Building on the momentum from COP15, the importance of nature and biodiversity continues to rise on the global sustainability agenda. On September 19, 2023, one of the key nature-related frameworks, the Taskforce on Nature-related Financial Disclosures (TNFD)1 launched its final set of recommendations. TNFD builds on the successes of the Taskforce on Climate-related Financial Disclosures (TCFD) framework structure and introduces distinct nature-related guidance to help corporations address both nature and climate in an integrated risk management strategy.
Biodiversity is declining faster than at any point in history, with 69% of wildlife populations plunging from 1970-2018. The loss is driven by human activities, including unsustainable agriculture, deforestation, logging, and urbanization leading to habitat destruction.2 Carbon sinks lost in this manner exacerbate climate change by releasing carbon dioxide into the atmosphere. In parallel, climate change plays an important role in biodiversity decline as it alters marine, terrestrial, and freshwater ecosystems, causing further loss of local species and an increase in diseases, leading to the first climate-driven extinctions.3, 4
Conversely, nature can mitigate the impacts of climate change and help humans adapt to a changing world. For example, wetlands and peat bogs help regulate flood water; green infrastructure curbs rising temperatures and the urban heat-island effect; and ocean habitats such as seagrass and mangroves can sequester carbon dioxide at rates up to four times higher than terrestrial forests.
Companies that have already completed the TCFD disclosure reporting process are well positioned to incorporate nature in TNFD responses by building on their climate-related assessment, disclosure, and strategy. TNFD is designed to expand on the TCFD recommendations and is consistent with International Sustainability Standards Board’s (ISSB) International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards,5 with the intention to streamline nature under sustainability and climate reporting requirements. As with other parts of the sustainability journey, the path to integrating nature risk and impact management into business operations will require continuous improvement.
Top Commonalities and Differences Between TCFD and TNFD:
Similar to TCFD, TNFD preparation includes the following steps: scope, engage, analyze or assess, quantify, and disclose. During scoping, companies should examine the TNFD framework and conduct a gap analysis, incorporating some recommended steps below. Outcomes from the scoping and assessment phase will also position companies for Science-based Targets Network (SBTN) by collecting common inputs and helping prioritize impact areas within operations or the value chain. Sustainability certification is a tool that can help companies drive greater traceability to quantify, manage, and disclose nature-related risks and impacts in their value chain.
We see a growing focus from investors and reporting frameworks to understand nature and biodiversity, given the release of TNFD guidance and upcoming SBTN guidance finalization. CDP (formally Carbon Disclosure Project), for example, has signaled that it views TNFD as a roadmap to integrate and expand on nature themes.6 Although CDP already includes biodiversity in the climate questionnaire, it is expected to expand significantly to align with the TNFD guidance. Additionally, the ISSB will consider integrating TNFD metrics as it strives to build “consistent, comprehensive sustainability-related disclosure for investors” in its Sustainability Disclosure Standards.7 As the development on nature and biodiversity catches up to climate, it is time to take actions toward a nature-positive, equitable, and net-zero future.
1. "The Taskforce." Taskforce on Nature-related Financial Disclosures. TNFD, https://tnfd.global/about/the-taskforce/.
2. "Living Planet Report 2022." WWF. World Wildlife Fund, https://livingplanet.panda.org/en-GB/.
3. "Biodiversity - Our Strongest Natural Defense against Climate Change." United Nations Climate Action. United Nations, Accessed October 27, 2023. https://www.un.org/en/climatechange/science/climate-issues/biodiversity.
4. "Biodiversity and Climate Change." IPBES-IPPC, (2021). Accessed October 27, 2023. https://www.ipbes.net/sites/default/files/2021-06/2021_IPCC-IPBES_scientific_outcome_20210612.pdf.
5. "General Sustainability-related Disclosures." IFRS. IFRS, Accessed October 27, 2023. https://www.ifrs.org/projects/completed-projects/2023/general-sustainability-related-disclosures/.
6. "CDP Announces Intention to Align with TNFD Framework and Drive Implementation across Global Economy." CDP Disclosure Insight Action. CDP, September 18, 2023. https://www.cdp.net/en/articles/media/cdp-announces-intention-to-align-with-tnfd-framework-and-drive-implementation-across-global-economy.
7. Distefano, Noemi. "TNFD Publishes Final Recommendations on Nature-related Issues." IR Magazine. IR Magazine, September 18, 2023. https://www.irmagazine.com/reporting/tnfd-publishes-final-recommendations-nature-related-issues
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