UPDATE (November 16, 2022): On November 4, the Taskforce on Nature-Related Financial Disclosures published an updated draft framework—the third iteration—to help companies report on their risks and impacts related to nature. The latest draft also provides disclosure requirements and guidance for establishing science-based targets.
A fourth draft of the framework is scheduled to be released in March of 2023, with final recommendations to be published in September 2023.
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ORIGINAL ARTICLE: When it comes to ESG regulations, we’re awash with acronyms, and now there’s another one in your alphabet soup: TNFD. Established in 2021, the Task Force on Nature-Related Financial Disclosures (TNFD) responds to the increasingly critical need to consider nature in financial and business decisions. The global initiative will provide a risk-management and disclosure framework that organizations can use to report on and respond to nature-related risks and opportunities. The aim is to discourage outcomes that are harmful to nature and promote outcomes that are more “nature-positive.”
How Do the TNFD and TCFD Compare?
As you might guess, the concerns and considerations underlying TNFD are similar to those that prompted the Task Force on Climate-Related Financial Disclosures (TCFD).
While TCFD looks at the relationship between climate change and a company’s business model and outlook, TNFD looks at nature-related dependencies, impacts, risks and opportunities. It considers the impacts that businesses have on environmental assets and ecosystem services and how these translate into risks and opportunities for corporates. (TNFD defines environmental assets as “living and non-living components of the Earth that provide benefits to humanity” and ecosystem services as “the contributions of ecosystems to the benefits used in economic and other human activity.”)
TNFD may inform future reporting requirements in the same way that TCFD recommendations form the foundation of many existing and proposed sustainability reporting requirements. Both initiatives encourage more responsible and sustainable corporate behavior in a way that complements other frameworks and reporting directives, such as the sustainability standards promoted by the International Sustainability Standards Board (ISSB).
TNFD: A Framework in Progress
TNFD is a market-led initiative, and its 34 members are executives who represent institutions that manage assets worth more than US$19.4 trillion in more than 180 countries. Sixteen core knowledge partners from global scientific, conservation and standards-development bodies have contributed to the framework’s development. The TNFD Forum—the initiative’s consultative group—has over 500 members.
TNFD released the framework’s first beta version in March to initiate a conversation on how to assess and manage nature-related risks and opportunities. It released the second beta version (v0.2) in June; the third beta version (v0.3) is expected in November of this year; and the fourth (v0.4) is expected in March 2023. TNFD invites market participants and other stakeholders to comment on the beta versions using its interactive online platform. Final recommendations will be released in September 2023.
A is for Atmosphere, B is for Biome: the ABCs of TNFD v0.1
The first beta version (v0.1) outlines fundamental concepts and definitions for nature-related risks and opportunities. Atmosphere, biome and critical habitat are among the terms defined. To be fair to the rest of the alphabet, terms such as nature loss, protected area and species richness are defined as well.
The TNFD framework also addresses the four realms of nature:
- Land
- Ocean
- Freshwater
- Atmosphere
These four realms provide context for our understanding of how individuals and organizations rely on and affect our natural capital. The TNFD’s v0.1 also identifies five key drivers of nature change:
- Climate change
- Resource exploitation
- Land and sea use change
- Pollution
- Invasive alien species

What Are the TNFD Disclosure Recommendations?
The first beta version offers guidance on how to incorporate nature-related risk and opportunity assessment into enterprise strategy and risk-management processes to support decision-making. Most importantly, v0.1 provides a first look at the TNFD draft disclosure recommendations:
- Governance: how an organization’s oversight and decision-making functions take nature-related risk and opportunities into account.
- Strategy: the integration of actual and potential effects of nature-related risks and opportunities on the organization’s business model, strategy and financial planning.
- Risk management: how the organization integrates nature-related risks into its overall risk-management approach.
- Metrics and targets: quantitative and qualitative performance indicators and aims related to nature-related risk and opportunities, based on nature dependencies and impacts.
It’s worth noting that the TNFD is considering the inclusion of Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions disclosures and related risks in its recommended metrics and targets.
TNFD also provides a risk and opportunity assessment approach called LEAP. It stands for:
- Locate your interface with nature.
- Evaluate your dependencies and impacts.
- Assess your risks and opportunities.
- Prepare to respond to nature-related risks and opportunities and report to investors.
Note that LEAP is an approach for organizations to use in understanding nature-related risks and opportunities; it’s not a disclosure recommendation or a process for adhering to the upcoming disclosure recommendations. Reporting bodies will not need to disclose everything that is identified, assessed and evaluated through this approach.
Where We Are Now: TNFD Framework Beta v0.2
The latest version—v0.2—retains the core components of v0.1 and introduces enhancements based on market feedback, as well as three new additions:
- A first draft architecture for metrics and targets, as well as draft guidance on dependency and impact metrics
- A proposed approach to specific guidance
- LEAP-FI—an update to LEAP—where FI stands for Financial Institutions
Nature-Related Risks and Opportunities Are Too Great to Ignore
According to the TNFD, more than half of the world’s economic output is highly or moderately dependent on nature. In monetary terms, that’s US$44 trillion of economic value generation. The TNFD holds that companies, investors and lenders must consider nature-related risks and opportunities in their decisions. And once the TNFD framework and recommendations are agreed and in place, the pressure to do so will only increase.
