The Taskforce on Nature-related Financial Disclosure (TNFD) has published its finalized recommendations and supporting guidance after a two-year open innovation process to develop the framework.
The framework is the first risk management and disclosure tool for the private sector to report and act on evolving nature-related risks. It includes 14 recommended disclosures covering nature-related dependencies, impacts, risks and opportunities and supports organizations in understanding that nature is no longer a corporate social responsibility issue, but a core and strategic risk management issue alongside climate change.
As a founding TNFD knowledge partner the Coalition welcomes the framework and looks forward to seeing it operationalized to enable companies and financial institutions to integrate nature into decision-making.
The Coalition also welcomes the integration of our flagship decision-making framework, the Natural Capital Protocol as a central tool in the TNFD additional guidance for organizations to undertake impact and dependency analysis. Core elements of the Natural Capital Protocol have been fully integrated into the TNFD LEAP approach, while others are embedded in annexes.
Steps within the Protocol, such as measuring impacts, dependencies and changes in the state of natural capital are fully integrated into the TNFD framework as part of the Evaluate (E) stage of the LEAP approach, with the framework building directly on the Protocol.
The Coalition also supports the inclusion of valuation, contained within an annex of the framework. Users are signposted to the Natural Capital Protocol to enhance their impact and dependency analysis and for support in applying valuation to TNFD applications. The Coalition will continue to work with TNFD to advocate for the integration of valuation into the core framework in future iterations.
The Protocol has supported the TNFD in deciding to move beyond looking solely at impacts to also looking at business dependencies on nature. This is a core principle of a capitals approach. Sustainability disclosure frameworks traditionally focus only on the activities of the business, but by building on the Natural Capital Protocol, the TNFD goes beyond this by also asking businesses to assess the impacts they are having on the state of nature.
This move from measuring only impacts to contextualizing these impacts in relation to changes they have on the state of nature provides more relevant information that can be used by organizations to make decisions as well as to disclose. With the addition of valuation, significantly more context can be provided to businesses that will enable them to inform decisions and disclose why those impacts are material to businesses and their stakeholders.
Alongside the Protocol, the TNFD also builds on work from several other efforts that the Coalition has developed alongside partners and our global community. These include Align, Transparent and ENCORE. Furthermore, the TNFD framework also supports the ‘Assess’, ‘Commit’ and ‘Disclose’ steps of the high-level business actions on nature, which were co-developed by Capitals Coalition, TNFD, Science Based Targets Network, Business for Nature, World Economic Forum, WBCSD and WWF.
Through providing businesses with the ability to assess and disclose their impacts and dependencies on nature, the TNFD recommendations are aligned with, and support the implementation of, Target 15 of the Global Biodiversity Framework, which the Coalition heavily advocated for at the UN CBD COP15 in December 2022.
Looking ahead, the Coalition will continue to work closely with TNFD to promote and highlight applications across the business community, provide technical insights, bring valuation into the heart of future iterations, and build capacity to apply the approach within the global business community. We welcome the recommendations and look forward to ongoing collaboration with TNFD to include the value of nature into decision-making.