What is TNFD?

What is TNFD?

The Taskforce on Nature-related Financial Disclosures (TNFD) is a global, market-led initiative that developed a risk management and disclosure framework for organizations to report and act on evolving nature-related dependencies, impacts, risks, and opportunities. Launched in 2021 and publishing its final recommendations in September 2023, TNFD mirrors the TCFD's four-pillar structure—governance, strategy, risk management, and metrics and targets—adapted for nature and biodiversity. The framework covers terrestrial, freshwater, marine, and atmospheric realms and addresses the full range of nature-related issues including biodiversity loss, ecosystem degradation, water scarcity, and land-use change.

Why It Matters

The economic case for nature-related disclosure is stark. The World Economic Forum estimates that $44 trillion of global economic value generation—over half of global GDP—is moderately or highly dependent on nature and its services. Agriculture depends on pollination and soil health. Pharmaceuticals depend on genetic diversity. Water utilities depend on watershed ecosystem services. Manufacturing depends on raw materials extracted from natural systems. Yet until TNFD, no standardized framework existed for assessing and disclosing these dependencies and the financial risks they create.

Nature loss is accelerating at unprecedented rates. The IPBES Global Assessment found that 1 million species face extinction, 75% of terrestrial environments have been significantly altered, and 66% of marine environments face cumulative impacts from human activities. These aren't just ecological statistics—they represent the degradation of natural capital that underpins economic activity. When pollinators decline, crop yields fall. When forests are cleared, water quality degrades and flood risk increases. When fisheries collapse, protein supply chains are disrupted.

Regulatory alignment is cementing TNFD's importance. The EU's CSRD and ESRS E4 (Biodiversity and Ecosystems) require disclosures that align closely with TNFD recommendations. The Kunming-Montreal Global Biodiversity Framework's Target 15 calls on governments to require large companies to disclose nature-related risks, dependencies, and impacts—using frameworks like TNFD. France's Article 29 already mandates biodiversity-related disclosure for financial institutions. TNFD early adopters—320+ organizations signed up by early 2024—are positioning themselves ahead of the regulatory curve.

For financial institutions, TNFD addresses a massive blind spot. Banks, insurers, and asset managers face nature-related risks through their lending and investment portfolios but have lacked frameworks to assess and disclose this exposure. A bank with significant agricultural lending faces credit risk from pollinator decline; an insurer with coastal property exposure faces claims risk from coral reef degradation that reduces storm protection. TNFD gives financial institutions the tools to identify, assess, and manage these previously invisible nature-related financial risks.

How It Works / Key Components

TNFD's disclosure recommendations follow the TCFD's four-pillar architecture, making them immediately familiar to companies with climate disclosure experience. Governance disclosures cover board and management oversight of nature-related issues. Strategy disclosures address nature-related dependencies, impacts, risks, and opportunities and their effects on business model and strategy. Risk management disclosures describe processes for identifying, assessing, and managing nature-related risks. Metrics and targets disclosures include quantitative measures of nature-related performance.

The LEAP approach is TNFD's distinctive analytical methodology: Locate the organization's interface with nature (where are operations and value chains in contact with ecosystems?), Evaluate dependencies and impacts (what natural capital does the business depend on, and how does it affect nature?), Assess material risks and opportunities (which dependencies and impacts create financial exposure?), and Prepare to respond and report (what management actions and disclosures are appropriate?). LEAP provides a structured process for companies that don't know where to start with nature assessment.

TNFD specifies core metrics organized into three categories: dependencies and impacts on nature (land/water/ocean use change, pollution, resource exploitation, invasive species, climate change impacts on nature), nature-related risks and opportunities (financial effects from nature dependencies and impacts), and response metrics (actions taken to manage nature-related issues). The framework also recommends sector-specific metrics for high-impact sectors including agriculture, mining, infrastructure, and fisheries.

Location specificity is a central feature distinguishing TNFD from climate disclosure. While a ton of CO₂ has the same global warming impact regardless of where it's emitted, nature-related impacts are inherently local—deforestation in a biodiversity hotspot is categorically different from tree clearing in a managed plantation. TNFD requires companies to identify priority locations where their activities interface with sensitive ecosystems, using tools like the TNFD-endorsed ENCORE database, IBAT (Integrated Biodiversity Assessment Tool), and national biodiversity databases.

Council Fire's Approach

Council Fire helps clients implement TNFD-aligned nature risk assessments using the LEAP methodology, identify priority locations where operations and supply chains interact with sensitive ecosystems, and develop disclosure-ready metrics and management responses. We connect TNFD reporting with ESRS E4 compliance and corporate biodiversity strategy, ensuring clients address nature-related risks as an integrated component of their broader ESG and climate resilience programs.

Frequently Asked Questions

How does TNFD relate to TCFD?

TNFD deliberately mirrors TCFD's four-pillar structure to leverage institutional familiarity and enable integrated climate-nature reporting. Companies already reporting under TCFD can extend their governance, strategy, and risk management disclosures to cover nature alongside climate. The key differences are TNFD's location-specificity requirement (nature impacts are local, not global like GHG emissions), the LEAP analytical approach (no TCFD equivalent), and the broader scope of nature-related issues beyond carbon. The ISSB is considering nature-related disclosure standards that would build on TNFD, potentially unifying climate and nature under one mandatory framework.

What tools exist for conducting TNFD assessments?

Several tools support TNFD implementation: ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) maps sector dependencies on ecosystem services; IBAT provides site-specific biodiversity data including proximity to protected areas and key biodiversity areas; the TNFD's own location and sector tools provide prioritization guidance; WWF Biodiversity Risk Filter assesses nature-related risks at the site level; and satellite-based platforms like Global Forest Watch and MapBiomas enable deforestation monitoring. For most companies, the practical starting point is mapping operations and key supply chain locations against these databases to identify priority interfaces with nature.

Is TNFD reporting mandatory?

TNFD itself is voluntary, but its recommendations increasingly align with mandatory requirements. The CSRD's ESRS E4 requires biodiversity and ecosystem disclosures that overlap substantially with TNFD. France's Article 29 mandates nature-related disclosure for financial institutions. The Kunming-Montreal Global Biodiversity Framework calls for mandatory corporate nature disclosure. Brazil, India, and other jurisdictions are developing nature-related reporting requirements. Companies that adopt TNFD now are building capabilities that will likely become mandatory within two to four years in most major jurisdictions.