Today, the Taskforce on Nature-related Financial Disclosures (TNFD) released the fourth and final beta framework for nature-related risk management and disclosure, marking the final stage in its process. For the first time, market participants can view the full representation of the framework, including the Taskforce’s proposed approach to disclosure metrics.
The final recommendations will be available later this year.
Broad Support for the TNFD Draft Framework
Since the TNFD started its work in October 2021, the open and iterative approach to the design and development of the framework has garnered the support of over 1,000 organizations in its Forum. More than 200 organizations are now pilot-testing aspects of the draft framework around the world. As of this month, the framework has been viewed over 90,000 times by market participants across more than 150 countries and territories.
Feedback from market participants and other stakeholders has broadly endorsed the three core elements of the draft framework. Including the core concepts and definitions, the proposed risk and opportunity assessment approach (LEAP), and the draft disclosure recommendations aligned with those of the Task Force on Climate-related Financial Disclosures (TCFD). Since the last release, the Taskforce has made minimal provisions to its proposed risk. Further, after additional feedback, the recommended disclosures were reduced from 15 to 14.
Alignment with the TCFD and Global Standards
Anchored by the same four pillars of the TCFD approach, all 11 of the recommended disclosures have been incorporated into the final draft. Market participants will have access to a high level of alignment with the structure, language, and approach taken by the TCFD.
Encouraging and enabling market participants with the ability to move towards integrated climate-nature disclosures. The final draft draws from and is designed to inform, relevant standards including those from the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI).
A Tiered Approach to Disclosure Metrics
For the first time in this final draft, the Taskforce has outlined its approach to disclosure metrics, proposing a tiered approach to leading indicators. Much of the outline is drawn from existing standards, that seek to strike the right balance between being science-based and yet practical for market participants to use as part of the annual reporting cycle and on a limited assurance basis.
The metrics approach not only aims to offer comparability to report users who are providers of capital but also ensures flexibility to report preparers who acknowledge the variations in nature-related issues across sectors and business models.
This tiered approach includes Core Global Disclosure Metrics, Core Sector Disclosure Metrics, and Additional Disclosure Metrics.
- Core Global Disclosure Metrics – that are relevant broadly to organizations across sectors and are reflected in global policy priorities, including the Global Biodiversity Framework (GBF);
- Core Sector Disclosure Metrics – to enable capital providers to make comparative assessments of businesses within a sector; and
- Additional Disclosure Metrics – to enable report preparers to include metrics that might be particularly relevant to their business model and nature-related issues.
Draft Guidance on Engagement with Affected Stakeholders and Biome and Sector Guidance
As part of the package of updates and new components released today, the TNFD has also released draft guidance on engagement with affected stakeholders. Additionally, issuing draft guidance for four sectors as well as four biomes, including tropical forests.
The four sectors include:
- Agriculture & Food
- Mining & Metals
- Financial Institutions
Final Recommendations to be Released in September 2023
Following a final 60-day consultation process, from 30 March to 1 June 2023, the TNFD’s final recommendations based on final feedback and pilot testing (v1.0) will be published in September 2023.