The Taskforce on Nature-related Financial Disclosures (TNFD) has today released the first beta version of its nature-related risk-management and disclosure framework, marking an important step by the market to tackle the risk of nature-loss to the global economy and reduce negative impacts on the natural world.
Businesses and financial institutions can no longer afford to overlook the value they receive from nature in their strategy, operational, risk management and capital allocation decision-making. Impacts and dependencies on nature are posing risks to businesses, investors, and lenders, but are also opening new business opportunities to contribute to nature-positive outcomes.
The prototype framework marks the beginning of an 18-month process of consultation and development together with a broad range of market players and stakeholders. By following an open innovation approach, TNFD hopes to accelerate the framework’s development and steadily improve its relevance, usability, and effectiveness before releasing its recommendations in the 3rd quarter of 2023.
TNFD’s 13 core knowledge partners, including the Capitals Coalition, provided detailed input into the first beta version framework to ensure it is scientifically sound and builds on existing standards, data and frameworks such as the Natural Capital Protocol. We’re pleased to see that many of the underlying definitions and concepts developed during the creation of the Protocol now sit within the TNFD framework.
For businesses to effectively apply this Framework, they will need to identify, measure and value their impacts and dependencies on natural capital as part of the Evaluate element of framework’s new ‘LEAP approach’. The Natural Capital Protocol provides the standardized framework that empowers businesses to undertake such an assessment, and will be an indispensable tool in delivering the TNFD guidance.
The beta framework is also designed for future alignment with the global baseline for sustainability standards under development by the International Sustainability Standards Board (ISSB) while providing flexibility for those organizations that wish to, or need to, report to different materiality thresholds and regulatory requirements.