This Taskforce on Nature-related Financial Disclosures (TNFD) guidance addresses the critical impact of environmental crime on nature-related financial assessments. Environmental crimes—defined as unlawful acts or failures to act that directly damage the environment—include activities such as illegal deforestation, mining, fishing, wildlife trafficking, and waste crime. These activities degrade ecosystems, disrupt value chains, and expose organisations to significant operational, financial, and regulatory risks. Criminal activity often obscures nature-related assessments through weak traceability, fraudulent documentation, and convergence with crimes like money laundering and corruption.

Executive summary

Environmental crime affects nature-related assessments in two primary ways: it contributes to nature loss and degradation, and it increases uncertainty by obscuring information about commodity origins and activity locations. Organisations that strengthen governance and traceability can improve their resilience and reduce exposure to these risks. This guidance supplements the TNFD LEAP approach by helping organisations consider the implications of environmental crime throughout the identification and assessment process. It does not intend to determine criminal conduct but provides a framework for managing associated nature-related dependencies, impacts, risks, and opportunities.

Introduction

The guidance provides a framework for incorporating environmental crime considerations into the assessment of nature-related issues. It is intended for use by various functions within corporates and financial institutions, including sustainability, risk management, compliance, and procurement teams. For corporates, it supports assessments across operations, sourcing areas, and logistics routes. For financial institutions, it assists in evaluating exposure at the client, transaction, or portfolio level. The application of this guidance should be proportionate to an organisation’s size, geographic footprint, and exposure to specific commodities and jurisdictions.

Environmental crime and the TNFD LEAP approach

Environmental crime comprises conduct that is unlawful under domestic law, violates international conventions, or breaches permit conditions. The guidance focuses on five categories: illegal deforestation and land conversion; illegal mining and resource extraction; illegal fishing; wildlife trafficking; and waste and pollution. These crimes rarely occur in isolation and often converge with financial crimes. For instance, in 2018, a US precious metals refinery pleaded guilty to anti-money laundering failures linked to illegal gold mining proceeds and forfeited USD 15 million.

Illegal activities are embedded within global value chains, often entering legitimate markets through complex networks. Organisations may be exposed even if not directly involved in the initial offence. For example, the Sri Lankan fisheries sector lost access to the EU market in 2015 following a ban related to illegal fishing. Environmental crime also creates assessment uncertainty, reducing confidence in data regarding activity locations, species identity, and the magnitude of impacts.

LEAP assessment guidance

In the Scoping phase, organisations should generate a working hypothesis regarding their exposure to known crime types. Internal systems may not capture all illicit activity, so external sources such as NGO alerts, geospatial tools like Global Fishing Watch, and public enforcement information are essential for prioritising sectors and geographies.

The Locate phase involves identifying the organisation’s interface with nature. Criminal activity interferes with traceability, making it harder to identify these interfaces. For example, up to 87% of Colombia’s and 91% of Venezuela’s gold exports may be illegally produced, complicating origin tracking. Organisations should prioritise high-risk geographic locations with weak enforcement and transport nodes like free trade zones where documentation is frequently weak.

During the Evaluate phase, organisations assess their dependencies and impacts. Environmental crime can cause hidden impacts, such as illegal water abstraction exceeding permitted levels. The guidance recommends triangulation across independent sources to counter data unreliability. An FMCG company sourcing palm oil might compare the geolocation of plots against forest loss alerts from Global Nature Watch and test mill production volumes against installed capacity to identify irregularities.

The Assess phase identifies nature-related risks and opportunities. Physical risks include ecosystem degradation that undermines operations, exemplified by a landslide caused by illicit mining in the Democratic Republic of the Congo in 2026. Transition risks involve policy and liability; for example, a large flooring retailer was fined more than USD 13 million for importing illegally sourced timber. Reputational risks are also significant, as seen when a major sovereign wealth fund excluded a company due to ingredients derived from endangered species.

The Prepare phase focuses on response and reporting. Organisations should define escalation triggers, such as unexplained mismatches between supplier claims and spatial evidence. An illustrative escalation pathway includes verification, enhanced due diligence, engagement, reporting to authorities, and responsible disengagement. Reporting should describe the governance, escalation, and remediation mechanisms in place for managing the effects of environmental crime on the organisation’s risk profile.