Businesses press UK Government to fast-track TNFD adoption with clear roadmap

The UK, despite its global standing, ranks among the most nature-depleted nations.

The UK Government has been urged to establish a roadmap for the enforcement of mandatory disclosures aligned with the Taskforce on Nature-related Financial Disclosures’ (TNFD) framework, to accelerate widespread industry adoption.

In a recent briefing, the Aldersgate Group has identified and addressed three key challenges faced by corporations in adopting the TNFD framework.

This follows the recent announcement that more than 300 businesses have signalled their intentions to formally adopt the recommendations of the TNFD.

However, barriers to corporate adoption more widely include low board-level understanding, a lack organisational capacity and poor access to data, according to the briefing.

The briefing sets out how boards of directors have become more well-versed in climate-related risks since the UK mandated disclosures in line with the Taskforce on Climate-Related Financial Disclosures’ (TCFD) recommendations in 2022. This trend is yet to be replicated in the understanding of nature-related risks and the TNFD framework.

As per data from CDP, 91% of financial institutions have board-level supervision concerning climate-related matters, but only 32% exercise oversight on issues related to forests and/or water.

This disparity is primarily attributed to the challenge of translating global nature targets into actionable corporate-level strategies, unlike the more straightforward application of climate emissions reductions targets.

Furthermore, even with specialised ESG teams in place, there is a need for increased capacity and expertise to ensure companies adhere to the TNFD framework.

Lastly, unlike the quantifiable CO2 equivalent used for climate measurements, there is no universally agreed-upon metric for assessing nature-related impacts. This lack of consensus makes businesses reluctant to disclose data that may be incomplete or imperfect.

Recommendations for Government and regulators

The briefing not only highlights these obstacles but also offers strategic recommendations for the Government and regulators to actively promote the adoption of high-quality TNFD-aligned disclosures.

Aldersgate Group’s executive director Rachel Solomon Williams said: “It is positive to see so many businesses and financial institutions commit to disclosing their impact on nature.

“To maximise effectiveness, the Government must now look to provide support and guidance to build capacity within businesses, with a view to making disclosures mandatory through a phased plan in the future.”

As with the TCFD, the Government has been urged to demonstrate global leadership by becoming the first G20 country to mandate TNFD-aligned disclosures, starting with the UK’s largest companies and  Financial institutions.

Other recommendations include the Government and regulators offering explicit guidance on TNFD-aligned disclosures to assist businesses in expanding their knowledge and capabilities.

Drawing from successful models in 2022 for climate-related financial disclosures, collaboration with professional bodies, including the Sustainable Finance Education Charter, should be prioritised to integrate TNFD reporting into relevant professional courses.

Lastly, the briefing suggests that the UK, having been an early supporter of TNFD, should persist in championing the framework internationally. This includes active participation and promotion of TNFD at key global forums such as the G7 and G20 summits and the 2024 UN Biodiversity Conference.