who have contributed to this framework.

“The integration of biodiversity by all relevant sectors is what will ensure the shift in global financial flows toward sustainability.”

UK Environment Secretary, Thérèse Coffey, added: “We need nature to feed the world, provide pharmaceuticals and keep the planet turning. Businesses need nature, and nature needs business. Identifying, assessing, and acting on nature-related risks and opportunities is key to companies’ long-term financial health and meeting the global goals set out in the COP15 agreement.

“We encourage UK businesses and financial institutions across sectors to engage with the TNFD’s recommendations and the work of the UK’s TNFD National Consultation Group.

“The nature risk management and disclosure recommendations released today are important in shifting the dial on nature loss and we continue to actively support the TNFD’s work.

“We look forward to the TNFD informing a global baseline on nature and broader sustainability standards and reporting so that global capital allocations can increasingly be aligned with environmental goals at an international and domestic level.”

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