The Release of the TNFD’s Final Recommendations
Context
On 18th September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) published its final recommendations for nature-related risk management and disclosure. In tandem, a suite of additional guidance (e.g., sector specific) has been released in draft form. The publication marks the culmination of a two-year design and development process, including pilot testing by over 200 companies.
The TNFDs recommendations serve as a “key milestone in the relationship between nature, business and financial capital” and will facilitate companies and financial institutions ability to integrate nature and biodiversity into decision making.
ESG360°’s 5 Key Takeaways:
TNFD Recommendations:
There are 14 recommended global disclosures in the framework (applicable to all sectors on a comply/ explain basis), which support companies to identify, assess, manage and, where appropriate, disclose nature related issues. There are additional sector specific metrics which should also be disclosed.
Supplementary guidance:
Specific guidance tailored to sectors and biomes will be made available around the time of COP28. Finalised sector-specific metrics will be released in the year 2024.
Guidance for 6 high nature impact/ dependency sectors:
Draft guidance for six sectors with significant nature impact/ dependency will be published in November.
TNFD is consistent with both Impact and Financial Materiality:
The TNFD aligns with both Impact and Financial Materiality. It follows a similar approach to the ISSB, meeting the material needs of capital providers, and aligns with the broader impact materiality approach of CSRD/GRI, addressing the material needs of stakeholders focusing on impacts.
Alignment to requirements of Standards such as ISSB, TCFD and GBF:
The recommended disclosures are structured around the same four pillars of the TCFD/ ISSB, which are Governance, Strategy, Risk and Impact Management and Metrics and Targets. All the TNFD core global disclosure indicators and metrics for dependencies and impacts are relevant to Target 15 of the Kunming-Montreal Global Biodiversity Framework.