The global economy depends on nature to the tune of $44 trillion annually, but nature-related risks and opportunities have traditionally been overlooked in financial decision-making. However, this area of focus is developing at pace, riding in the slipstream of climate and making up for lost time.
Yesterday saw the Taskforce on Nature-Related Financial Disclosures launch its beta Framework. The full framework will launch in September 2023, with comments on the beta version open until 1 June 2023. The framework is designed to help organizations report and act on evolving nature-related risks and opportunities, and promote more sustainable business practices.
The beta framework includes a full and final draft of the framework, recommended draft disclosures, updates to the LEAP process, additional guidance for four sectors and four biomes, and cross-sector guidance on risk management, scenario analysis, target setting, and stakeholder engagement.
Framework categories & recommended disclosures
Biodiversity
The use of natural resources, the impacts of land use and infrastructure development, and the risks and opportunities associated with biodiversity conservation and restoration. Recommended disclosures include information on the company’s use of biodiversity, the potential impacts of its activities on biodiversity, and any measures it is taking to mitigate these impacts.
Land use
Recommended disclosures include information on the company’s land use practices, its impacts on land use change, and its efforts to manage these impacts, including the use of agricultural land, forestry, and other natural resources.
Water
Recommended disclosures include information on the company’s water use, its impact on water quality and availability, and its efforts to manage and reduce these impacts.
Greenhouse gas emissions
Recommended disclosures include information on the company’s greenhouse gas emissions, its efforts to reduce these emissions, and any risks and opportunities associated with the transition to a low-carbon economy.
Other disclosures
In addition to the four main categories, the Framework also includes a set of general disclosures such as the company’s governance structure and policies related to nature, as well as its engagement with stakeholders and efforts to integrate nature-related considerations into its decision-making processes.
Toolkit
The TNFD Framework is accompanied by a toolkit which provides guidance to companies and financial institutions on how to use the Framework to assess and report their nature-related dependencies and impacts.
- Guidance Document on how to use the Framework, including instructions on how to conduct a nature-related risk assessment and how to prepare a nature-related financial disclosure
- Technical Supplement on specific issues related to the Framework, such as how to measure and report on biodiversity impacts and dependencies
- Case Studies on how companies and financial institutions have used the Framework to assess and report on their nature-related dependencies and impacts
- Data and Metrics to measure and report on their nature-related dependencies and impacts.
- Implementation Support for companies and financial institutions that are using the Framework, including training and capacity building, technical assistance, and stakeholder engagement.
The release of the TNFD’s full and final beta framework is an important milestone towards developing a standardized approach to nature-related financial disclosures. To provide feedback on the draft framework, visit the TNFD website. By integrating nature-related considerations into decision-making processes, organizations can better understand the risks and opportunities associated with nature, and work towards a more sustainable future for all.