ESG: TFND publishes second beta version of disclosure framework

As we reported at the time, in March 2022, the Task Force on Nature-related Financial Disclosures (TFND) published the first beta version of its disclosure framework. This marked the start of an 18 month period for consultation and development, which is due to end in September 2023.

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

The version released in March generated what the TFND describes as “an overwhelmingly positive response” - over 500 contributions were received from more than 130 market participants in 37 countries.

As promised at the time, on 28 June 2022, the TNFD released its second beta version.

What does Version 0.2 cover?

The newly published draft includes several enhancements and additional elements including:

• a draft architecture for metrics and targets along with an illustrative set of assessment metrics;
• further guidance on how to undertake dependency and impact evaluation as well as the identification of priority locations as part of the Locate Evaluate Assess Prepare (LEAP) approach;
• an overview of the Taskforce’s approach to the future development of additional guidance for market participants, including sector classification aligned with the approach taken by the International Sustainability Standards Board (ISSB), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD);
• enhancements to the LEAP approach for financial institutions (LEAP-FI); and
• additional practical guidance for market participants interested in starting to pilot test the beta framework from 1 July 2022 to 1 June 2023.

Next steps?

Over the next 12 months, the TFND aims to learn from pilot testing and feedback in order to produce a manageable set of disclosure metrics for nature-related dependencies, impacts, risks, and opportunities ahead of publishing its final recommendations in September 2023.

Further sector guidance and guidance on the use of scenarios is being developed – drafts are expected to go out for consultation in November 2022 and February 2023.