Liz Loxton is a business writer and editor

It is less than a year since the Taskforce for Nature-related Financial Disclosures (TNFD) released its recommendations on how organisations might report their use and dependencies on nature, and there are already signs of increasing recognition and traction.

In January 2024, early adopters of the TNFD framework numbered 320 organisations. Four months on, there are 370 adopters from more than 45 countries, with a combined US$15 trillion in assets under management, says Alessandra Melis, senior manager for standards and regulatory engagement at TNFD. She adds that the early adopter group includes 25% of the world’s systemically important banks.

‘Leading asset owners/managers are calling for TNFD-aligned disclosures with investees’

To market

Underpinning TNFD is a powerful goal – to redirect global financial flows towards nature-positive outcomes in line with Target 15 of the Kunming-Montreal Global Biodiversity Framework – so it is encouraging to see the wider financial community embracing the framework.

‘An increasing number of leading asset owners and asset managers are now calling for TNFD-aligned disclosures through their stewardship guidelines with investee companies,’ Melis says.

Others confirm that engagement with TNFD has the potential to be a positive force in terms of nature’s visibility in the financial world. William Attwell, director for climate and sustainable finance research at ratings agency Sustainable Fitch, says: ‘TNFD has focused minds on biodiversity and nature issues. We’re seeing more companies setting nature-related targets, new biodiversity-themed funds being launched and a marked uptick in investor engagement and stewardship activity in this area.’

More TNFD-informed reporting will in turn increase the volume, consistency and comparability of information on companies’ impacts on nature, Attwell says. ‘This would obviously be helpful for investors with thematic or impact-focused strategies by providing more granular insights about the sustainability profiles of investee companies on topics that so far have been challenging to track and measure.’

‘TNFD allows strategic steps to adapt to nature-related risks and opportunities’

Reporting realities

It is important not to underestimate the complexity of the task, however. Understanding a company’s local impacts on nature generates one set of questions; factoring in the totality of its operation spawns another.

Bridget Beals, head of decarbonisation, climate and nature at KPMG in the UK, says: ‘Boards of leading companies, such as the TNFD early adopters, and those with large exposures to nature, are taking steps to locate and evaluate their relationships with nature in line with TNFD. This enables them to take strategic steps to mitigate and adapt to nature-related risks and opportunities, often based on cumulative impacts of both climate and nature.

‘Where nature impacts and dependencies can be specific to a local area, businesses are having to explore new datasets and methodologies to understand these risks and opportunities. This can make performing assessments more challenging, when having to do them at scale and across their entire business model from suppliers to customers.’

But it is only when organisations have a comprehensive knowledge and understanding of their nature challenges that they can move on to form overall strategies, priorities, targets and roadmaps, Beals adds.

Towards a mandate

Ultimately, for TNFD to continue on its path of embedding nature-related disclosures into reporting, wider endorsement will be a factor. Melis says TNFD anticipated its recommendations being able to influence the voluntary standards landscape, based on take-up of TCFD (Taskforce on Climate-Related Financial Disclosures), the complementary climate-related financial disclosure framework. ‘We have recently seen the International Sustainability Standards Board and the Global Reporting Initiative both drawing on the recommendation work of TNFD,’ she says.

And as Will Evison, a sustainability, climate and nature strategy director at PwC, points out, the crossovers between TNFD and the EU’s corporate sustainability reporting directive, as well as TNFD’s alignment with Target 15 of the Global Biodiversity Framework, mean that governments will ultimately need to make the framework mandatory.

TNFD provides a methodology for companies through its Leap (locate, evaluate, assess and prepare to disclose) process, which Evison refers to as the ‘how-to guide for companies starting out’. There is no doubt that adoption is challenging, he says, but early adopters are applying Leap and in a lot of cases leaning on their early experiences looking at compliance with the EU directive. ‘The corporate sustainability reporting directive and TNFD were developed in parallel, and there was a lot of dialogue between the teams, so there is a very high degree of operability,’ Evison says.

Financial quantification of risks and opportunities drives more than reporting


And what about broader nature-positive behaviour? Evison is optimistic.

He explains: ‘The theory of change for these reporting frameworks is essentially that by requiring assessment of impacts and dependencies and evaluation of risks and opportunities, and particularly the financial quantification of those risks and opportunities, they are driving more than just reporting. They are getting the information into business planning processes and into capital allocation decisions. Some organisations do treat them as a kind of tick-box exercise and will do the minimum, but many, many organisations treat them as a means of getting broader internal buy-in and driving genuine change.’

This is, Evison says, a live and fast-evolving topic. ‘Target 15 says governments will make TNFD mandatory. Most observers reasonably expect that the International Sustainability Standards Board will integrate TNFD in much the same way that it has already integrated TCFD. That’s the direction of travel, and one way or another, governments are committed to making it mandatory.’

TNFD’s position is that the convergence of global goals, legislative requirements and reporting standards underscores the critical role of nature and biodiversity reporting in sustainable business practice. Melis says: ‘We look forward to continuing to work with various global stakeholders to minimise duplication, complexity and fragmentation in corporate reporting and accelerate the shift towards integrated sustainability reporting.’

More information

Read our articles ‘Natural capital reporting advances’ and ‘Are you TNFD-ready?’.

Visit ACCA’s Accounting for a better world hub for articles and resources, and read ACCA’s guide to preparing for sustainability reporting.