The Taskforce on Nature-related Financial Disclosures (TNFD) has published its final recommendations (the Recommendations) and cross-sector guidance which are designed to provide organisations of all sizes with a risk management and disclosure framework to identify, assess, manage and, where appropriate, disclose nature-related issues.
The Recommendations are intended to be consistent with and work alongside the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the sustainability disclosure standards developed by the International Sustainability Standards Board, the impact materiality approach used by the Global Reporting Initiative and the European Sustainability Reporting Standards.
The Recommendations are based on the same four conceptual pillars as the TCFD recommendations, namely:
- Governance: the governance processes, controls
and procedures an organisation uses to monitor and manage
nature-related dependencies, impacts, risks and
opportunities.
- Strategy: the effects of nature-related
dependencies, impacts, risks and opportunities on an
organisation's business model, strategy and financial planning
where such information is material.
- Risk & Impact Management: the process used
by an organisation to identify, assess, prioritise and monitor
nature-related dependencies, impacts, risks and
opportunities.
- Metrics & Targets: the metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities.
The Recommendations set out 14 recommended disclosures that can be made under the above four pillars. They incorporate all 11 of the TCFD recommended disclosures to encourage and support integrated climate and nature reporting.
The TNFD intends to track voluntary market adoption of its Recommendations through an annual status update report beginning in 2024.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
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