Introduction to the 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 phase of design of the TNFD framework. The TNFD’s complete recommendations (v1.0) will be published in September 2023 for market adoption. 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 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 approach; and
• Provide a structured path to increase disclosure ambition over time, recognising that this area is new to many organisations, but a rapidly growing strategic imperative for sound governance, strategy, risk management and capital allocation.

The Taskforce is made up of 40 senior executives drawn from corporates, financial institutions and market intermediaries around the world and led by the TNFD Co-Chairs, Elizabeth Mrema and David Craig. Collectively, the Taskforce Members represent institutions with over US$20.6 trillion in assets under management and a footprint in over 180 countries. The Taskforce is supported by a larger institutional support base, the TNFD Forum, consisting of over 800 organisations globally, and a network of 18 core knowledge partners, including leading global scientific, conservation and standards development bodies, which are actively contributing to the development of specific aspects of the framework.

To develop the framework, the TNFD has adopted an open innovation approach, developing the framework with the market. This has involved the release of a series of prototype frameworks, called ‘beta’ versions, for feedback and pilot testing with market participants and other stakeholders (see Box 1). The TNFD framework has been viewed over 90,000 times by stakeholders in over 149 countries and territories since the release of the first beta version (v0.1) in March 2022. Over 200 organisations are pilot testing the beta framework, providing valuable feedback on its usability and relevance.

The TNFD’s open innovation approach has enabled the engagement and feedback of market participants and other stakeholders through a range of channels:

• The online TNFD framework platform, including feedback forms and interactive functionalities;
• Desktop and in-depth pilot tests of the beta framework on entire businesses or product lines by companies, and investment, insurance and credit portfolios by financial institutions;
• Dedicated engagement with different stakeholder groups, including with Indigenous Peoples and Local Communities and ongoing dialogue with a range of civil society organisations;
• 11 TNFD Consultation Groups in eight countries and three regions;
• The Nature-related Data Catalyst, established by the TNFD, which now includes over 135 nature-related data providers, spanning financial data aggregators, non-profit convenors of data, nature-technology companies, academia, government agencies, non-profit tool providers, data infrastructure providers and financial institutions; and
• Presentations, webinars and focus group meetings globally with a wide range of stakeholders, including market participants, policy makers, regulators, industry associations, other sustainable finance initiatives, representatives of Indigenous Peoples and Local Communities and conservation groups.

The TNFD is grateful to all those who have provided feedback on the beta framework to date and invites market participants and other stakeholders to continue to provide feedback on this v0.4 beta framework until 1 June 2023. All feedback received before that deadline will be reviewed and evaluated to inform the final recommendations (v1.0) to be launched in September 2023.

The Taskforce is launching a formal public consultation process from 30 March until 1 June 2023. This will be open to organisations and individuals in addition to the general feedback the TNFD collects through its general feedback survey. Both formal comment letters and general feedback can be submitted via the TNFD framework site:

• The TNFD’s formal public consultation process: A formal comment letter and summary of feedback can be uploaded to the TNFD framework site from 30 March 2023. All submissions made through this channel will be made publicly available on the TNFD framework site. Market participants will have the option to disclose formal responses to the TNFD framework either as individuals or organisations. Feedback through the formal consultation can be provided here:
• TNFD’s general feedback process: Individuals and organisations may continue to explore the framework site and provide feedback through the general feedback survey here, or using the feedback function at the end of specific pages on the framework site. All feedback surveys completed before 1 June 2023 will be considered by the Taskforce before publishing its complete recommendations in September 2023.

Figure: Open innovation timeline for developing the TNFD framework

ExpandFigure: Open innovation timeline for developing the TNFD framework

The TNFD continues to consult and engage to collect feedback from market participants across a range of countries and sectors, and a variety of stakeholders.

Pilot testing

The TNFD pilot testing programme is central to its open innovation approach to design and develop the TNFD framework with a focus on ensuring it is both science-based and practical to use. Nearly 200 organisations are currently designing, implementing or have completed a pilot test of the TNFD beta framework to explore its application in their organisational context. Approximately half of these pilots are financial institutions and half are corporates. Pilots cover all moderate to high nature-risk sectors identified as priorities by the TNFD in the v0.2 beta release, all realms and 40 countries across six continents. The feedback received from pilots to date has been considered in this v0.4 beta framework update.

The pilot testing programme includes pilots led by the TNFD’s pilot programme partners: the United Nations Environment Programme Finance Initiative (UNEP FI), Financial Sector Deepening Africa (FSD Africa), Agence Française de Développement (AFD), World Business Council For Sustainable Development (WBCSD), International Council on Mining and Metals (ICMM) and Global Canopy. Since November 2022, the TNFD has engaged two new partners to advance pilots in specific sectors and support the development of additional guidance for those sectors: Ipieca, the global oil and gas association, in the energy sector and Textile Exchange in the textile and apparel sector.

A number of organisations have signalled an intention to continue pilot testing the framework beyond the deadline for feedback of 1 June 2023 because of the learning and capability building benefits for their organisation. To support those efforts, the TNFD will be sharing insights and experiences from the pilot testing undertaken over the past year through a series of TNFD Forum events.

Engagement with civil society, Indigenous Peoples and Local Communities

The TNFD has partnered with the International Union for Conservation of Nature (IUCN) to engage with a range of representatives of Indigenous Peoples and Local Communities to leverage their knowledge and provide their voice and perspective to help design and develop the TNFD framework. The TNFD has held over 10 online and in-person meetings and sessions with the International Indigenous Forum on Biodiversity (IIFB), and bilateral sessions with civil society organisations working on societal dimensions of nature-related issues, to gather their input on the beta framework as it has been developed. In addition, pilot testing by Indigenous and Community-based Enterprises is being established and will run beyond June 2023.

This ongoing dialogue with Indigenous Peoples, Local Communities and civil society representatives has informed the development of both the draft recommended disclosures and guidance on engagement with affected stakeholders, which is being released in draft as part of this v0.4 release (see Section 3.5). This guidance has been developed following the discussion paper on ‘Societal dimensions of nature-related risk management and disclosure – Considerations for the TNFD framework’ which was published in November 2022. The Taskforce welcomes additional feedback from market participants and other stakeholders on the draft guidance on engaging affected stakeholders.

Regional and national Consultation Groups

To increase awareness, outreach and engagement on the TNFD framework in markets where there has been strong interest, market-led TNFD Consultation Groups have been activated at a national or regional level. Consultation Groups are championed by Taskforce members and convened by business or financial associations in local languages, highlighting local contexts. Participation in Consultation Groups is open to all institutional members of the TNFD Forum from that jurisdiction. There are 11 Consultation Groups, spanning four continents, as shown in Table 1.

Additional Consultation Groups are expected to be announced through 2023 and in future years to deepen engagement, capability building and uptake of TNFD recommendations.

• Learn more about TNFD Consultation Groups at: https://tnfd.global/consultation-and-engagement/consultation-groups/
• For more details on the TNFD’s engagement efforts, see the TNFD webpage on Consultation and Engagement.

Nature-related Data Catalyst

Building on the TNFD’s Nature-related 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 Data Catalyst aims to improve the ease, speed and scale of access to nature-related data and analytic tools to support adoption of the TNFD framework. The goal of the Data Catalyst is to explore how best to address shortcomings in the current landscape of nature-related data, while identifying and encouraging the development of – and access to – nature-related data, analytics and tools.

The Nature-related Data Catalyst now has over 135 participants, spanning financial data aggregators, non-profit convenors of data, nature-technology companies, academia, government offices, non-profit tool providers, data infrastructure providers and financial institutions. Since its launch in November 2022, the Nature-related Data Catalyst members have:

• Helped populate the TNFD Tool Catalogue, with over 100 tools currently listed;
• Increased understanding of the current capabilities and requirements of nature-related data across different sectors, through a series of workshops with data providers and data users;
• Explored real-life examples of nature-related data issues faced by TNFD framework end-users, to identify potential solutions and develop case studies;
• Begun to investigate proxies relevant to application of the TNFD framework, and data requirements, outputs and key limitations, to build understanding of how to use proxies appropriately; and
• Begun to develop a standardised qualitative approach to describing data and tool quality, aligned with data best practices and data standards already in use. These data quality descriptions could feed into a data-use decision tree that will assist TNFD users to select the right data for their purposes and understand key data limitations.

A study is being undertaken to scope the needs for – and a possible approach to develop – a global public data utility for nature-related data. The work is being done in collaboration with a range of partner organisations and will be published later in 2023. Market participants and a number of G20 governments have signalled strong interest in exploring global approaches to address data challenges that could inhibit the uptake of the TNFD recommendations. The work of the Nature-related Data Catalyst and the findings of the data public utility scoping study will help to inform the TNFD’s final recommendations published in September 2023.

The Taskforce is grateful to the many organisations who have given feedback and provided input to the ongoing development of the TNFD beta framework.

Acknowledgements

For key updates in v0.4, the Taskforce is particularly grateful for the support and input from:

• Accounting for nature
• Agence Française de Développement (AFD)
• Alliance of Bioversity & CIAT
• Arcadis
• Banque de France
• Breakwater Strategy
• Capitals Coalition
• Convention on Biological Diversity (CBD) Secretariat
• CDP
• Cambridge Institute for Sustainability Leadership (CISL)
• Center for Global Commons, University of Tokyo
• Ceres
• Convention on Biological Diversity (CBD) Secretariat
• Earth Commission
• European Financial Reporting Advisory Group (EFRAG)
• Farming for the Future
• Financial Sector Deepening Africa (FSD Africa)
• Finance for Biodiversity Pledge
• Flora and Fauna International (FFI)
• GIST Impact
• Global Canopy
• Global Reporting Initiative (GRI)
• Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) community of scientists
• International Council on Mining and Metals (ICMM)
• International Indigenous Forum on Biodiversity (IIFB)
• International Sustainability Standards Board (ISSB)
• IUCN
• Key Biodiversity Area Secretariat
• National University of Singapore
• OECD
• One Planet Business for Biodiversity (OP2B)
• Partnership for Biodiversity Accounting Financials (PBAF)
• PBL Netherlands Environmental Assessment Agency
• ProForest
• Science Based Targets Network (SBTN)
• ShareAction
• Shift Project
• Stockholm Environment Institute
• Stockholm Resilience Centre at Stockholm University, with partners Beijer Institute and Global Economic Dynamics and the Biosphere (GEDB) Academy Program of the Royal Swedish Academy of Sciences
• Sustainable Food Trust
• Systemiq
• The Biodiversity Consultancy
• The Nature Conservancy
• UN Statistics Division
• UNEP World Conservation Monitoring Centre
• University of Leeds
• University of Oxford
• University of York
• UNEP FI
• UN PRI
• Vivid Economics | McKinsey & Company
• Wildlife Conservation Society World Business Council in Sustainable Development (WBCSD)
• WRAP
• WWF

Updates in v0.4 of the beta framework

This release marks the fourth and final TNFD beta framework publication (v0.4). For the first time, market participants can view a full representation of the framework, including examples of additional guidance by sector and biome. The Taskforce encourages and welcomes feedback by 1 June 2023 ahead of publication of its full set of recommendations in September 2023. 

The core components and overall structure of the framework remain unchanged and consistent with v0.3. The Taskforce has developed and updated a range of guidance to help users interpret and apply the LEAP approach and to ensure the TNFD framework can be applied. The new and updated guidance documents included in the v0.4 release are shown in Figure 2.  

The changes in v0.4 are based on ongoing research and development by the Taskforce through Working Groups and feedback from a range of market participants, knowledge partners and other stakeholders. An overview of these updates in v0.4 are provided in subsequent sections of this report. 

Figure 2: Updates to the TNFD beta framework in v0.4

ExpandFigure 2: Updates to the TNFD beta framework in v0.4

With demand for an integrated nature-related risk management and disclosure framework growing, the TNFD seeks to provide recommendations and guidance of relevance to a wide range of market participants:

1. Investors and financial institutions: Support more informed and robust capital allocation decisions and active ownership strategies based on clarity, confidence and trust in data relating to nature-related risks.
2. Analysts: Enable high-quality and timely analysis that incorporates nature-related risks to support the determination of potential and likely impacts on future cash flow and company valuations.
3. Corporates: Inform better corporate strategy, governance and risk management decision making, and the incorporation of nature-related risk assessments alongside, and ideally integrated with, climate-related risk reporting in statutory reporting to markets and regulators.
4. Regulators: Ensure recommendations and guidance align with existing disclosure mechanisms, standards and other jurisdiction-specific regulatory requirements.
5. Stock exchanges: Support and encourage consideration of new voluntary and mandatory listing requirements linked to nature-related risks, as well as opportunities for new listed equity offerings that encourage nature-positive outcomes.
6. Accounting firms: Enable comprehensive company assurance that incorporates nature risk and opportunity considerations, and support internal risk functions.
7. Environmental, Social and Governance (ESG) data providers, credit rating agencies and financial service providers: Enable support to investors and financial decisionmakers with consistent and robust data and insights on how corporates manage their nature-related risks.

As we have seen in the growth of climate-related reporting, demand for disclosure from investors and others is now strong and widespread. For many investors, company disclosures on climate are considered essential to their full disclosure of material risks.

Large asset owners and asset managers also play a catalytic role, as they influence the organisations they invest in to provide nature-related financial disclosures and strengthen their management of nature-related risks and opportunities. This also applies to lenders, including development financiers. Corporates have been found to be 2.3 times more likely to disclose across climate, forests and water themes when financial institutions request them to do so.^[3]

In addition, governments and regulators are considering nature-related risk management and disclosure, expanding the work they have already undertaken on climate-related risks. Eight jurisdictions, including the United Kingdom, Japan, Singapore and the European Union, have now mandated the incorporation of TCFD recommendations into their national reporting regimes.^[4] The more than 100-strong network of global central banks and supervisors, the Network for Greening the Financial System (NGFS), is now exploring the impacts of nature and biodiversity loss on systemic risks to financial system stability. Many national governments, central banks, regulators and public sector organisations formally support the TNFD as members of the TNFD Forum, a global and multi-disciplinary consultative network of over 700 institutional supporters who share the vision and mission of the TNFD.^[5]

‘We look forward to the establishment of the Taskforce on Nature-related Financial Disclosures and its recommendations.’ G7 Finance Ministers

‘The TNFD will play a shaping role in providing a reporting framework that will allow for consistent and comparable reporting.’ Network for Greening the Financial System, Study Group on Biodiversity and Financial Stability

‘A move to ultimately mandatory standards [for nature-related risks] is appropriate. The Taskforce on Nature-related Financial Disclosures, which is a voluntary process, could ideally provide some basis for this.’ Mark Carney, UN Special Envoy for Climate Action and Finance

The TNFD framework is being developed following the TNFD principles:^[6]

• Market usability: Directly usable and valuable to market participants, notably corporates and financial institutions, as well as policy and other actors.
• Science-based: Follow a scientifically anchored approach, incorporate well established and emerging scientific evidence, and converge towards other existing science-based initiatives.
• Embrace nature-related risks: Embrace nature-related risks that include immediate and material financial risks, as well as nature dependencies and impacts and their related organisational and societal risks.
• Purpose driven: Actively reducing risks and increasing nature-positive action by using the minimum required level of granularity to ensure achievement of the TNFD goal.
• Integrated and adaptive: Can be integrated into and enhance existing disclosures and other standards. Account for and be adaptive to changes in national and international policy commitments, standards and market conditions.
• Climate-nature nexus: Employ an integrated approach to climate- and nature-related risks, scaling up finance for nature-based solutions.
• Globally inclusive: Ensure the framework and approach is relevant and accessible worldwide, across emerging and developed markets.

Figure: The TNFD Principles

ExpandFigure: The TNFD Principles