TNFD: Taskforce on Nature-related Financial Disclosures

What It Is

The Taskforce on Nature-related Financial Disclosures (TNFD) published its final recommendations in September 2023, providing a risk management and disclosure framework for organizations to report and act on evolving nature-related dependencies, impacts, risks, and opportunities. Modeled on the TCFD's approach to climate, TNFD extends the disclosure architecture to cover the broader natural world — biodiversity, water, soil, air, and mineral resources.

TNFD's framework is built on three core components:

The LEAP approach — a systematic process for nature-related assessment: Locate your interface with nature (using spatial data to identify where in the value chain the organization interacts with sensitive ecosystems), Evaluate dependencies and impacts on nature, Assess material nature-related risks and opportunities, and Prepare to respond and report.

14 recommended disclosures organized around TCFD's four pillars — Governance, Strategy, Risk & Impact Management, and Metrics & Targets. TNFD adds nature-specific elements: dependencies on ecosystem services, location-specific impacts, and metrics covering land use, water use, pollution, and species impacts.

Additional guidance including sector-specific guidance, biome-specific guidance, and guidance on engagement with Indigenous Peoples and local communities.

TNFD recognizes that nature risk is fundamentally location-specific — unlike carbon emissions, which have the same climate impact regardless of where they occur, the impact of water withdrawal or land use change depends entirely on the ecological context of the specific location. This is why the LEAP approach starts with "Locate."

Who Uses It

• Companies with significant nature dependencies — agriculture, food and beverage, mining, forestry, fisheries, real estate, infrastructure, and pharmaceuticals
• Financial institutions assessing nature-related portfolio risk — banks, insurers, and asset managers
• Companies subject to CSRD — ESRS E4 (Biodiversity and Ecosystems) aligns closely with TNFD
• Companies responding to the Kunming-Montreal GBF — Target 15 calls for business disclosure of nature-related risks
• Early adopters seeking leadership positioning — over 1,200 organizations have registered as TNFD Adopters
• Companies already reporting under TCFD looking to extend their disclosure to nature

Key Requirements

Governance: Board oversight of nature-related dependencies, impacts, risks, and opportunities. Management's role in assessment and management.

Strategy: Nature-related dependencies, impacts, risks, and opportunities identified. Effects on business model, strategy, and financial planning. Resilience of strategy considering different nature-related scenarios.

Risk & Impact Management: Processes for identifying and assessing nature-related dependencies, impacts, risks, and opportunities. How these are managed and integrated into overall risk management. Engagement with affected stakeholders including Indigenous Peoples and local communities.

Metrics & Targets: Metrics used to assess nature-related dependencies, impacts, risks, and opportunities. Targets and performance. Location of assets and activities in priority areas (areas of high biodiversity importance, high ecosystem integrity, high water stress, etc.).

How to Implement

Phase 1: Locate (1-3 months) Map organizational activities, assets, and value chain interactions with nature using spatial data. Identify which locations interface with sensitive ecosystems — Key Biodiversity Areas, protected areas, water-stressed regions, areas of high ecosystem integrity. Tools: IBAT, ENCORE, WWF Biodiversity Risk Filter, WRI Aqueduct.

Phase 2: Evaluate (2-4 months) For priority locations, assess dependencies on ecosystem services (pollination, water purification, flood regulation, etc.) and impacts on nature across five drivers: land/sea use change, resource exploitation, pollution, invasive species, and climate change.

Phase 3: Assess (2-3 months) Translate dependencies and impacts into financial risks and opportunities. Physical risks (ecosystem degradation affecting operations), transition risks (regulation, market shifts, technology), and systemic risks (tipping points, ecosystem collapse). Identify opportunities in nature-positive products, services, and practices.

Phase 4: Prepare (2-3 months) Develop disclosures across all four pillars. Set targets for nature-related performance. Prepare the TNFD report for publication.

Relationship to Other Frameworks

TCFD: TNFD uses the same four-pillar structure and is designed as a complementary framework. Organizations reporting under TCFD can extend to TNFD using familiar architecture.

CSRD/ESRS: ESRS E4 (Biodiversity and Ecosystems) aligns closely with TNFD and was developed with TNFD input. TNFD adoption supports CSRD compliance.

SBTN: The Science Based Targets for Nature provides the target-setting methodology that complements TNFD's disclosure framework — analogous to how SBTi complements TCFD.

GBF Target 15: The Kunming-Montreal Global Biodiversity Framework's Target 15 calls for business disclosure aligned with TNFD.

GRI 304: GRI's biodiversity standard covers similar ground but with an impact-materiality lens rather than financial-materiality.

Why It Matters

Nature loss is an emerging financial risk of comparable scale to climate change. The World Economic Forum estimates that $44 trillion in economic value generation — over half of global GDP — is moderately or highly dependent on nature. Companies that depend on ecosystem services (water, pollination, soil fertility, flood regulation) face material risks as these services degrade.

TNFD provides the framework for understanding and managing these risks before they materialize as financial losses. The framework is moving quickly from voluntary to mandatory — CSRD already requires nature-related disclosure, and other jurisdictions are following. Companies that begin TNFD assessment now will be prepared for requirements that are arriving faster than many expect.