The Taskforce on Nature-related Financial Disclosures (TNFD) report, contains recommendations on disclosing nature-related financial risks. The report aims to raise awareness of the significance of nature-related risks in finance, and seeks to provide guidance to organisations to help manage and report on their relationship with nature.

Introduction

The introduction provides the background of nature-related disclosures and their relation to financial sustainability. The report aims to build on the success of the Task Force on Climate-related Financial Disclosures (TCFD) by providing a similar framework for nature-related disclosures.

Foundations for understanding nature and business

The report identifies nature-related issues, dependencies, and risks. Given the deterioration of nature globally, threats to financial systems resulting from changes to nature are imminent. Companies that depend on natural resources face risks such as supply chain disruption and deterioration of reputation due to environmental impact.

Recommendations and guidance

The report recommends reporting on nature-related dependencies, impacts, risks, and opportunities under four pillars: Governance, Strategy, Risk and Impact Management, and Metrics and Targets. The guidance covers all industry sectors and supports recognising and measuring nature’s value when reporting. A comprehensive list of additional guidance on various topics such as ‘Identifying and assessing nature-related issues’ and ‘Scenario analysis guidance’ is also available in the report. The TNFD recommended disclosures structure is shown in Figure 1, on page 9.

Measuring nature-related dependencies, impacts, risks, and opportunities

The TNFD metrics architecture provides four metrics categories that can measure nature-related dependencies, impacts, risks, and opportunities. These categories include Direct, Indirect, Systemic, and Metrics for Biodiversity and Habitat. Annex 1 provides the TNFD core global disclosure metrics, while Annex 2 contains additional metrics and describes how they might be put into practice with the help of examples.

Overview of additional guidance

Guidance is available to measure and assess specific nature-related risks and issues based on industry sectors and geographic regions. The report discusses which quantitative and qualitative data should be collected and shared for each type of reporting.

Looking ahead – getting started, and priorities for the taskforce

The TNFD aims to build on its current work to address nature-related financial risks. To do so, it has prioritised areas for further work:

1. Develop materials on measurement and other types of analytics.
2. Create practical case studies.
3. Improve methods for engaging stakeholders – Expand partnerships with key organisations.

Conclusion

In conclusion, the TNFD report calls for companies and investors to recognise the importance of nature-related financial risks and integrate them into their decision-making process. The report provides guidance on how to do so and guidance that varies for different sectors. The recommendations are the next step in addressing the importance of nature in finance, creating a comprehensive framework like that produced for climate-related disclosures. Companies are encouraged to implement these recommendations to manage their ESG risks and develop a sustainable approach.