TNFD launches latest framework for nature-related financial disclosure
The Taskforce on Nature-related Financial Disclosures (TNFD) has issued the latest amendments to its beta framework to enhance corporate approaches to disclosing nature-related data for investors, ahead of an official launch next year.
In March 2022, the TNFD unveiled the first iteration of its beta framework to help corporates outline and disclose nature-related risks and impacts in alignment with corporate reporting.
A third iteration of the TNFD beta framework has been released today (4 November). The Taskforce claims the latest update includes significant enhancements based on feedback from businesses, financial institutions, governments, regulatory and standards setting bodies, civil society organisations and Indigenous Peoples and Local Communities from around the world.
The new beta proposes new disclosure recommendations related to supply chain traceability, based on the quality of stakeholder interactions and data. It also improves focus on engagement with rights-holders and attempts to better align nature with climate targets from corporations.
The new framework will also attempt to accommodate the varying materiality and reporting preferences based on the type of organisation and aims to ensure that disclosure is increased and improved over time.
Additional guidance on risk and opportunity assessment is also included, as is the usability of a unique risk and opportunity assessment. The latest update also features guidance on target-setting developed with the Science Based Targets Network for financial institutions.
David Craig, Co-Chair of the Taskforce said: “Together with the previously released draft disclosures on risks and opportunities aligned with the approach and language of TCFD, v0.3 of the TNFD beta framework now provides a full spectrum of recommended disclosures across dependencies, impacts, risks and opportunities to support the reporting preferences and compliance requirements of report preparers everywhere.
“Our objective is to provide the TNFD framework as a powerful tool that helps move business and finance to take action on nature-related dependencies, impacts, risks and opportunities, sooner rather than later. This framework will encourage increasing disclosure ambition over time, essential to aligning financial flows and business activities to the task of urgently halting and reversing nature loss; and ensuring that both business and finance become more resilient in the face of the increasing frequency and magnitude of nature-related risks that are clearly apparent today.”
The TNFD has also confirmed that its Forum supporting the Taskforce now consists of more than 700 institutions across five continents. More than 130 organisations have announced plans to test the beta framework and more than 100 data providers are now participating in the TNFD’s Data Catalyst initiative.
The next iteration of the framework, expected in March 2023, will feature progress on disclosure metrics, measurements of impact and risks across the supply chain and additional guidance for priority sectors —including agriculture and aquaculture, mining, energy, infrastructure and other sectors. The TNFD will also expand from 34 members currently to 40.
The TNFD officially launched in June 2021 with an overarching aim to align corporate reporting and financial spending to alleviate nature-related risks.
The initiative was first announced in July 2020, with an informal working group set up two months later comprising of 74 financial institutions, corporates, governments, regulators, multilaterals, NGOs and consortiums, spearheaded by Banorte, BNP Paribas and the Green Finance Institute.
The aim of the TNFD was to compliment the growth of the TCFD, which is gaining popularity amongst corporates and financial markets in outlining the economic risks associated with the climate crisis. The TNFD follows a similar pattern; it aims to give companies and financial institutions a complete picture of their environmental risks.
Future iterations of the framework are expected to be released in March 2023. The finalised framework is earmarked for release in September 2023.