Approach to additional sector and biome guidance

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Additional guidance by sector and biome

The v0.4 beta release includes an initial set of additional guidance by sector and biome, as described in Table 4.

Additional Content

Table: Scope of additional guidance by sector and biome in the v0.4 release

Type of additional guidance	Scope of guidance	Included in v0.4	Sub-sectors/sub-biomes in scope
Sector	Specific and additional considerations for organisations to take into account when applying the LEAP approach, across all phases.	Financial institutions (an update to previous draft guidance)	Banks Insurance companies Asset managers Asset owners Development finance institutions
		Mining and metals	Metals and mining Iron and steel producers
		Agriculture and food	Agricultural products Meat, poultry and dairy Processed food Food retailers and distributors Restaurants
		Energy (two sub-sectors: oil and gas, and electric utilities and power generators)	Oil and gas Exploration and production Midstream Refining and marketing Services Electric utilities and power generation with the following value chain assets: Electricity generation Power source in the scope: Coal/fuel/gas Nuclear energy Wind energy (on-shore and off-shore) Solar energy (photovoltaic) Hydropower Transmission and distribution electric lines
Biome	Guidance for companies that produce, operate or source in these biomes to assess nature-related risks and opportunities using the LEAP approach. It provides further details for each biome to enrich the understanding and level of detail for users of the TNFD framework.	Tropical forests	Tropical subtropical lowland rainforests Tropical subtropical dry forests Tropical-subtropical montane rainforests Tropical heath forests
		Rivers and streams	Permanent upland streams Permanent lowland streams Freeze-thaw rivers and streams Seasonal upland streams Seasonal lowland rivers Episodic arid rivers Large lowland rivers
		Intensive land use systems	Short-rotation croplands Sown pastures and fields (including intensive livestock pastures) Plantations Derived semi-natural pastures and old fields Note – the sub-biome of urban and industrial ecosystems is not covered.
		Marine shelf	Seagrass meadows Kelp forests Photic coral reefs Shellfish beds and reefs Phot-limited marine animal forests Subtidal rocky reefs Subtidal sand beds Subtidal mud plains Upwelling zones Rhodolith/Maërl beds

This first set of draft sector and biome guidance has been developed through consultation with market participants in each sector and experts on each biome, including a number of organisational members of the TNFD Forum and TNFD knowledge partners.

The Taskforce welcomes further feedback on this draft additional guidance and will continue active consultation to improve and expand other sectors and biomes. This is already underway through the Taskforce for:

Aquaculture;
Chemicals and pharmaceuticals;
Forestry;
Infrastructure and real estate; and
Textiles and apparel.

Users can access the additional sector and biome guidance on the TNFD’s framework site using a new sector and biome dashboard filtering function. Users can now set sector and biome preferences to create a unique user dashboard that ensures each user sees cross-sector LEAP guidance, and any additional guidance for those sectors and biomes that are relevant to them.

Figure 10: The TNFD additional guidance dashboard functionality

The tailored dashboard format for this additional guidance is presented as a first prototype for testing by market participants, ahead of the final framework in v1.0. The Taskforce welcomes feedback from users on the utility of the additional guidance dashboard functionality, and suggestions for what is needed to ensure the guidance is practical, easily navigable and includes relevant, decision-useful information.

Towards sector guidance: TNFD sector classification & sector prioritisation

The TNFD draft disclosure recommendations are sector agnostic and apply both to financial institutions and corporates.

Since the launch of the Taskforce, the TNFD has received significant interest from market participants in the development of additional guidance, including by sector. The TNFD therefore aims to enhance the specificity of its recommendations moving forward and develop additional guidance that is relevant, customised and aligned to the needs of different market participants.

TNFD’s Proposed Approach to Sector Classification

The TNFD’s non-financial sector classification is based on the Sustainable Industry Classification System® (SICS®), developed by SASB to group companies based on shared sustainability risks and opportunities. This has been adopted by the ISSB for the global baseline they are developing for sustainability disclosure. The TNFD has adopted SICS® to align as closely as possible to this emerging global baseline under development by the ISSB.

The TNFD will organise financial sector guidance into the four major financial services industries identified and defined by the TCFD: banks, insurance companies, asset managers and asset owners. Development Finance Institutions have been added, given their important role in nature-related financing in emerging markets, including in many nature hotspots.

The specific guidance developed by the TNFD will be designed to be interoperable with different sector and industry classification schemes and a mapping to different classification schemes will be provided in future releases.

TNFD’s proposed priority sectors

Non-financial TNFD priority sectors

While the TNFD recognises that every non-financial sector has an impact on nature and is affected by nature-related risks and opportunities, the TNFD has developed an initial list of its priority sectors, identifying the sectors and industries that are more likely to be financially impacted than others due to their exposure to dependencies and impacts on nature. It also considers the sector’s potential opportunities – activities that create positive outcomes for organisations and nature by avoiding or reducing negative impact on nature or contributing to its restoration. This first list of priorities has been identified to ensure a manageable scope of work for the Taskforce in developing its first set of specific guidance. Further sectors, sub-sectors and industries may be added in subsequent releases.

To inform its prioritisation of sectors for developing sector specific guidance, the TNFD has conducted a review and consolidation of existing sector-specific research and assessments focused on nature-related dependencies, impacts, risks, and opportunities.[1] Based on this review and evaluation, and aligned with the SICS classification scheme, eight thematic sectors, 13 sub-sectors and 19 industries have been prioritised for the TNFD’s initial development of sector-specific guidance/recommendations moving forward:

Additional Content

Table: Non-financial TNFD priority sectors and industries for development of sector specific guidance

Thematic sectors	Sub-sectors	Industries	SASB definition
Food and Beverage	Food	Meat, Poultry and Dairy	The Meat, Poultry and Dairy industry produces raw and processed animal products, including meats, eggs and dairy products, for human and animal consumption. Key activities include animal raising, slaughtering, processing and packaging.
	Food	Agricultural Products	The Agricultural Products industry is engaged in processing, trading and distributing vegetables and fruits, and producing and milling agricultural commodities such as grains, sugar, consumable oils, maize, soybeans and animal feed.
	Food and Beverage Retail	Alcoholic Beverages	The Alcoholic Beverages industry includes companies that brew, distill, and manufacture various alcoholic beverages, including beer, wine and spirits. Companies in this industry transform agricultural products, including sugar, barley and corn, into finished alcoholic beverages.
		Non-Alcoholic Beverages	The Alcoholic Beverages industry includes companies that brew, distill, and manufacture various alcoholic beverages, including beer, wine and spirits. Companies in this industry transform agricultural products, including sugar, barley and corn, into finished alcoholic beverages.
		Processed Foods	The Processed Foods industry includes companies that process and package foods such as bread, frozen foods, snack foods, pet foods, and condiments for retail consumer consumption. Typically, these products are made ready to consume, are marketed for retail consumers, and can be found on food retailers’ shelves.
Renewable Resources and Alternative Energy	Forestry and Paper	Forestry Management	The Forestry Management industry consists of companies that own and/or manage natural and planted forestry lands and timber tracts, or operate non-retail tree nurseries and rubber plantations.
	Forestry and Paper	Pulp and Paper Products	The Pulp and Paper Products industry consists of companies that manufacture a range of wood pulp and paper products, including pulp fiber, paper packaging and sanitary paper, office paper, newsprint and paper for industrial applications.
	Alternative Energy	Biofuels	The Biofuels industry consists of companies that produce biofuels and process raw materials for production. Biofuels are manufactured using organic feedstocks and are used primarily as transportation fuels. Companies typically source feedstocks, which include food, oil crops and animal products, from agricultural product distributors. Ethanol and biodiesel are the most widely produced biofuels, while other types include biogas, biohydrogen and synthetic biofuels, produced from a variety of organic feedstocks.
Infrastructure	Infrastructure	Engineering and Construction Services	The Engineering and Construction Services industry provides engineering, construction, design, consulting, contracting and other related services that support various building and infrastructure projects. The industry is primarily made up of four major segments: engineering services, infrastructure construction, non-residential building construction and building sub-contractors and construction-related professional services.
Utilities	Utilities	Water Utilities and Distributors	Companies in the Water Utilities and Services industry own and operate water supply and wastewater treatment systems (generally structured as regulated utility businesses) or provide operational and other specialised water services to system owners (usually market-based operations). Water supply systems include the sourcing, treatment and distribution of water to residences, businesses and other entities such as governments. Wastewater systems collect and treat wastewater, including sewage, graywater, industrial waste fluids and stormwater runoff, before discharging the resulting effluent back into the environment.
Utilities		Electric Utilities and Power Generators	The Electric Utilities and Power Generators industry is made up of companies that generate electricity, build, own, and operate transmission and distribution (T&D) lines and sell electricity. Utilities generate electricity from a number of different sources, commonly including coal, natural gas, nuclear energy, hydropower, solar, wind and other renewable and fossil fuel energy sources.
Extractive and Minerals Processing	Construction Materials	Construction Materials	Construction materials companies have global operations and produce construction materials for sale to construction firms or wholesale distributors. These primarily include cement and aggregates, but also glass, plastic materials, insulation, bricks and roofing material. Materials producers operate their own quarries, mining crushed stone or sand and gravel. They may also purchase raw materials from the mining and petroleum industries.
	Metals and Mining	Metals and Mining	The Metals and Mining industry is involved in extracting metals and minerals, producing ores, quarrying stones, smelting and manufacturing metals, refining metals and providing mining support activities. It also produces iron ores, rare earth metals and precious metals and stones.
	Oil and Gas	Oil & Gas Exploration and Production	Oil and gas (E&P) companies explore for, extract or produce energy products such as crude oil and natural gas, which comprise the upstream operations of the oil and gas value chain. Companies in the industry develop conventional and unconventional oil and gas reserves, which include, but are not limited to, shale oil and/or gas reserves, oil sands and gas hydrates.
Health Care	Biotechnology and Pharmaceuticals	Biotechnology and Pharmaceuticals	The Biotechnology and Pharmaceuticals industry develops, manufactures and markets a range of brand-name and generic medications. A significant portion of the industry is driven by research and development, a high risk of product failure during clinical trials and the need to obtain regulatory approval. Concerns over pricing practices and consolidation within the sector have created downward pricing pressures. Demand for the industry’s products is largely driven by population demographics, rates of insurance coverage, disease profiles and economic conditions.
Resource Transformation	Chemicals	Chemicals	Companies in the Chemicals industry transform organic and inorganic feedstocks into more than 70,000 diverse products with a range of industrial, pharmaceutical, agricultural, housing, automotive and consumer applications. The industry is commonly segmented into basic (commodity) chemicals, agricultural chemicals and specialty chemicals.
Consumer Goods	Apparel and Textiles	Apparel, Accessories and Footwear	The Apparel, Accessories and Footwear industry includes companies involved in the design, manufacturing, wholesaling and retailing of various products, including men’s, women’s and children’s clothing, handbags, jewelry, watches and footwear.
Transportation	Marine Transportation	Cruise Lines	The Cruise Lines industry comprises companies that provide passenger transportation and leisure entertainment, including deep sea cruises and river cruises.
Transportation	Marine Transportation	Marine Transportation	The Marine Transportation industry consists of companies that provide deep-sea, coastal and/or river-way freight shipping services. It is of strategic importance to international trade and its revenues are tied to macroeconomic cycles. Key activities include transportation of containerised and bulk freight, including consumer goods and a wide range of commodities, and transportation of chemicals and petroleum products in tankers.

Financial industries prioritised by TNFD

The TNFD will organise financial sector guidance into the four major financial services industries identified and defined by the TCFD, with the addition of Development Finance Institutions, given their important role in nature-related financing in emerging markets, including in many nature hotspots.

Additional Content

Table: TNFD priority financial industries for development of specific guidance

	Industry	Financial service provided / Description
1	Banks	Lending
2	Insurance companies	Underwriting
3	Asset managers	Asset management
4	Asset owners	Investing Public and private-sector pension plans, endowments and foundations
5	Development finance institutions	Lending, grants, hybrid financing, pay-for-success models and catalytic funding.

The TNFD’s sector equivalency tool will allow these industries to be mapped to equivalent national/regional classification systems (e.g. NACE, Taxonomies) or other commonly used classification systems (e.g., GICS as used in ENCORE, ICS).

Footnotes

Research and assessments examined included:
1. UN Environment Programme. Prioritising nature-related disclosures. Considerations for high-risk sectors. UNEP-WCMC (2022);
2. Beyond ‘Business as Usual’: Biodiversity targets and finance. Managing biodiversity risks across business sectors, UN Environment Programme, UNEP Finance Initiative, Global Canopy and UNEP-WCMC (2020);
3. Measuring and Managing Environmental Exposure: A Business Sector Analysis of Natural Capital Risk, Allianz Global Corporate & Specialty (2018);
4. The Climate-Nature Nexus: An investor guide to expanding from climate- to nature-data, UNEP-WCMC and Finance for Biodiversity Initiative (2021);
5. Nature Risk Rising, World Economic Forum and PwC (2020);
6. Technical Report Taxonomy: Final report on the Technical Expert Group on Sustainable Finance, European Union Technical Expert Group on Sustainable Finance (2020). The TNFD Taskforce also developed a methodology to align sector classification across the research sources analysed, normalise rankings and scoring, and provide recommendations on sectors to be prioritised.
The TNFD will leverage existing research and tools developed by TNFD knowledge partners (e.g. WCMC – Encore, SBTN – Sector materiality tool, SASB Materiality Finder, GRI Sector Standards).