The Taskforce on Nature-related Financial Disclosures (TNFD) has proposed a tiered approach to disclosure metrics, and adopted a ‘Scopes’ approach like that used for climate reporting in its fourth and final draft framework.
Released today, the final draft outlines a tiered approach of leading indicators, many drawn from existing standards, with the aim of making reports comparable across sectors but also providing flexibility.
This approach is also designed to allow organisations to signal their alignment to global policy goals, such as the Global Biodiversity Framework (GBF) announced at COP15.
“I was delighted to see more than 2,000 people join a recent TNFD webinar on how the emerging TNFD framework will help business and finance deliver on target 15 and other GBF targets,” Elizabeth Mrema, TNFD co-chair and deputy executive director of UNEP said.
The three tiers of proposed disclosure metrics are:
- Core global disclosure metrics that are relevant broadly to organisations across sectors and are reflected in global policy priorities, including the GBF.
- Core sector disclosure metrics to enable capital providers to make comparable assessments of businesses within a sector.
- Additional disclosure metrics to enable report preparers to include metrics that might be particularly relevant to their business model and nature-related issues.
The Taskforce has also adapted the notion of ‘Scopes’ (Scope 1, 2 and 3 in climate reporting) to the nature context as ‘direct’ operations, ‘upstream’, ‘downstream’ and ‘financed’.
The TNFD started its work in October 2021 and released its third draft in November last year. This final draft puts in on track to publish its final recommendations in September 2023.
Feedback from market participants and other stakeholders has broadly endorsed the three core elements of the draft framework: the core concepts and definitions; the proposed risk and opportunity assessment approach; and the draft disclosure recommendations aligned with those of the Taskforce on Climate-related Financial Disclosures (TCFD).
“We are delighted by the level of active participation from the market, including pilot testers, throughout this design and development phase which will help to underpin strong market support when the final recommendations are published in September,” said David Craig, co-chair of the TNFD.
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Like the TCFD, the TNFD has also released draft guidance on its proposed approach to the use of scenarios for nature-related issues, as well as guidance for how to approach nature reporting for four sectors: agriculture and food; mining and metals; energy; and financial institutions – and for four biomes, including tropical forests.
The Taskforce has also made minor adjustments since the last release to its proposed risk and opportunity assessment process and reduced its proposed recommended disclosures from 15 to 14.
“This has been the culmination of a lot of work to bring a science-based approach but make the complexity of the science of nature accessible and relevant to market participants,” Craig added.
In addition, two new consultation groups have joined the TNFD. WBCSD convened the ASEAN consultation group in February 2023, and Finance Denmark and the UN Global Compact Network Denmark will co-convene a Nordic consultation group in April 2023.