Overview

In addition to further refining the content included in this second beta version, a number of further science-based and framework design topics remain under consideration by the Taskforce. As such, the TNFD will release further material on the following topics in subsequent releases.

Climate-nature nexus

Climate change and nature loss are mutually reinforcing. Climate change is one of five direct drivers of nature loss. At the same time, extensive nature loss reduces the ability of ecosystems to store carbon and releases carbon emissions, which amplifies the effects of climate change. Climate- and nature-related physical risks, transition risks and opportunities are therefore closely connected[1] . Natural ecosystems mitigate – and help to adapt to the unavoidable – effects of climate change, such as increased temperatures, droughts or floods.

The combination of nature loss and climate change can significantly increase physical risks to corporates and financial institutions. For example, in the agriculture sector, crop yields can be affected by lower rainfall and higher temperatures, but also declining natural pest control, soil degradation and loss of pollinators. These risks can be compounding – for example, climate change can create conditions in which pests flourish. The growing scientific evidence around tipping points highlights that compounding climate-nature impacts increase the risk to business owners and investors of stranded assets.

Transition risks are also connected, as commitments are made to achieve both net zero greenhouse gas emissions and nature-positive outcomes, in line with the Convention on Biological Diversity (CBD) post-2020 Global Biodiversity Framework. Climate change mitigation and adaptation and nature conservation and restoration are mutually reinforcing. There is increasing awareness that climate change mitigation and adaptation solutions – such as monoculture afforestation, bioenergy crop planting and large built infrastructure such as dams or solar and wind energy installations – can lead to nature loss. In addition, concerns have been raised about the design, additionality and co-benefits of some poorly managed carbon offsets, while others – including some nature-based carbon offsets – have been shown to deliver well-managed, reliable offset solutions. Nature-based carbon offsets also offer considerable co-benefits for nature, livelihoods and wellbeing.

Nature- and climate-related opportunities are also interconnected: actions that mitigate climate change can contribute to nature restoration, and actions that conserve and restore nature can contribute to climate change mitigation and adaptation. Investment opportunities for nature-based solutions include, for example, restoring peatlands as carbon sinks, regenerative farming, or restoring seagrasses for climate adaptation.

Approach in this version of the TNFD Framework (v0.2)

Recognising the climate-nature nexus, and wanting to build on progress made in climate-related risk management and disclosures, many corporates and financial institutions now want to take an integrated approach to managing and disclosing material climate- and nature-related risks and opportunities. One of the TNFD’s principles is to employ an integrated approach to climate- and nature-related risks. The fundamental definitions at the foundation of this first beta version of the TNFD framework have been developed to ensure links between climate and nature are recognised, and to enable an integrated approach:

  1. Atmosphere is included in the TNFD framework as one of four nature realms (along with Ocean, Freshwater and Land) to reflect the close association between climate- and nature-related risks and opportunities, while also acknowledging that links with climate mitigation and adaptation occur across all realms.
  2. Climate change is recognised as one of the direct drivers of nature change.[2]   Therefore, the TNFD includes greenhouse gas emissions as a nature-related impact driver.
  3. The TNFD’s approach to impact drivers recognises that some actions for climate mitigation and adaptation can be harmful to nature, including carbon offsets e.g. land use change to establish monoculture plantations as a carbon sink.
  4. Dependencies on ecosystem services relating to climate change are included in the TNFD framework, for example, global and local climate regulation and rainfall pattern regulation.
  5. Nature-based solutions and natural climate solutions are specifically identified by the TNFD as opportunities that address synergies to address nature loss, as well as climate mitigation and adaptation, while also considering societal impacts, with the potential to maximise co-benefits and avoid trade-offs.
  6. The TNFD’s approach to defining physical, transition and systemic risks can encompass feedback loops and reinforcing interactions between climate change and nature loss, to ensure financial risks and opportunities are accurately assessed.

In the draft disclosure recommendations in this beta version, the TNFD actively encourages integrated climate- and nature-related disclosures, rather than the development of dedicated nature-only reporting. To encourage an integrated approach to the climate-nature nexus, the TNFD’s proposed disclosure recommendations have been designed to align with, and be additive to, the TCFD’s disclosure recommendations (see section 4 for further details on how the recommendations align).

The proposed draft disclosure recommendations refer to the TCFD for specifics on disclosure of climate-related risks and opportunities. In line with this approach, the TNFD recommendations do not include specific language related to greenhouse gas emissions. However, atmospheric systems and processes, as well as greenhouse gas emissions and other emissions, are treated as part of nature in the context of the TNFD. The TNFD recognises that the TCFD reporting requires a much broader assessment of climate-related aspects than greenhouse gas emissions.

The TNFD recognises differences in the way in which nature-related risks and opportunities need to be assessed, but the similarity of the high-level draft disclosure recommendations of the TNFD with the high-level recommendations of the TCFD should enable users to adopt an integrated approach to risk management and disclosures from the outset.

 

Areas for further development in subsequent beta versions

The Taskforce will continue to work with knowledge partners and market participants to evaluate how best to fully incorporate the climate-nature nexus into the TNFD framework. The next phase of work for the Taskforce will involve investigating the approach to scenarios in collaboration with the TNFD’s knowledge partners. This will include exploring the potential for an integrated approach that reflects the effects of both climate change and nature loss, as well as any global targets for nature set out in the forthcoming Global Biodiversity Framework.

The Taskforce welcomes feedback on how to approach the climate-nature nexus in subsequent versions of the TNFD framework. In particular, TNFD welcomes feedback on how to approach this in the context of scenarios of practical relevance and application for market participants.

Scenarios and timeframes

As described by the TCFD, scenario analysis is a well-established method for developing strategic plans that are more flexible or robust to a range of plausible future states. Scenario analysis allows consideration of how an organisation might perform under different plausible future states (i.e. its resilience or robustness). As in the case of climate change, nature-related scenarios allow an organisation to explore and develop an understanding of how nature-related physical and transition risks and opportunities might plausibly affect it over time.

Forward-looking scenario analysis is necessary for nature-related risk assessment for the same reasons that it has proved useful for climate-related risks and been encouraged by the TCFD. Nature-related risks are also far reaching in breadth, scope and potential irreversibility. Risks are simultaneously uncertain and foreseeable, and the size and balance of future risks will be determined by actions taken in the short to medium term.[3]   Given that ecosystem processes are non-linear,[4]   generating the risk of ecosystem tipping points,[5]   assessment of nature-related risks must be undertaken in the face of deep or radical uncertainty. No single model or scenario can provide the full picture of potential risks. Longer time horizons increase the extent to which impacts affect dependencies and become risks.

There are currently no standard scenarios designed to address the resilience of corporates and financial institutions (or the wider financial system) to nature-related physical and/or transition risks. Scenarios suitable for use by central bankers and financial supervisors may now be addressed by the Network for Greening the Financial System (NGFS), which has recognised the importance of scenario analysis in its next phase of work on biodiversity risks and financial stability.[6]   IPBES has undertaken work on nature-related scenarios, which can also provide a useful starting point.[7]

Approach in this version of the TNFD Framework (v0.2)

As with the TCFD approach to climate, given the importance of forward-looking assessments of nature-related risks, this first beta version of the TNFD framework explicitly recognises that scenario analysis is an essential tool for an organisation to use when assessing physical and transition risks. This is based on an understanding of the importance of scenarios for identifying material risks and opportunities over short-, medium- and long-term time frames, due to the complexity, uncertainty and importance of long-time horizons when dealing with nature.

The definitions in the beta version of the TNFD framework, and its conceptual approach to nature-related risks, opportunities and financial risks, reflect that several hazards and potential shocks are uncertain, as are the transmission channels through which organisations experience associated financial risks and opportunities. The physical and transition risks of nature loss can be acute or chronic. Ecosystems can collapse suddenly, and policies can lead to a rapid repricing of assets. In contrast, ecosystem tipping points can also materialise gradually, and policies can be implemented incrementally. Nature impacts can affect ecosystem services that organisations depend on and/or create transition risks over time.

The draft disclosure recommendations included in this beta version of the TNFD framework specify that risks should be assessed taking into consideration different scenarios of nature loss. In this beta release, the TNFD also recommends organisations disclose how they define short-, medium- and long-term time frames, and how those timeframes align with the organisation’s strategic planning horizons and capital allocation plans. As guidance, the TNFD recommends use of the following time frames: short-term – less than 2 years; medium-term – 2-5 years; and long-term – more than 5 years. If a preparer is using definitions of short-, medium- and long-term that differ from the time frames recommended by TNFD, they should explain and justify their choice based on the time horizon over which nature-related risks or opportunities could reasonably be expected to have a financial effect on the organisation.

 

Further development in subsequent beta versions

  • Scenarios will be considered and explored in future work by the Taskforce, and guidance on scenarios will be included in subsequent releases of the framework. The Taskforce will establish a Working Group dedicated to working on scenarios, exploring how they can and should be used to identify potential physical and transition risks and opportunities over short-, medium- and long-term time frames.

The Taskforce intends to collaborate with a select group of knowledge partners to develop guidance on the development of scenarios relevant to nature-related risks. The work will consider questions such as:

  • The case for, and benefits of, scenario development and analysis;
  • Which scenarios to use or develop in order to assess nature-related risks and opportunities, and the resilience of strategies;
  • How organisations can develop and apply scenario analysis as part of the TNFD framework;
  • How to address practical application challenges with scenario analysis, including important analytical choices, as well as relevant tools and data sources to be used.

The Taskforce welcomes feedback on how to approach scenarios and scenario guidance in subsequent versions of the TNFD framework, and in particular how to reflect connections between climate and nature. This will enable a better understanding of linkages and the resilience of organisations to both climate- and nature-related shocks.

The Taskforce also welcomes feedback on its approach to timeframes, including the guidance on the definition of short-, medium- and long-term.

Scope of disclosures

A systematic approach to defining scope enables organisations to prioritise specific elements of an assessment of nature-related risks and opportunities, and clearly communicate to others which elements of scope they are including in their assessment.

A clear indication of selected scope helps to convey to users:

  • what the organisation views as potentially material and is disclosed,
  • potentially material and is not yet disclosed, and
  • not material.

This allows users to understand whether risks and opportunities not in the disclosure are excluded to make the initial scope practical, or because they are not considered material.

The TCFD requires organisations to define if they are reporting against Scope 1, 2 and 3 as defined by the GHG Protocol. An equivalent of these scopes could be defined for nature, but does not yet exist. An adaptation of the scope concept for nature could capture additional dimensions beyond value chain coverage, such as sector or business unit, geography, asset class and types of nature-related dependencies and nature impacts:

  • Value chain coverage: Direct operations (equivalent of Scope 1 for greenhouses gas emissions), or full value chain including upstream and downstream, including consumption and end of life (equivalent of Scope 3 for greenhouse gas emissions). For a corporate, this refers to their own value chain. For a financial institution, this refers to the value chain of the corporates to which they provide finance, including, where relevant and identifiable, their value chain impacts.
  • Sector/business units: For a corporate, different economic industries in which the reporting organisation operates. For a financial institution, different economic industries to which the reporting organisation provides finance.
  • Geography: For a corporate, countries or subnational jurisdictions in which the reporting organisation operates. For a financial institution, countries or subnational jurisdictions where the organisations to which the reporting organisation provides finance are listed.
  • Asset class (specific to financial institutions): Listed equity, private equity, corporate bonds, government bonds, corporate loans, other debt instruments, real estate, infrastructure, project finance and other asset classes.
  • Types of impacts, impact drivers and dependencies: Which dimensions of interactions with nature the reporting entities are choosing to disclose (see section 3)). This is a new aspect of scope, specific to the context of nature. Dependencies and impacts, including cumulative impacts, on nature occur not only directly from a corporate or financial institution’s own operations, but also in upstream and downstream activities across value chains. For financial institutions, this would include lending (on- and off-balance sheet), investment (direct and through investment vehicles) and/or insurance, as well as business activities, such as client investments and advisory.

Approach in this version of the TNFD framework (v0.2)

The proposed approach in this beta version of the TNFD framework is that corporates disclose on all material risks and opportunities related to the dependencies and impacts of their operations and across their value chain. This includes a consideration of the upstream (supply) and downstream (consumer) value chains, as described above. For financial institutions, this would include lending, investment and/or insurance, as well as fee-based business activities. The TNFD recognises that there is a difference in perspective and degree of control between a corporate that is managing its value chain, and an investor that needs to understand the value chains of all the corporates in their portfolio.

However, in all cases, disclosures should be guided by the concept of materiality. The TNFD recommends that organisations follow an enterprise value approach aligned with the developing standards of the ISSB, which will set a global baseline. The TNFD notes that consideration of medium- to long-term timeframes through scenarios is important, as impacts and dependencies over these time frames may lead to additional risks and opportunities that are material for enterprise value.

The TNFD understands that nature-related disclosures will be new to many organisations. Organisations may need to start with a narrow scope and expand the depth and breadth of their assessments. They may wish to prioritise their disclosures and focus on specific activities or business lines where such information is particularly material, focusing on priority locations and aspects of their value chain, as well as specific impact drivers, impacts and dependencies. Financial institutions may wish to focus on certain asset classes, sectors, locations or portions of their financing and advisory activities.

In the first beta version of the TNFD framework, the draft disclosure recommendations specify that users should be clear what was considered in scope for the disclosure and what has not been considered for the scope of the disclosure. The TNFD recommends that a statement should be provided of what further disclosures and additional scope areas are planned in the future. This should allow users to form a view on whether there are any gaps in an organisation’s current disclosures of material nature-related risks and opportunities. The coverage should expand over time, so that after no more than five years, organisations are considering their full set of material dependencies and impacts across their upstream and downstream operations when making disclosures. This proposed timeline aligns with TCFD’s concept of a five-year pathway to full disclosure.

Further development in subsequent beta versions

The TNFD will continue to explore its approach to scoping in relation to its disclosure recommendations and the LEAP approach for nature-related risk and opportunity assessment and welcomes feedback.

Approach to materiality

A fundamental issue in any risk management and disclosure framework or standard is the approach to materiality. The terms ‘single materiality’, ‘double materiality’ and ‘dynamic materiality’ are used to distinguish different approaches. Double materiality is associated with the suggestion that organisations should disclose not only how nature may impact the organisation’s immediate financial performance (so-called ‘outside-in’) but also how the organisation impacts nature (‘inside out’). The concept of ‘dynamic materiality’ emphasises that there is a path for issues (including impacts) to become material over time.

The terms singular, double and dynamic materiality are often put in juxtaposition and contrasted as mutually exclusive approaches. In practice, there is a clear move towards convergence in the market. The new ISSB is focused on its ambition to introduce a global baseline of standards for sustainability-related disclosures. It recognises enterprise value as a key concept that is ‘interdependent with value creation for society and the environment’.[8]

The ISSB Sustainability Prototype includes impacts, and it has been stated that the ISSB will develop IFRS Sustainability Disclosure Standards, including disclosure requirements that ‘address companies’ impacts on sustainability matters relevant to assessing enterprise value and making investment decisions’.[9] Clause 12 of their prototype specifies that ‘material information could include but is not limited to information about a) an entity’s impacts on society and the environment, if those impacts could reasonably be expected to affect the entity’s future cash flows.’[10]

Individual jurisdictions are creating their own requirements, which may be more ambitious than the emerging global baseline being introduced by ISSB, with materiality approaches being developed.[11]

Approach in this version of the TNFD framework (v0.2)

In line with the gradual convergence in the perspective on materiality in the market, the TNFD framework recognises that consideration of both nature-related dependencies and impacts is required for a comprehensive assessment of risks and opportunities, and that impacts on nature become relevant to enterprise value when assessed over a future time horizon (e.g. through scenario analysis). The TNFD framework has thereby been developed 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 TNFD framework recognises that organisations need to make disclosures in accordance with their national disclosure requirements. If certain elements of the recommendations are incompatible with national disclosure requirements for financial filings, organisations are encouraged to disclose those elements through other reports. As is recommended by the TCFD, the TNFD recommends that material nature-related information is provided in mainstream (i.e. public) annual financial filings.

Further development in subsequent beta versions

The Taskforce will continue to consider its approach to materiality and welcomes feedback from market participants.

Social dimensions

Wider society depends on ecosystems for their livelihoods and a variety of ecosystems. Like education and health, nature is more than an economic good: many people value its existence and recognise its intrinsic value, irrespective of any direct or indirect use by people. The term ‘nature’s contributions to people’ (the preferred term of IPBES) is a broader concept than ecosystem services that emphasises that culture is central to the links between people and nature, and the TNFD recognises the value of other knowledge systems, for example, those of local communities and Indigenous peoples.[12] These communities have customs, values and institutions that enable them to act as stewards of ecosystems. Some of these sites may be considered sacred.

Local communities and Indigenous peoples play a critical role in safeguarding nature, and protecting and restoring nature plays an essential role in safeguarding Indigenous peoples and local communities, as they depend on ecosystems for their livelihoods. Community-led protection and practices of Indigenous peoples and local communities have proved highly effective for the protection of ecosystems through their knowledge, practices and institutions. As evidence of this, biodiversity indicators show declines of 30% less and 30% more slowly in Indigenous lands than in lands not managed by Indigenous people.[13]

Values of connectivity, reciprocity and trust in relationships with all species have provided the basis for effective institutions for environmental management. The TNFD recognises that nature is more than an economic good: many value its existence and recognise its intrinsic value, irrespective of any direct or indirect use by people.

Approach in this version of the TNFD framework (v0.2)

The importance of broader society, Indigenous peoples and local communities is emphasised throughout the draft definitions in this version of the framework.

  • The draft definition of nature itself emphasises that people are part of nature, not separate from it.
  • The focus on ‘natural capital’ supporting the provision of ‘ecosystem services’ makes clear that many actors depend on ecosystem services to function, not only the organisation in focus.
  • Although the TNFD uses the term ecosystem services, as it is already well understood and used by the private sector, the Taskforce recognises that it will be important for users of the framework to understand the many aspects of nature’s contributions to people. The approach to ‘impacts’ in the framework clarifies that these affect many actors who depend on nature. Further, many actors can have impacts on nature and these can be cumulative.
  • The definition of transition risks makes it clear that corporates and financial institutions are affected by the perspectives and awareness of society on nature loss, who may take action to shape policies and regulations, challenge reputations and litigate.
  • Enterprise value is affected by transition and physical risks that evolve over time, and shaped by the experience, perspectives and rights of wider society, including local communities.

Understanding the dependencies and impacts of other actors on nature is critical to understanding nature-related risks and opportunities to a corporation or financial institution. Stakeholder engagement is therefore a critical, cross-cutting element of the LEAP approach for nature-related risk and opportunity assessment in the TNFD framework.

The TNFD is expanding its consultation efforts with a dedicated plan for engaging Indigenous Peoples and Local Communities, via a partnership with the IUCN, to start in July 2022. This aims to ensure the voices and perspectives of Indigenous Peoples and Local Communities are incorporated into the design and development phase of the framework. Indigenous and local communities are stewards of much of the world’s natural resources and play a particularly critical role in safeguarding nature. Their communities are also highly dependent on nature for their livelihoods and Indigenous-led enterprises are often pioneers in sustainable business models.

Further development in subsequent beta versions

The Taskforce is developing engagement channels to broaden and deepen its engagement with representatives of local and Indigenous communities.

A priority area for further development in the framework in subsequent releases is consideration of social dimensions, including consideration of human rights. This will be developed in close engagement with Indigenous Peoples and Local Communities through the TNFD engagement channel led by IUCN.

Defining nature-positive

The term nature-positive is the subject of ongoing discussions linked to the agreement of the Convention on Biological Diversity’s Post-2020 Global Biodiversity Framework, which will provide the global umbrella policy framework agreed by governments. This reflects calls from members of business, government and civil society for a global goal for nature that could sit in parallel to the goal of the UN Framework Convention on Climate Change to limit global warming to below 2°C, preferably to 1.5°C, compared to pre-industrial levels. The term nature-positive is also increasingly used in the context of corporates’ and financial institutions’ actions and impacts on nature.

The term nature-positive is not yet well defined or understood in a consistent manner. In the context of corporate risk, opportunity and disclosures relating to nature, clarity on what nature-positive means for corporates will be important. It raises questions such as: What is the baseline or reference point? How can nature-positive and nature-negative outcomes be measured? Can an organisation, product or project be described as nature-positive or only the outcomes to which they are contributing?

Approach in this version of the TNFD framework (v0.2)

The TNFD’s ultimate objective is to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. Nature-positive is defined in this version of the framework as a high-level goal and concept describing a future state of nature across all realms (including biodiversity, ecosystem services and natural capital) which is greater than the current state.

Further development in subsequent beta versions

To further define transition pathways to nature-positive, the TNFD will look to the CBD Global Biodiversity Framework, including specific targets agreed, which could form the basis of development of scenarios and targets for transition plans. The Taskforce will also look towards the development of goals and objectives for nature and biodiversity within national and local policies, which will set the level of ambition and context for targets set by corporates and financial institutions. The implications of these policy frameworks will be considered in subsequent beta versions of the TNFD framework, particularly in relation to metrics, targets and scenarios.

The Taskforce welcomes feedback on the approach to defining nature-positive and nature- positive outcomes in subsequent beta versions of the TNFD framework.

Data, metrics and targets

Data

High-quality data is essential to enable effective risk and opportunity management and disclosure. This is especially true for nature-related risks and opportunities. The TNFD’s research has indicated that a significant amount of nature-related data is already available, from public, NGO and commercial sources. However, gaps remain, and data quality and consistency vary considerably across different regions, biomes and ecosystems. Over time these gaps will be filled, and organisations are already using – and can start working on – what is available today.

Location is a key element to assessing nature-related risks and opportunities. Data on the location of an organisation’s assets and operations, both those directly controlled by it and those in its supply chain, are critical for applying the draft TNFD framework. Organisations will need to compile and manage data sets that map the location of their assets and activities (both direct and across their value chain) and the biomes and ecosystems these are located in, to understand their nature-related dependencies and nature impacts. Many corporates have already built data sets that map their assets and operations, while financial institutions are using models that can integrate aggregated data on locations. Other organisations have yet to begin or are just starting to work with location-specific data. A key challenge for all organisations is identifying and managing the spatial location of assets in their supply chain.

Data on the location of an organisation’s assets and operations, both those directly controlled by it and those in its supply chain, are critical for applying the draft TNFD framework.

Organisations should work to manage and disclose those nature-related risks and opportunities, based on nature-related dependencies and nature impacts, that are material to the context of their business activities.

The data and metrics required to assess an organisation’s dependencies and impacts vary greatly depending on factors such as the type of environmental asset, the location and sector. A challenge for organisations will be to interpret the data and metrics, and how to identify appropriate proxy data to assess metrics, indicators and targets when direct data, such as asset locations, are unavailable. Further, report users will require information to understand whether the metrics reported by preparers indicate that impacts are being effectively mitigated.

Metrics and targets

As yet, there is no architecture of globally agreed metrics and targets for nature protection and restoration at global or national levels. The forthcoming CBD Global Biodiversity Framework may fill this gap and provide recommended metrics and targets globally. Others, such as the Science-based Targets Network (SBTN), are developing approaches for businesses to set targets. Other frameworks, guidelines and tools provide metrics and indicators that can be used to assess, manage and disclosure nature-related risks and opportunities, and more are in development. The TNFD framework will take into consideration these targets and related metrics, as they are developed.

Key challenges on data, metrics and targets now include identifying a coherent and comprehensive set of essential metrics and indicators for nature-related risk and opportunity management and disclosure. A landscape assessment undertaken by the TNFD found that there are more than 3,000 different nature-related metrics in use already today. The lack of standardisation of nature-related metrics limits corporate and financial institution measurement, management and reporting of nature-related risks and opportunities.

Additional challenges include filling data gaps for the use of more direct measurement rather than proxies; achieving the granularity needed to assess and address location-specific dependencies and impacts on nature, and developing appropriate targets and tracking processes.

Approach in this version of the TNFD framework (v0.2)

Data

The TNFD’s discussion paper published alongside v0.1 of the beta framework and updated with a new case study for v0.2, sets out the findings of an initial landscape assessment of data sources. The paper includes a non-exhaustive nature-related data inventory, with indications of where these apply to the proposed LEAP risk and opportunity assessment approach and hypothetical case studies of this application. The case studies illustrate how organisations can use available data to manage and disclose their dependencies and impacts on environmental assets, as well as how report users rely on both information and metrics disclosed by businesses and proxies from models and data platforms to understand exposure and risk. The forests case study has been updated in the v0.2 release to align with the v0.2 approach to metrics.

Metrics and targets

The Taskforce has initially provided two draft recommended disclosures regarding nature-related metrics and targets, with considerations of these and possible additional disclosures ongoing.

In this beta v0.2 release, the TNFD:

  • outlines an integrated, overarching architecture for nature-related indicators, metrics and targets, including cross-industry metrics categories
  • provides proposed criteria for the selection of assessment indicators and illustrative sets of indicators and metrics for the assessment of nature-related dependencies and impacts to support pilot testing (see Annexes 1 and 2); and
  • sets out initial considerations for target-setting (see Annex 3).

TNFD also sets out initial considerations for target-setting.

Further development in subsequent beta versions

Data

Moving forward, the TNFD will engage the data community to encourage and facilitate development of data, analytics and tools to support the application of the emerging TNFD framework. The ‘Data Catalyst’ initiative aims to help accelerate the development of more standardised data, analytics and workflow tools for measuring, assessing and reporting on nature-related risks and opportunities, with the objective of addressing the gaps and challenges identified in the TNFD Data and Analytics Discussion Paper published in March 2022.

Metrics and targets

In future releases, the TNFD will expand and increase the specificity of guidance on indicators, metrics and targets.

Learning from the data catalyst, the Taskforce will continue its landscape assessment of existing metrics and targets to the TNFD framework and provide solutions to gaps identified. The TNFD anticipates this landscape assessment to continually evolve as nature-related reporting evolves. The landscape assessment of existing metrics and targets is a key piece of work for the Taskforce and will ensure the TNFD framework is usable for market participants in practice.

In subsequent beta releases, the Taskforce will continue to provide recommendations and guidance on nature-related metrics and targets for disclosures – including those that will apply to all organisations and those that are sector-specific – to help contextualise data availability for the TNFD framework for corporates and financial institutions.

Overall, the planned development of the TNFD approach to indicators, metrics and targets is as follows:

  • For release in November 2022 (v0.3) – initial guidance on measuring nature-related risks and opportunities, initial guidance on targets (recognising that the timing will not allow the outcomes of the CBD process to be reflected) and initial guidance on disclosure metrics. The release may also include guidance on how the approach to indicators, metrics and targets can be adopted and used by financial institutions.
  • For release in February 2023 (v0.4) – revised guidance on disclosure metrics, including proposed core and additional disclosure metrics. Revised guidance on target-setting based on work by SBTN and CBD, sector-specific guidance for prioritised sectors and case studies.
  • For release in September 2023 (v1.0) – final set of indicators and metrics, including assessment and disclosure metrics (both ‘core’ and ‘additional’), categorised by realm. Finalised target-setting guidance.

Specific guidance

Many market participants have been clear that nature-related risk and opportunity assessment is new and unfamiliar. The TNFD has received feedback from market participants that they need additional guidance, including sector-specific guidance, but also by realm, biome and nature-related issues.

Approach in this version of the TNFD framework (v0.2)

TNFD will approach the development of specific recommendations and guidance using the following structure:

  1. Sector specific: Guidance tailored to the economic sector in which organisations conduct business. (Sector classification and priority sectors set out in v0.2. In forthcoming v0.3 and v0.4 releases, the TNFD will develop additional guidance).
  2. Nature-related issue specific: Guidance tailored to specific nature-related issues – dependencies, impacts, risks and opportunities – that are relevant for a particular organisation and across sectors. (Not yet developed for v0.2 – to be added in future releases).
  3. Realm specific: Guidance linked to the nature realms defined by the TNFD (ocean, freshwater, land and atmosphere), and possibly also by biome. (Not yet developed for v0.2 – to be added in future releases).

Further development in subsequent beta versions

TNFD specific guidance navigable by priority sector, nature-related issue (dependencies, impacts, risks, opportunities) and realm/biome will be provided in subsequent releases. This guidance will include further detail on metrics relevant to specific sectors, impact drivers, dependencies and realms/biomes, as well as illustrative examples.

The Taskforce intends to provide illustrative examples of disclosures in the v0.4 release and final framework.The Taskforce has determined that this specific guidance (to be developed for subsequent releases) will build on the following further design considerations:

  • Provide further detail on sector-specific metrics and targets, building on the approach to metrics and targets in v0.2, which covers cross-industry metrics only;
  • Leverage the work advanced by knowledge partners and industry associations and align with relevant normative requirements (e.g. taxonomies, sector specificity in mandatory disclosure standards across jurisdictions); and
  • Provide valuable specific guidance for organisations at varying levels of maturity, as it relates to the management and disclosure of nature-related risks and opportunities.
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