The Taskforce on Nature-related Financial Disclosures (TNFD) has launched its final framework designed to address risks connected to the natural world.
Released yesterday during New York Climate Week, the TNFD’s 14 disclosure recommendations have been in development for nearly two years in a bid to address investors’ and regulators’ requirements for more disclosure from companies about how their activities impact nature.
According to the TNFD, the framework is aligned with recommendations released by the TCFD and consistent with the newly launched International Sustainability Standards Board (ISSB) standards and the approach used by the GRI.
‘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 represents 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,’ says David Craig, co-chair of the TNFD.
Sue Lloyd, vice chair of the ISSB, congratulated the TNFD on reaching a ‘major milestone’, saying: ‘We are pleased to note the high level of consistency within the finalized TNFD recommendations and the ISSB Standards, which both incorporate the architecture of the TCFD recommendations.’
Nearly three months since the launch of IFRS S1 and IFRS S2, the ISSB says it will consider the work of the TNFD as it strives to ‘deliver consistent, comprehensive sustainability-related disclosure for investors.’
GRI’s CEO Eelco van der Enden says his organization has worked closely with the TNFD ‘with the aim to simplify and align the TNFD recommendations and GRI standards.’
The taskforce says the delivery of its final recommendations follows extensive global engagement by market participants, scientific and standards organizations and other stakeholders during its design and development phases.
It claims it has received input from more than 1,200 institutions as part of the TNFD forum, that the framework has been pilot-tested by more than 200 companies and its prototype framework received more than 3,000 pieces of feedback from the market, science experts, policymakers and regulators.
ADDRESSING ‘VITAL’ NEEDS
S&P Global has also welcomed the launch, noting the new framework will serve as a tool to businesses and investors in their decision-making.
‘This is a significant milestone in providing clarity to business and investors that wish to assess and mitigate their exposure to nature-related risks,’ says Dr Richard Mattison, vice chair at S&P Global Sustainable1.
‘S&P Global Sustainable1 data shows that 85 percent of the world’s largest companies have a significant dependency on nature across their direct operations, illustrating the importance of nature to corporates and investors. These recommendations address a vital need as, quite simply, nature risk is financial risk.’
Alongside its final recommendations, the TNFD has also released guidance for companies to get started on their corporate reporting journey and has called for voluntary market adoption. It also says it will track voluntary market adoption on an annual basis through an annual status update report beginning in 2024.