TNFD’s definitions of nature

Nature's four realms

The working definition of nature in the TNFD framework is outlined below. People and societies interact with nature and are not separate from it.

Definition

Nature

The natural world, with an emphasis on the diversity of living organisms (including people) and their interactions among themselves and with their environment.

Díaz, S et al (2015) The IPBES Conceptual Framework – connecting nature and people

Nature can be understood through a construct of four realms – Land, Ocean, Freshwater and Atmosphere. These are major components of the natural world that differ fundamentally in their organisation and function. Atmosphere is included in the framework 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.

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Society interacts with and across all four realms and therefore sits at the centre. People, including corporates and financial institutions, both depend on, and have impacts on, nature. As such, society both contributes to – and is affected by – the main drivers of nature change.

The four realms provide an entry point for understanding how organisations and people depend on, and have impacts on, the natural capital that provides the resources and services from which business and societies benefit.

The TNFD considers five main drivers of nature change: climate change; resource exploitation; land and sea use change; pollution; and invasive alien species.[1]

Definition

Natural Capital

The stock of renewable and non-renewable natural resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people.

Capitals Coalition (2016) Natural Capital Protocol

Environmental assets

Just as in the financial world, where assets exist that give rise to flows of revenue, nature can be conceived of consisting of stocks of environmental assets that give rise to associated flows of benefits to people and the economy. Examples of environmental assets include forests, wetlands, coral reefs and agricultural areas.

Definition

Environmental Assets

The naturally occurring living and non-living components of the Earth, together constituting the biophysical environment, which may provide benefits to humanity.

UN (2021) System of Environmental-Economic Accounting - Ecosystem Accounting

The TNFD aligns with the UN System of Environmental-Economic Accounting Ecosystem Accounting (UN SEEA EA) in its list of environmental assets upon which corporates and financial institutions depend for their business operations and enterprise value, and which they may impact. A list of environmental assets is provided in component E1 of the LEAP approach.

Definition

Ecosystem Assets

A form of environmental assets that relate to diverse ecosystems. These are contiguous spaces of a specific ecosystem type characterised by a distinct set of biotic and abiotic components and their interactions.

UN (2021) System of Environmental-Economic Accounting - Ecosystem Accounting

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The concept of nature as a set of capital assets – producing flows of benefits and having direct links to a healthy global economy – acknowledges that any adverse changes in natural capital have a potentially negative effect on the ecosystem services upon which businesses and economic activity rely.

Natural capital underpins our economy and society as a stock of assets providing humanity with a flow of services. Ecosystem services provide benefits (the goods and services that are ultimately used and enjoyed by people and society) to business.

The TNFD defines ecosystem services as falling into one or several of these categories:

  1. Provisioning services represent the contributions to benefits that are extracted or harvested from ecosystems (e.g. timber and fuel wood in a forest, freshwater from a river).
  2. Regulating and maintenance services result from the ability of ecosystems to regulate biological processes and to influence climate, hydrological and biochemical cycles, and thereby maintain environmental conditions beneficial to individuals and society. Provisioning services are dependent on these regulating and maintenance services (e.g. the provision of freshwater depends on the ability of forests to absorb carbon and regulate climate change).
  3. Cultural services are the experiential and intangible services related to the perceived or actual qualities of ecosystems whose existence and functioning contributes to a range of cultural benefits (e.g. the recreational value of a forest or a coral reef for tourism).
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For the purposes of private sector risk management and disclosure, ecosystem services provide a basis for understanding corporate dependence on natural capital. The TNFD aligns with the list of 25 ecosystem services set out by the UN SEEA Ecosystem Accounts. A full list of environmental services is provided in component E1 of the LEAP approach.

Biodiversity

The TNFD’s working definition of biodiversity comes from the United Nations Convention on Biodiversity (CBD).

Definition

Biodiversity

The variability among living organisms from all sources, including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems.

Convention on Biological Diversity (1992) Article 2

In short, 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. Biodiversity is also sometimes used as a term to refer to the living components of natural capital, such as species and habitats.

TNFD’s building blocks for understanding nature

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Example

The relationship between natural capital, biodiversity and ecosystem services

Environmental assets (water, species such as the honeybee or birds within terrestrial ecosystems, and atmosphere) combine to enable the flow of ecosystem services (pest control, pollination services and soil quality) which in turn deliver value through increased quality and quantity of crop yields. The environmental assets are underpinned by biodiversity; for example, biodiversity increases the resilience of species providing pollination services. The diversity of wild pollinator species and their habitats can act as an insurance policy against future changes in the environment – if one pollinator struggles to cope with a disease outbreak or rising temperature, a diverse community of other species could take over and prevent a collapse in crop pollination.

A water utility or beverage company depends on the ecosystem service of clean water provision, which derives from the environmental asset of water resources and healthy terrestrial and aquatic ecosystems. The degradation of peatlands leads to water sedimentation and deterioration of water quality. Restoration of habitats and preservation of biodiversity could reduce water quality deterioration, reducing the operational costs of water treatment.

Definition

Biome

Global-scale zones, generally defined by the type of plant life that they support in response to average rainfall and temperature patterns e.g. tundra, coral reefs or savannas.

IPBES (2019) Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services

Overview of TNFD’s fundamental concepts for understanding nature

An overview of the TNFD’s core concepts related to nature are provided in the figure attached, including realms, biomes, environmental assets and ecosystem services.

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