ESG: TNFD consults on its first beta disclosure framework

On 15 March 2022, the Task Force on Nature-related Financial Disclosures (TNFD) published the first beta version of its disclosure framework (the Framework).

This prototype version marks the start of an 18-month consultation and development involving market participants, with the plan being to release final recommendations in September 2023.

What is the TNFD?

The TNFD is an international initiative that builds on a model developed by the Taskforce on Climate-Related Financial Disclosures (TCFD). Its aim is to provide a framework which enables organisations to address environmental risks and opportunities with the end result that capital is channelled into positive action.

Funding for the TNFD is provided by governments (including those of Australia, the Netherlands, Switzerland and the United Kingdom), the UN and a number of philanthropic foundations.

Its work is guided by seven principles: market usability, science-based, nature-related risks, purpose-driven, integrated & adaptive, climate-nature nexus and globally inclusive.

What is the Framework?

The Framework is intended to provide guidance for organisations to report and act on evolving nature-related risks, thereby supporting “a shift in global financial flows away from nature-negative outcomes and towards nature-positive outcomes”.

The first beta version of the Framework consists of:

• Foundational guidance, including key science-based concepts and definitions to help a wide range of market participants understand nature and nature-related risks and opportunities.
• Disclosure recommendations aligned with the approach and language of the climate-related guidance developed by the TCFD.
• Practical guidance on nature-related risk and opportunity analysis for companies and financial institutions to consider incorporating into their enterprise risk and portfolio management processes.

Recognising that climate change and nature loss are interlinked, the TNFD’s disclosure recommendations build on the TCFD’s work - they adopt the same four-pillars and align as far as possible with its high-level disclosure recommendations.

The aim is also for the beta Framework to align in time with the global baseline for sustainability standards which the International Sustainability Standards Board (ISSB) is currently developing.

Next steps?

The current consultation is open until June 2023.

In the interim, a further three iterations of the beta versions are planned:

• version v0.2 will be released in June 2022
• version v0.3 will be released in October 2022 and
• version v0.4 will be released in February 2023.

The release of the TNFD’s final recommendations is planned for September 2023.