The report evaluates the alignment of nature-related disclosures by firms in eight high-risk sectors with the Taskforce on Nature-related Financial Disclosures (TNFD) framework. Key findings indicate significant gaps in reporting, particularly in risk management and target setting, with only a few firms showing comprehensive alignment.

Methodology

The analysis included 16 firms from eight priority sectors, selected for their environmental performance and geographical representation. Disclosures were assessed against TNFD Core Recommendations and sector-specific drivers of nature-loss, focusing on relevance, clarity, completeness, verifiability, and reliability.

State of disclosures: Sector insights

Extractives and minerals processing: Firms in this sector are engaged in activities such as exploration, extraction, and processing of minerals. They face significant nature-related risks, including habitat degradation, water usage, and pollution from mining activities. Disclosures need improvement, particularly in risk management and pollution mitigation.

Consumer goods: This sector includes firms manufacturing products like clothing, footwear, and personal care items. They face challenges related to supply chain transparency, water use, and pollution from production processes. While some firms have made progress, comprehensive nature-related disclosures remain lacking.

Food and beverage: Firms in this sector produce raw and packaged food and beverage products. They are heavily reliant on natural resources, making them vulnerable to nature-loss impacts such as water scarcity and land-use restrictions. Disclosures should focus on upstream sourcing practices, deforestation risks, and water management.

Health care: This sector includes firms involved in the research, development, and production of medications and health care products. They depend on environmental capital like clean water, posing risks from resource exploitation and regulatory changes. Improvements are needed in target setting and transparency of nature-related impacts.

Resource transformation (Chemicals): Firms in this sector produce chemicals and fertilisers, facing significant risks from resource use, greenhouse gas emissions, and pollution. Disclosures often lack specificity and detail on stakeholder engagement and risk management processes.

Transportation (Marine): Firms in this sector are involved in the movement of goods and people. They face nature-related risks from fuel use, emissions, and infrastructure development. Disclosures need to improve in areas such as environmental impact assessments and mitigation strategies.

Infrastructure: This sector includes firms involved in the construction and maintenance of infrastructure. They face risks from land use, resource use, and pollution. Disclosures should focus on sustainable practices and reducing environmental impacts of infrastructure projects.

Renewable resources and alternative energy (Forestry, pulp and paper): Firms in this sector focus on sustainable energy solutions and renewable resources. They are generally better aligned with TNFD recommendations but need to enhance disclosures on the impacts of their activities on local ecosystems and communities.

Recommendations for all sectors

• Action and process clarity: Ensure disclosures cover both actions taken and the processes behind them.
• Business strategy resilience: Deepen understanding of how nature-loss impacts strategy, ideally through scenario analysis.
• Stakeholder engagement: Report transparently on stakeholder engagement in nature-related assessments.
• SMART targets: Align all targets with Specific, Measurable, Achievable, Relevant, and Timebound criteria, focusing on outcome-oriented goals.
• Policy language: Strengthen clarity in policy documents to define nature-related expectations and non-compliance consequences.

Results and discussion

• Governance: While governance structures integrate nature-related metrics, transparency in monitoring and enforcement mechanisms is insufficient. Few firms disclose meaningful stakeholder engagement processes.
• Strategy: Disclosures on nature-related impacts, dependencies, risks, and opportunities are emerging. However, proactive strategic adjustments are rare, with most changes resulting from regulatory pressures.
• Risk management: Only the renewable resources and transportation sectors acknowledge all key drivers of nature-loss. Risk management disclosures often lack transparency, particularly regarding monitoring mechanisms and methodologies.
• Metrics and target setting: Firms vary widely in reporting TNFD metrics. Consumer goods and food and beverage sectors show better alignment, but overall, more specific and ambitious target setting is needed.

Engagement guidance

To support investor engagement, focus on governance mechanisms for nature-related issues, integration of Indigenous and local community perspectives, and accountability within firms. Assess methods for developing nature-related targets and the effectiveness of risk management processes.