In September 2023, the final recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) were released. Below is a quick guide for all organisations on why they should be paying attention to the TNFD and developments in the nature-based reporting landscape.
The TNFD is a reporting framework, following the TCFD for climate (Taskforce on Climate-related Financial Disclosures), which enables companies to disclose the nature-related issues impacting their business and how the organisation is set up to manage these into the future. The TNFD also provides the LEAP methodology to guide organisations on how to identify, assess and disclose the nature-related dependencies, impacts, risks and opportunities relevant to them. But why does all this matter?
4 Reasons You Should Care About the TNFD
Long-Term Resilience All organisations are dependent on nature to some extent - especially in high impact-sectors such as agro-forestry, energy, extractives and the built environment. PwC research shows that over half of global GDP is either highly or moderately reliant upon nature. With nature degrading at the fastest rate in human history and as ecosystem services begin to break down, this represents material risks for all organisations - physical, transitional and systemic. Just as with climate, for their long-term sustainability, it is essential that organisations become aware of these nature risks so that they can manage them effectively.
Access to Capital The TNFD has been created in response to investor demand for greater information on relative exposure to nature-risk, so that investors can allocate finance more efficiently. Nature is now a material issue to an organisation's stakeholders. With effective use of the TNFD framework (and accompanying LEAP methodology) to demonstrate a robust understanding and management of their nature-related dependencies, impacts, risks and opportunities, organisations can respond to investor demand and boost their access to capital at lower cost.
Regulatory Momentum As well as financial drivers, regulatory momentum is also strong in this direction. In the UK, TCFD reporting is becoming mandatory for a wide range of organisations from 2025. The TNFD builds upon the TCFD and given their close alignment, mandatory reporting could soon follow suit. Additionally, as of February 2024, the UK government’s Biodiversity Net Gain (BNG) initiative is now live for new developments in the UK. Such shifts are sure to represent only the beginning, with regulatory pressure and public procurement rules likely to grow across all jurisdictions in the coming years. Now is as good a time as any to get started.
Reputational Benefits and Win-Win-Wins It’s not all about risk, nature-reporting can provide significant opportunities. Evolving customer and societal demands provide an incentive for proactive action and reporting on nature. Through good news stories and demonstrated actions, significant reputational benefits can be gained from customers and societies who are paying more attention than ever to ESG performance. And since addressing the climate crisis and boosting biodiversity are mutually supporting goals, choosing the right interventions can represent a win for business, for nature and for the climate - contributing to Net Zero targets.
With a low cost to getting started, the business case for integrating nature can easily stack up. So why not get started and signal to investors, regulators and society as a whole the strength of your organisation and its resilience into the future.
We are proud to have carried out one of the very first North Sea operator TNFD pilot studies - take a look at our case study to learn more.
Ready to chat about how we can help you showcase your commitment to nature-related financial disclosures? Get in touch.
See also our quick guide to nature-based reporting & how to get started.
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