Introducing the TNFD framework

The Taskforce on Nature-related Financial Disclosures (TNFD) was established in 2021 in response to the growing need to factor nature into financial and business decisions. The TNFD is a global, market-led initiative with the mission to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks and opportunities, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.

To achieve these outcomes, the Taskforce resolved at its first meeting in October 2021 that the TNFD risk management and disclosure framework should be applicable to, and used by, business and financial institutions of different sizes, across sectors and jurisdictions, irrespective of their preferred or required approach to materiality. Halting and reversing nature loss, achieving nature-positive outcomes and mitigating and managing nature-related risks will only be possible if large and small businesses across supply chains and financial institutions of all types are collectively identifying, assessing, managing and disclosing nature-related dependencies, impacts, risks and opportunities.

The Taskforce is now half-way through its two-year design and development phase building the TNFD framework. The TNFD’s complete recommendations (v1.0) will be published in September 2023. As it continues to develop the framework with the support and input of a wide range of knowledge partners and stakeholders, the Taskforce aims to:

  • Help drive alignment with the emerging global reporting baseline under development by the ISSB and with best practice standards and tools already in use by market participants today;
  • Provide adaptability and flexibility regarding the approach to materiality to accommodate the preferences and regulatory requirements of report preparers and report users from organisations of all sizes and across all jurisdictions;
  • Encourage early action by companies and financial institutions to begin reporting nature-related dependencies, impacts, risks and opportunities, given the urgent need to address both nature loss and climate change in an integrated way; and
  • Provide a structured path to increase disclosure ambition over time, recognising that the incorporation of nature-related issues is new to many organisations, but a rapidly growing strategic imperative for sound governance, strategy, risk management and capital allocation.

Updates on the TNFD’s consultation and engagement efforts

TNFD has adopted an open innovation approach, centered around the release of several ‘beta’ or draft versions of the framework for feedback and pilot testing with market participants, experts and other stakeholders to bring insights and learnings as it develops the framework. (For more details on the TNFD’s consultation and engagement efforts, see end of summary)

Following the release of v0.1 of the beta framework in March 2022, v0.2 in June 2022 and this v0.3 in November 2022, the Taskforce will release v0.4 of the beta framework in March 2023, before the launch of the TNFD framework v1.0 for market adoption in September 2023.

In March 2023, the TNFD will conclude its open innovation process with a 60-day formal consultation where organisations can submit responses to a full draft of the beta framework (v0.4). The Taskforce will consider all feedback received to inform its complete framework for publication in September 2023. Comment letters received in this formal consultation will be published on the TNFD website, following the approach of international standards organisations.

The TNFD beta framework is open for feedback until 1 June 2023, ahead of the Taskforce publishing its complete recommendations (v1.0) of the TNFD framework in September 2023. The deadline for providing feedback to inform the v0.4 release is 14 February 2023, and should be submitted via the feedback survey on the online platform.

Updates in v0.3 of the beta framework

Version 0.3 of the TNFD beta framework incorporates a number of important modifications and additions from v0.2 released in June 2022. These modifications and additions are based on the ongoing research and design of Taskforce Working Groups and feedback on v0.2 from market participants and other stakeholders.

The TNFD framework’s core components remain unchanged and consistent with v0.2 of the beta framework, illustrated in the figure below. The Taskforce expects it to remain unchanged in future update releases.

Additional Content

This version 0.3 update to the beta framework incorporates for the first time the Taskforce’s recommended approach to disclosures of dependencies and impacts on nature.

Additional Content

Draft disclosure recommendations

As outlined in earlier versions of the beta framework, the Taskforce’s approach to the design and development of the framework was to start by building on the disclosure approach and guidance already developed by the TCFD. Market participants have been clear in their feedback to the TNFD that consistency of approach and language is essential to support early market adoption of a risk management and disclosure framework for nature-related risks and to help move to integrated sustainability disclosures over time that cover both climate and nature.

As explained in v0.1 and v0.2, the Taskforce has therefore worked ‘outwards’ from the TCFD guidance in its structured, sequential design and development of the framework, with three guiding questions:

  1. Which of the TCFD recommended disclosures apply well to the nature context and can carry over with minimal, if any, change in approach and language to maximise consistency and support integrated disclosures?
  2. Which of the TCFD recommended disclosures remain relevant but need some adaptation to the nature context?
  3. What additional disclosures might be warranted and should be considered by the TNFD, given the particular characteristics of nature-related dependencies, impacts, risks and opportunities?

Having identified those TCFD disclosures that need further adaptation, the TNFD provided initial guidance on some of this adaptation in v0.2 and is now providing new guidance on other aspects of this adaptation in v0.3:

  • A proposed adaptation of the TCFD Metrics & Targets B recommended disclosure to incorporate disclosure on dependencies and impacts on nature, replacing the TCFD’s focus on the equivalent ‘impact on climate’ disclosure (i.e. greenhouse gas emissions-related disclosure).
  • A proposed addition of ‘nature-related dependencies and impacts’ alongside ‘risks and opportunities’ in a number of the other draft disclosure recommendations for coherence and consistency.
  • A proposed adaptation of the title of the ‘Risk Management’ pillar to include impact, i.e. ‘Risk and Impact Management’.
  • Three new proposed disclosure recommendations the Taskforce believes are important given the specific characteristics of nature-related dependencies, impacts, risks and opportunities on: (i) traceability, (ii) the quality of stakeholder, including rights-holder, engagement; and (iii) the alignment of climate and nature targets, given the growing importance of integrated transition planning to achieve both net zero and nature positive goals in tandem. Crucially, the Taskforce believes these proposed additional disclosures are additive to those in the TCFD guidance, with a view to encouraging further movement towards integrated (TCFD+TNFD) sustainability disclosures by market participants as soon as possible.
Additional Content

For v0.4 of the beta framework, the TNFD will develop two ‘Annexes’ on Disclosure Metrics for implementation of two disclosure recommendations:

  • Metrics and Targets A (Annex 1 – relating to metrics for nature-related risks and opportunities); and
  • Metrics Targets B (Annex 2 – relating to metrics for impacts and dependencies on nature).

The Taskforce proposes to centre Annex 2 on metrics for impact drivers, organised by:

  • the five drivers of nature change, adapted to reflect drivers of both positive and negative impacts on nature: land/ocean/freshwater use change; climate change; resource use / replenishment; pollution / pollution removal; invasive alien species introduction / removal; and
  • the four realms (ocean, freshwater, land and atmosphere).

As part of v0.3 of the beta framework, the Taskforce has also published draft additional disclosure guidance for financial institutions  and an illustrative set of assessment and disclosure metrics for financial institutions, which includes examples with links for further information.

Approach to materiality

As the developer of a framework for practical application by market participants, the Taskforce is guided by a core design principle that the TNFD framework should be applicable to, and used by, corporates and financial institutions of different sizes, across sectors and jurisdictions, irrespective of their preferred or required approach to materiality.

The modifications and additions included in this v0.3 update of the beta framework, including the new draft disclosures on dependencies and impacts on nature, are consistent with that principle. Together with the previously released draft disclosures on risks and opportunities, v0.3 of the TNFD beta framework now provides a full spectrum of recommended disclosures to support the reporting preferences and compliance requirements of report users everywhere.

To facilitate the applicability and uptake of the TNFD disclosure recommendations when released for market adoption in September 2023, the Taskforce is working on a mechanism to encourage the adaptable application of the TNFD disclosure recommendations. This will enable market participants to start disclosing as soon as v1.0 of the framework is released, and increase their disclosure ambition over time. This adaptable approach to adoption of recommended disclosures will likely distinguish between ‘core’ disclosures that constitute a baseline of TNFD adoption and additional disclosure recommendations that represent ‘enhanced’ disclosure.

Together, the combination of a full spectrum of disclosure recommendations and an adaptable application approach is designed to ensure that the framework is relevant and usable to corporates and financial institutions everywhere, accommodate different preferred or required approaches to materiality, and encourage increasing ambition in disclosure over time.

‘To do this, the Taskforce is exploring an adaptable approach to the application of the framework that could be subject to independent audit. This will likely centre around distinguishing between:

  1. use of a ‘core’ set of TNFD disclosure requirements that constitute a baseline of TNFD adoption; and
  2. use of additional disclosure recommendations that would represent ‘enhanced’ disclosure, depending on the type and size of the disclosing organisation.

The Taskforce is guided by a core design principle that the TNFD framework should be applicable to, and used by, business and financial institutions of different sizes, across sectors and jurisdictions, irrespective of their preferred or required approach to materiality.

As set out in v0.1 and v0.2 of the beta framework, the TNFD framework is designed to be applicable to meet both the emerging global baseline being developed by the ISSB, and the approaches of specific jurisdictions and the ambitions of individual preparers, which may go beyond these requirements. 

The Taskforce is continuing to evaluate an adaptable application approach to the use of its disclosure recommendations and will provide further details on the proposed approach in v0.4 of the beta framework in March 2023.

In short, the combination of a spectrum of recommended disclosures covering nature-related dependencies, impacts, risks and opportunities, and an adaptable application approach, depending on the type and size of the disclosing organisation, will help to ensure the broad relevance and usability of the TNFD framework to corporates and financial institutions everywhere and accommodate their preferred or required approach to materiality.

Given the critical and urgent necessity for corporates and financial institutions to identify, assess, manage and disclose their nature-related dependencies, impacts, risks and opportunities, the TNFD prioritises enabling rapid and broad voluntary adoption.

The LEAP approach to risk and opportunity assessment

Based on market feedback and ongoing pilot testing of the LEAP approach, v0.3 of the beta framework sets out a streamlined LEAP approach, with the ultimate objective that corporates and financial institutions will be able to incorporate LEAP into their existing enterprise or portfolio risk management systems. Over 130 institutions are already pilot testing the beta framework, including the LEAP approach, and 46 pilots have already provided the TNFD with feedback based on their experience.

Based on this feedback, the updated LEAP approach in this v0.3 release has four major revisions:

  • Scoping the assessment: Guidance on scoping the assessment, with scoping questions for corporates to reflect the importance of scoping before starting analysis using the LEAP phases. This has now been made clearer for corporates, alongside the previously released scoping guidance for financial institutions (referred to in v0.2 as LEAP-FI);
  • Evaluate phase: New guidance on impact mitigation and positive impacts, anchored in an adaptation of the IPBES five drivers of change to enable organisations to identify, assess and manage both negative and positive impacts on nature.
  • Assess phase:
    • Consolidation of the five components of the Assess phase into four components by incorporating opportunities alongside risks throughout the LEAP Assess phase and eliminating the previous stand-alone opportunities identification component of LEAP ‘A5’.
    • New draft guidance on the Assess phase of LEAP for assessment of nature-related risks and opportunities;
  • Updated characterisation of stakeholder engagement: To reflect the engagement approach and requirements that may be required with rights-holders, as distinct from other types of stakeholders, the language has been updated to ‘stakeholder, including rights-holder engagement’ (this will be further detailed in additional guidance in the v0.4 release in March 2023).

In addition, the Taskforce has published:

Additional Content

The approach to metrics and targets

Metrics

In this v0.3 of the beta framework, the Taskforce sets out an approach to measurement required for the Assess phase of LEAP (risks and opportunity assessment) and provides illustrative examples of metrics for all categories of nature-related risks and opportunities.

The measurement approach introduces two types of assessment metrics:

  1. Exposure metrics, based on nature-related dependencies and impacts identified in the Evaluate phase of LEAP (Evaluate priority dependencies and impacts); and
  2. Magnitude metrics, which can be used to assess the financial implications to the organisation of nature-related risks and opportunities. Magnitude metrics should be used as part of the criteria to prioritise nature-related risks and opportunities. This will frame their strategy, risk management, capital allocation and disclosure decisions in the final Prepare phase of LEAP (Prepare to respond and report).

Targets

Building on initial considerations set out in v0.2 and consistent with the Taskforce’s commitment to build on and incorporate best practice methods and frameworks already widely used or under development, v0.3 includes guidance on target-setting based on methods under development by the Science-Based Targets Network (SBTN).

Developed with the SBTN, the ‘Additional draft guidance for corporates on science-based targets for nature’  incorporates the five-step approach to setting science-based targets for nature developed by the SBTN. The TNFD beta framework provides an overview of relevant SBTN guidance and signposts to SBTN documentation for further details. The TNFD’s guidance on target-setting will be updated with SBTN, as it releases further updates to their methods and guidance.

When corporates applying the TNFD framework set targets for impacts on nature and measure performance against those targets, the TNFD recommends that they set science-based targets for nature following SBTN guidance. If organisations choose to follow another approach to target setting, the TNFD strongly recommends that target-setting follows the basic principles of science-based targets used by SBTN.

Additional guidance by sector, realm and biome

To help organisations interpret and implement the TNFD framework, the Taskforce is developing additional guidance by sector and biome. In addition to the Draft Additional Guidance for Financial Institutions released in v0.3, further additional guidance is currently under development with knowledge partners and input from relevant industry experts, other scientific experts and Forum members. This additional guidance currently in development covers:

  • agriculture and food;
  • fishing and aquaculture;
  • forestry, paper and pulp;
  • mining and metals;
  • energy (oil and gas, and renewable energy); and
  • tropical forests and other biomes.

Additional guidance will be released by the Taskforce for comment as part of the v0.4 release and potentially earlier in tranches to give market participants time to review and provide feedback to the Taskforce.

The TNFD will continue to develop additional guidance on how to implement LEAP and the TNFD disclosure recommendations across priority sectors and biomes, for publication at regular intervals prior to the launch of v1.0 of the complete TNFD framework in September 2023.

Approach to scenarios

Like the TCFD, the TNFD recognises the utility of scenario analysis to help organisations navigate a complex set of interconnected uncertainties. Scenario analysis allows organisations to explore the possible consequences of climate change and nature loss, the ways in which governments, markets and society might respond, and the implications of these uncertainties for business strategy and financial planning. Nevertheless, a survey of TNFD Forum members confirmed that most market participants have either found the application of climate-related scenario analysis very difficult or have not yet attempted to use scenarios to inform their strategy, risk management and capital allocation decisions.

Alongside v0.3 of the beta framework, the Taskforce therefore publishes a discussion paper on the TNFD’s proposed approach to scenario analysis. In this discussion paper, the TNFD has set out its proposed approach to the use of scenarios and scenario analysis to support application of the TNFD framework. Since the TNFD defines nature to include the atmosphere and therefore the climate system, and is building on existing TCFD-aligned market practice and macro-prudential use of climate scenarios, the TNFD aims to work towards an approach to scenario analysis that integrates considerations of climate and nature. The TNFD will use the approach outlined in its discussion paper as the basis for a set of pilot tests, focusing initially on use by corporates to improve decision-making. Drawing on insights from applying the proposed approach in practice in these pilot tests and feedback from market participants, the TNFD aims to develop draft scenarios guidance in v0.4 of the beta framework in February 2023 and further refine this guidance for the v1.0 framework in September 2023. As part of the next phase of work, the TNFD will develop and adapt its approach to scenario analysis for financial institutions.

The Taskforce looks forward to feedback from market participants on the proposed approach to scenario analysis. It will undertake pilot testing and issue draft guidance on scenarios in the v0.4 beta release in March 2023.

Approach to societal dimensions of nature-related risk assessment and disclosure

The Taskforce looks forward to further input on the societal dimensions of nature-related risk management and disclosure, as it continues to assess how to incorporate these into the TNFD framework.

Recognising that the impacts and dependencies on nature of an organisation are location-specific and inextricably linked to society and local communities, the Taskforce is also considering societal dimensions of nature-related risk management and disclosure. Building on early discussions with, and feedback from, leaders of Indigenous Peoples and Local Communities (IPLCs) and engagement with a range of civil society organisations, the Taskforce has made several modifications and additions to the LEAP approach and the draft disclosure recommendations. It has also published a discussion paper on ‘Societal dimensions of nature-related risk management and disclosure – Considerations for the TNFD framework’.

The discussion paper outlines the feedback received to date and sets out important and interrelated societal dimensions of relevance to the TNFD framework. The Taskforce looks forward to further input on these dimensions as it continues to consider how to incorporate them into the TNFD framework. Draft additional guidance on engagement with stakeholders, including rights-holders, is planned for the v0.4 release in March 2023.

Core concepts & definitions

Based on the enhancements and additions outlined above and feedback from market participants, the TNFD has updated and added new concepts, definitions and categories. These are all now up to date on the ‘Understanding nature for market participants’  section of the online platform for the TNFD framework and added in an updated glossary.

Priority areas for further framework development

The TNFD will continue to develop the beta framework based on additional research and consultations by the Taskforce, including ongoing feedback from market participants and insights from pilot testing. The Taskforce aims for v0.4 of the beta framework in March 2023 to be a complete and coherent representation of the framework to allow market participants to provide feedback before the deadline and conclusion of pilot testing on 1 June 2023.

The highest priorities for the Taskforce’s work in the next phase of framework development before the v0.4 release are:

  • Additional guidance on metrics and targets, specifically on the Taskforce’s proposed Disclosure Metrics, as well as additional details on Assessment Metrics;
  • Additional guidance on measurement of dependencies, impacts, risks and opportunities across supply chains (the TNFD’s adaptation of the concept of ‘scopes’ from the climate reporting context);
  • Further guidance on target-setting developed with the SBTN and others;
  • Release of draft additional guidance for priority sectors and biomes across the four realms of nature;
  • Draft guidance on scenarios, developed in collaboration with a range of knowledge partners, including the Network for Greening the Financial System (NGFS), and with the benefit of feedback from the scenarios discussion paper issued as part of this v0.3 release;
  • Draft guidance on stakeholder, including rights-holder engagement, developed with the benefit of feedback on the social considerations discussion paper issued as part of this v0.3 release; and
  • Publication of a set of illustrative use cases, case studies and examples of the TNFD framework, across non-financial and financial sectors, including illustrative disclosures.

Engage – Co-create the TNFD framework

The TNFD invites market participants and other stakeholders to:

  • Review and provide feedback: Explore the latest version of the beta framework on the TNFD online platform and complete the feedback form.
  • Pilot test the beta framework: Corporates and financial institutions that want to explore how the TNFD framework would apply in their organisational context can pilot test the framework independently and, in some cases, through collaborative industry efforts. The TNFD piloting guide, released alongside v0.2 of the beta framework, provides detailed information for organisations interested in piloting the framework.
  • Participate in consultation discussions: Based on the feedback provided by market participants, the TNFD is convening focus group discussions about key emerging themes, technical areas of the framework or by geography or sector to engage further with feedback providers.

The TNFD’s open consultation period will continue until 1 June 2023. While the TNFD will accept feedback on a rolling basis, feedback for each iterative release of the beta framework will be evaluated according to the schedule outlined below. All feedback, irrespective of when it is provided, will be reviewed and evaluated before the complete recommendations are published in September 2023.

Additional Content

The TNFD's open innovation process

The TNFD continues to build its consultation and engagement efforts to collect feedback from market participants across a range of countries and sectors, and a variety of stakeholders and rights-holders.

Pilot testing

Approximately 130 organisations are currently designing, implementing or have completed a pilot test of the TNFD beta framework to explore its application in their organisational context. In addition to independent pilot tests, organisations are pilot testing through the TNFD’s pilot programme partners: Agence Française de Développment (AFD), Global Canopy, FSD Africa, via the African Natural Capital Finance Alliance (ANCA), the International Council on Mining and Metals (ICMM) the United Nations Environment Programme Finance Initiative (UNEP-FI) and the World Business Council on Sustainable Development (WBCSD).

Engagement with Civil Society, Indigenous Peoples and Local Communities

To ensure the voices and perspectives of civil society organisations and Indigenous Peoples and Local Communities (IPLCs) are incorporated into the design and development of the TNFD framework, the TNFD is partnering with the International Union for Conservation of Nature (IUCN) to engage with a wide range of Indigenous Peoples and Local Communities through IUCN’s global networks and relationships. The TNFD is meeting bi-monthly with IPLC leaders and organisations across five continents, as well as with a range of civil society organisations to gather feedback on the beta framework.

Regional and national Consultation Groups

To increase outreach and engagement in markets where there has been particularly strong interest, TNFD Consultation Groups have been established at a national or regional level. Participation in Consultation Groups is open to all institutional members of the TNFD Forum from that jurisdiction. Consultation Groups are now established in Australia and New Zealand, Brazil, Colombia, France, India, Japan, the Netherlands, Switzerland and the United Kingdom. The Consultation Groups are designed to help amplify awareness of the TNFD framework in development and provide a platform for national and regional dialogue on its future adoption across business and finance.

Nature-related Data Catalyst

Building on the TNFD’s Data and Analytics Discussion paper published in March 2022, the TNFD established the Nature-related Data Catalyst in July 2022. The Data Catalyst convenes a range of market participants across the nature-related data landscape, including nature-related data providers. The goal of the Data Catalyst is to address shortcomings in the current landscape of nature-related data, while also identifying and encouraging the development of – and access to – nature-related data, analytics and tools. The ultimate goal is to improve the ease, speed and scale of adoption of the TNFD framework. The Nature-related Data Catalyst now has over 100 members.

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