|Definitions & core concepts
|2.1 Clarity & consistency of definitions
||Need greater clarity, streamlining and consistency in definitions (specific points raised on physical risks, transition risks, impact, impact drivers, indirect impact, state of nature, criteria for high-risk ecosystems, opportunities, intrinsic value, preparers of information, nature, biodiversity, natural capital, materiality, nature-based solutions, and nature-positive).
||In the v0.1 beta release, the TNFD definitions drew on credible science sources (e.g. ‘nature’ from IPBES, ‘biodiversity’ from the CBD, ‘environmental assets’ from UN SEEA Ecosystem Accounting).
With thanks to respondents that identified a number of inconsistencies and lack of references in the v0.1 release, the v0.2 release of the TNFD framework on the online interactive platform is updated accordingly.
In the v0.2 release, a set of further definitions relating to the new additions have been included, which mostly relate to metrics and targets.
|The Taskforce will continue to refine and streamline the definitions as the TNFD framework evolves through subsequent beta releases.
The Taskforce will continue to work with knowledge partners to improve and revise the definitions, classifications and sources used in the TNFD framework in subsequent releases.
|2.2 Emphasis on biodiversity, the value of biodiversity and drivers of biodiversity loss
||Greater emphasis needed on the importance of biodiversity, the intrinsic value of nature and the drivers of biodiversity loss, drawing on the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES)
||Beta v0.1 of the TNFD framework:
- Provides definitions of the terms nature, biodiversity, nature loss and impact drivers, which are drawn from the definitions of the Convention on Biological Diversity and the IPBES. The TNFD framework considers the five main drivers of nature change: climate change, resource use, land and sea use change, pollution and invasive alien species, as identified by IPBES.
- Recognises that biodiversity is an essential characteristic of nature that enables ecosystem assets to be productive, resilient and able to adapt to change. Biodiversity operates at a genetic, species, habitat and ecosystem level and is critical to maintaining the quality, resilience and quantity of ecosystem assets and the provision of ecosystem services on which business and society rely.
- Recognises that wider society depends on ecosystems for their livelihoods and a variety of ecosystem services. It also recognises that, 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.
These approaches have not been changed in the v0.2 release. However, the v0.2 release considers the importance of biodiversity and the drivers of nature change in the draft approach to metrics and targets. This proposes categories of metrics for dependencies and impacts and includes state of nature metrics (including ecosystems, species and their diversity).
This reflects the recognition in the TNFD framework of the importance of maintaining the quality and quantity of the stock of environmental assets including ecosystem assets, the quality and reliability of ecosystem service flows, and biodiversity (as defined by the CBD, the variability among living organisms, including diversity within species, between species and of ecosystems).
|The TNFD acknowledges comments on the value, including intrinsic value, of biodivesrity. The Taskforce will be expanding its consideration of value as it develops the approach to measurement of nature-related dependencies, impacts, risks and opportunities.
|2.3 Focus on impacts on – and risks to – nature and society, acknowledging nature’s intrinsic value
||Require companies and financial institutions to report on impacts on, and adverse risks to, nature and human rights, not only if impacts create significant financial impact on business enterprise value.
||In the beta v0.1 framework, impacts on nature are included following the TNFD’s definitions of dependencies and impacts. One of the four general requirements outlined in the draft disclosure recommendations in the beta v0.1 framework is that ‘identification of material nature-related risks and opportunities should be based on an assessment of nature-related dependencies and impacts.’ The TNFD draft Disclosure Recommendations Strategy D includes considerations of business impacts on nature.
The beta v0.1 framework recognises that wider society depends on ecosystems for their livelihoods and a variety of ecosystem services. It also recognizes that, 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.
In beta v0.1, the TNFD also outlined its current approach to materiality in its priority areas for further development. This sets out that 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). In the beta v0.2 release, the TNFD has included guidance on – and a set of illustrative indicators and metrics for – assessing impacts on nature. The TNFD framework is being 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 Taskforce will continue to reflect and work on how impacts and risks to nature and society fit within the overall framework, including through ongoing consultation with conservation and scientific knowledge partners and dialogue with Indigenous peoples and local communities (IPLC) group representatives and civil society organisations over the course of the next 12 months.
The TNFD recognises the importance of this and the desire of many institutions providing feedback to make this more prominent.
|2.4 Consideration of opportunities
||Include the concept of ‘nature neutral’, recognising that steps are needed to shift from harmful to less harmful activities, and nature negative to nature neutral, before achieving ‘nature positive’.
Need to ensure framework does not reward basic actions that companies and financial institutions should be taking anyway as part of the expected baseline (e.g. Good International Industry Practices).
Organisations should be encouraged to look at opportunities in a wider context than risk mitigation for society and nature.
|In the beta v0.1 framework, opportunities are defined as ‘activities that create positive outcomes for organisations and nature by avoiding or reducing impact on nature, or contributing to its restoration’. This has not been changed in v0.2 of the framework.
||The Taskforce will continue to follow the progress among organisations defining nature positive to inform its work, including the Global Biodiversity Framework of the CBD.
The Taskforce appreciates the feedback on opportunities, and as it moves into developing sector-specific guidance, it will further strengthen its definition and guidance on opportunities and continue to evaluate how the mitigation hierarchy fits into the framework and the need for transformative business models.
|2.5 Inclusion of systemic risk
||Systemic risks are difficult to address directly for companies or financial institutions and are the responsibility of policy makers and regulators.
||There is no change to the approach to systemic risks in beta v0.2.
Companies and financial institutions are exposed to the systemic risk of ecosystem collapse. This risk of the collapse of ecosystems could present the greatest risk to companies and financial institutions.
|The Taskforce will continue to assess the best way to consider systemic risks in the TNFD framework.
The Taskforce will focus on scenarios in its next phase, as one important route for further building the TNFD’s thinking on systemic risks.
|Draft disclosure recommendations
|2.6 Inclusion of dependencies and impacts in draft disclosure recommendations
||Respondents queried whether the TNFD disclosure recommendations will require disclosure of dependencies and impacts, or only risks and opportunities.
||The draft disclosure recommendations in the v0.1 beta release were aligned with those of the TCFD as a starting point, including the TCFD’s focus on disclosure of risks and opportunities. Nevertheless, the general requirements introduced by the Taskforce in the v0.1 beta make clear that the assessment of risks and opportunities ‘should be based on assessment of nature-related dependencies and nature impacts’. This has not changed in the v0.2 release. However, the guidance and illustrative metrics outlined in the v0.2 release make clear that impact and dependency analysis is the critical starting point, aligned with the LEAP approach, for assessing nature-related risks and opportunities.
This is not changed in the v0.2 release. However, the new content on metrics in the v0.2 release sets out Assessment Metrics for dependencies and impacts. Assessment Metrics are distinguished from Disclosure Metrics.
|The Taskforce will consider this feedback and evaluate the inclusion of dependencies and impacts on nature in the disclosure recommendations, based on ongoing feedback from market participants, including pilot testing, for updates in subsequent releases.
Disclosure Metrics for dependencies, impacts, risks and opportunities will be designated into ‘core’ and ‘additional’ metrics and these will be set out in subsequent releases.
|2.7 Timeframes in the draft disclosure recommendations
||Lengthen the timeframe (five years) included in the disclosure recommendations for full assessment of all material nature-related risks and opportunities across value chains, given current data and analytical constraints.
||The Taskforce recognises that this timeframe set out in the TNFD disclosure recommendations is ambitious given current data availability. But the TNFD landscape assessment of data & analytics availability suggests that the data landscape is evolving rapidly and the TNFD aims to further stimulate innovation through the TNFD Data Catalyst (launching July 2022). The TNFD remains optimistic about new data and analytics solutions coming online in the next two to three years that could address a number of data gaps and analytical challenges. The Taskforce therefore has not changed the timeframe included in the v0.2 beta release.
||The Taskforce will continue to evaluate timeframes set out in the draft disclosure recommendations for subsequent releases, based on ongoing feedback, discussions with data providers and pilot testing.
|2.8 Adaptation of ‘scopes’ from climate reporting
||Adaptation of the concept of scopes (1, 2 & 3) from climate reporting needs to reflect a mature understanding of dependencies and impacts on nature, based on appropriate metrics, and reflect the importance of location.
||In the beta v0.1 framework, the TNFD used direct, upstream and downstream as a simplified construct. This aligns with the approach of the Science Based Targets Network (SBTN) and the draft European Sustainability Reporting Standards (ESRS) being developed by EFRAG. In v0.2, the Taskforce continues to propose this as a simplified and appropriate approach to ‘scopes’ in climate reporting.
||The TNFD will continue to evaluate the use of direct, upstream and downstream as a simplified construct for nature, equivalent to scopes in climate reporting, based on ongoing feedback and pilot testing. The Taskforce will be elaborating further on this adaptation of ‘scopes’ in the November 2022 v0.3 release.
|2.9 Criteria for defining high importance and low integrity ecosystems.
||Need for greater clarity on criteria and reference sources to evaluate high importance and low integrity ecosystems.
(Note – this is also relevant for Strategy D draft disclosure recommendation).
|The v0.2 beta release of the TNFD framework provides new guidance for the Locate phase of the LEAP approach, including signposting reference sources that can be used to evaluate the integrity and importance of ecosystems.
||The Taskforce is continuing to work with knowledge partners to refine the approach to defining the integrity and importance of ecosystems, with consensus and innovation on key reference sources.
There is a broader public policy and science challenge that there is no globally agreed approach to measuring ecosystem condition and extent. This goes beyond the mandate of the TNFD, but is a critical enabling condition for the TNFD framework. The TNFD is working with knowledge and other partners to explore how this can be tackled, so that it is not a constraint on the update and effectiveness of the TNFD framework and other related initiatives.
The TNFD will continue its work to address challenges users may experience in disclosing against disclosure recommendation Strategy D.
|2.10 Materiality assessment in the LEAP approach.
||The materiality approach in LEAP is not yet sufficiently clear and not at the right phase.
||In the v0.1 beta release, two materiality filters are built into the LEAP approach at component L3 to identify priority locations (see new Locate phase guidance in the v0.2 release), and component A4 to identify which risks are material and should be disclosed. The logic for this is to introduce a first prioritisation filter at the Locate phase to focus on ecosystems that present the greatest risks (both from a business and social perspective).
The draft disclosures include a requirement that ‘the TNFD expects organisations to disclose the full set of material risks and opportunities related to the dependencies and impacts of their operations and their upstream and downstream value chains’.
These have not been changed in the v0.2 release.
|The Taskforce welcomes the detailed feedback on the LEAP approach, including materiality assessment within it, and will continue to evaluate and revise the LEAP approach for subsequent releases.
|2.11 Inclusion of valuation in LEAP
||Embed valuation (as per the Natural Capital Protocol) as part of the Evaluation and Assessment phases of LEAP. Valuation is critical to understand the relative importance of nature to people and business, and assess risks and opportunities to business.
||The v0.2 release of the TNFD framework includes further guidance on impact and dependency analysis developed in collaboration with the Capitals Coalition, highlighting alignment between the LEAP approach and the Natural Capital Protocol. It includes Steps 05 and 06 of the Protocol (not Step 07 on valuation), but this may be included in subsequent releases.
||The Taskforce will consider the inclusion of valuation in future releases of the framework, as the Taskforce progresses its work on risk and opportunity metrics.
|2.12 LEAP approach in relation to disclosure recommendations
||Need to be clearer how the LEAP approach and disclosure recommendations relate to each other.
||As set out in the v0.1 release, LEAP is not, in itself, a disclosure recommendation or a mandated process to adhere to the disclosure recommendations put forward by the TNFD. As such, not everything that is identified, assessed and evaluated using the LEAP approach needs to be disclosed. LEAP is intended to serve as voluntary guidance to assist market participants with their internal analysis and discussions in order to make a number of corporate and investment decisions and apply the TNFD disclosure recommendations. Report preparers may want to note their use of the LEAP approach to increase confidence among report users about the methodology being used to prepare their disclosures. Critically, the TNFD believes that all aspects of the LEAP approach should be incorporated into any robust nature-related risk and opportunity assessment process.
The v0.2 beta release has not changed this approach.
|The Taskforce will set out how the LEAP approach relates to the evolving TNFD draft disclosure recommendations and explain the linkages in subsequent releases.