Stockholm (NordSIP) – The Task Force on Nature-Related Financial Disclosures (TNFD) has published an update to its proposed reporting framework. Version 0.4 of the TNFD beta framework is intended to be the final prototype as it approaches the end of its two-year design and development phase. The taskforce, which is sponsored by various governments and philanthropic organisations, is inviting feedback on this updated framework. It intends to publish the final market-ready version in September 2023.
Building on accepted sustainability frameworks
Given the urgency of the dual climate and biodiversity crises, the TNFD has endeavoured to design the framework to be readily adopted by market participants. With this in mind, it has sought to avoid replicating elements of existing sustainability standards and allow for interoperability with the work of the Global Reporting Initiative (GRI), International Sustainability Standards Board (ISSB), the European Financial Reporting Advisory Group (EFRAG) and other broadly accepted market sustainability standards. The teams charged with producing increasingly complex sustainability reporting on behalf of institutional asset owners and managers will appreciate the TNFD’s focus on slotting its new framework within the existing reporting architecture:
The TNFD’s recommended disclosures follow the existing Task Force on Climate-related Financial Disclosures (TCFD) structure. Companies will be required to describe their governance arrangements covering nature-related risks, impacts and opportunities along with a relevant strategy. This should include assets or activities in nature-exposed locations, full supply chain information and risk and impact management processes that have been implemented, along with the science-based metrics and targets employed.
The beta framework also includes guidance for market participants to carry out the groundwork needed to put the above disclosures in place. This is presented under the acronym LEAP, capturing the following four stages: Locate interface with nature, Evaluate dependencies and impacts, Assess material risks and opportunities, and Prepare a suitable response and reporting elements.
Market consultation until June 2023
Once the final version has been published in September, the TNFD will focus on encouraging the widespread, voluntary adoption of the framework and collaborating with other standard-setters and regulators to cement its principles in market best practice. It also anticipates some further changes in response to technological advances and improved data provision. In the meantime, the TNFD is inviting formal and informal feedback during an open consultation period that will run until 1 June, 2023. It is particularly keen to build up a library of practical case studies illustrating the real-world application of the framework, and will continue developing sector and biome-specific guidance and metrics ahead of the final publication date.