TNFD Reporting Guide: Nature-Related Disclosures

Overview

The Taskforce on Nature-related Financial Disclosures (TNFD) released its final recommendations in September 2023, providing a comprehensive framework for organizations to report on nature-related dependencies, impacts, risks, and opportunities. Built on the same four-pillar architecture as the TCFD (governance, strategy, risk management, metrics and targets), the TNFD extends the disclosure paradigm from climate to the broader natural world—encompassing land, ocean, freshwater, and atmosphere.

Nature loss is now recognized as a systemic financial risk. The World Economic Forum estimates that more than half of global GDP—approximately $44 trillion—is moderately or highly dependent on nature and its services. Pollination, water filtration, flood protection, soil fertility: these are not abstract environmental concerns but material inputs to business operations and financial performance. The TNFD provides the framework for translating these dependencies into the language of financial risk and opportunity.

While currently voluntary, the TNFD is rapidly becoming a de facto expectation. Over 1,000 organizations have committed to TNFD-aligned reporting. Regulatory integration is underway: the CSRD's ESRS E4 (Biodiversity and Ecosystems) draws heavily on TNFD concepts, and the ISSB has signaled that nature will be a priority in its future standard-setting agenda. Early adoption is not just prudent—it is strategically advantageous.

Who Does It Apply To?

The TNFD recommendations are voluntary and designed for adoption by any organization, regardless of size, sector, or geography. However, certain entities face stronger drivers for adoption:

• Companies subject to CSRD: ESRS E4 on biodiversity and ecosystems aligns closely with TNFD, making TNFD adoption a practical pathway to regulatory compliance.
• Financial institutions: Banks, insurers, and asset managers with nature-exposed portfolios face growing pressure from regulators and asset owners to assess and disclose nature-related risks.
• Sectors with high nature dependency: Agriculture, food and beverage, extractives, forestry, fisheries, infrastructure, pharmaceuticals, and tourism have direct dependencies on ecosystem services.
• Companies with Kunming-Montreal Global Biodiversity Framework (GBF) exposure: The GBF's Target 15 calls on governments to require large companies and financial institutions to assess and disclose their nature-related dependencies, impacts, risks, and opportunities.
• CDP respondents: CDP integrated TNFD-aligned questions into its 2024 questionnaire, effectively channeling thousands of companies toward TNFD adoption.

Even if your organization is not in a high-impact sector, investors and customers are increasingly asking nature-related questions. Proactive disclosure builds trust and positions you ahead of regulatory developments.

Key Requirements

1. Governance Disclose the board's oversight of nature-related dependencies, impacts, risks, and opportunities. Describe management's role in assessing and managing these issues. This mirrors TCFD governance disclosures but extends to the full scope of nature, not just climate.

2. Strategy Describe the nature-related dependencies, impacts, risks, and opportunities identified over the short, medium, and long term. Explain the effect on the organization's business model, strategy, and financial planning. Disclose the resilience of the organization's strategy under different nature-related scenarios, including a scenario of significant nature loss.

3. Risk and Impact Management Describe the processes for identifying, assessing, and managing nature-related dependencies, impacts, risks, and opportunities. The TNFD introduces a critical addition here: impact management alongside risk management, reflecting the double-direction relationship between business and nature. Explain how these processes integrate with overall enterprise risk management.

4. Metrics and Targets Disclose metrics used to assess nature-related dependencies, impacts, risks, and opportunities. The TNFD recommends a set of core global metrics and core disclosure metrics, as well as additional metrics organized by realm (land, ocean, freshwater, atmosphere). Report targets and performance against them.

5. The LEAP Approach The TNFD's LEAP approach provides a structured assessment methodology:

• Locate your interface with nature (where in your value chain do you interact with ecosystems?)
• Evaluate your dependencies and impacts on nature
• Assess your nature-related risks and opportunities
• Prepare to respond and report

LEAP is not mandatory for disclosure, but it is the recommended analytical backbone for producing credible TNFD-aligned reports.

6. Location-Specific Assessment Unlike climate, nature is inherently local. A water dependency in a water-scarce region carries different risk than the same dependency in a water-abundant area. The TNFD requires location-specific assessment of dependencies and impacts, using tools like the ENCORE database, IBAT, and WWF Water Risk Filter to map business activities to specific ecosystems.

7. Value Chain Scope Disclosures should cover direct operations and, where material, upstream and downstream value chain activities. For sectors like food and agriculture, the most significant nature dependencies and impacts often sit with suppliers, making value chain assessment essential.

Timeline & Milestones

The regulatory trajectory is clear: nature disclosure will follow climate disclosure from voluntary to mandatory. The question is not whether but when your organization will need to report on nature. Starting now provides a multi-year runway to build capability.

Step-by-Step Compliance Roadmap

Step 1: Scoping and Prioritization

Identify priority sectors, business units, and geographies for your initial TNFD assessment. You do not need to assess your entire value chain in year one. Focus on operations and supply chains with the highest likely nature dependencies and impacts. Use sector guidance published by the TNFD and tools like ENCORE to prioritize.

Step 2: LEAP Assessment

Work through the LEAP approach systematically. Locate your nature interfaces by mapping business activities to specific biomes and ecosystems. Evaluate dependencies (what nature provides to your business) and impacts (what your business does to nature). Assess risks (how nature degradation could affect your financials) and opportunities (how nature-positive strategies could create value). Prepare your response and disclosure approach.

Step 3: Data Collection and Baseline Setting

Gather data on priority metrics, including land use, water consumption and discharge, pollutant releases, and dependencies on ecosystem services. Establish baselines against which progress can be measured. Where primary data is unavailable, use credible secondary data sources and proxies while documenting your methodology and data limitations transparently.

Step 4: Disclosure Preparation

Structure your disclosures across the four pillars: governance, strategy, risk and impact management, and metrics and targets. Integrate nature disclosures with existing TCFD or ISSB climate disclosures where possible—the pillar structure is intentionally compatible. Draft narrative explanations that connect nature-related issues to business strategy and financial performance.

Step 5: Review, Assurance, and Iteration

Review disclosures with internal experts and external advisors. While formal assurance of nature disclosures is not yet widely mandated, voluntary assurance enhances credibility. Use stakeholder feedback and evolving TNFD guidance to improve your disclosures year over year. Plan for expansion of scope—both geographic and across the value chain—in subsequent reporting cycles.

Common Pitfalls

Treating nature as a subset of climate. While climate and nature are deeply interconnected, nature-related risks encompass far more than carbon. Water scarcity, pollinator decline, soil degradation, and ocean ecosystem collapse are distinct risk categories that require dedicated assessment. Companies that simply add a nature paragraph to their climate report will miss material issues.

Ignoring the location-specific dimension. Nature risk is inherently place-based. Aggregated, company-level metrics without location context are insufficient. A factory's water withdrawal in Sweden carries fundamentally different risk implications than the same withdrawal in Tamil Nadu. Invest in geospatial data and location-specific analysis.

Underestimating data complexity. Nature data is less mature than climate data. There is no equivalent of the GHG Protocol for biodiversity. Companies that expect neat, auditable datasets will be disappointed. Embrace the iterative nature of nature measurement—start with what you can measure, disclose your methodology, and improve over time.

Waiting for mandatory requirements. The organizations that will produce credible nature disclosures when mandates arrive are those building capabilities today. The LEAP assessment takes time, data systems need development, and stakeholder relationships require cultivation. Waiting for regulation means scrambling later.

How Council Fire Can Help

Nature-related disclosure is where Council Fire's core competencies converge most powerfully. Our deep expertise in ocean ecosystems and marine biodiversity provides a distinctive lens that few consultancies can offer—critical for companies with ocean-dependent value chains in fisheries, shipping, tourism, and coastal infrastructure.

Council Fire guides clients through the LEAP assessment process with scientific rigor and strategic clarity. We help organizations locate their nature interfaces, evaluate dependencies and impacts using best-available science, and translate ecological analysis into the financial risk language that boards and investors need.

Our climate resilience practice ensures that nature and climate disclosures are integrated rather than siloed, reflecting the real-world interconnections between climate change, ecosystem degradation, and business risk. We help clients build scenario analysis capabilities that account for compound nature-climate risks.

Stakeholder engagement is central to credible nature reporting, and Council Fire's expertise in Indigenous engagement, community partnerships, and multi-stakeholder dialogue ensures that nature assessments incorporate diverse perspectives and local knowledge—an increasingly important expectation under both TNFD and the Kunming-Montreal GBF.

Frequently Asked Questions

Is TNFD reporting mandatory?

Not yet, though it is moving in that direction. The TNFD recommendations are currently voluntary, but they are being integrated into mandatory frameworks. CSRD's ESRS E4 aligns closely with TNFD, making TNFD-aligned reporting effectively mandatory for companies in CSRD scope with material biodiversity impacts. CDP's adoption of TNFD-aligned questions channels thousands of companies toward disclosure. Multiple jurisdictions are considering mandatory nature disclosure rules, following the trajectory of climate disclosure from voluntary (TCFD) to mandatory (ISSB/CSRD).

How does TNFD relate to the Kunming-Montreal Global Biodiversity Framework?

The GBF, agreed in December 2022, sets global targets for halting and reversing biodiversity loss by 2030. Target 15 specifically calls on governments to require large companies and financial institutions to "monitor, assess, and transparently disclose" their nature-related risks, dependencies, and impacts. TNFD provides the disclosure framework that operationalizes Target 15 at the company level. As governments implement GBF commitments through national legislation, TNFD-aligned reporting is expected to become the default mechanism for corporate nature disclosure.

What tools should we use for TNFD assessment?

The TNFD recommends several tools for different stages of the LEAP approach. ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) maps sector dependencies on ecosystem services. IBAT (Integrated Biodiversity Assessment Tool) identifies proximity to protected areas and key biodiversity areas. WWF Water Risk Filter and WRI Aqueduct assess water-related risks by location. GLOBIO and Species Threat Abatement and Restoration (STAR) metrics support impact measurement. The TNFD maintains a catalogue of recommended tools and data sources organized by LEAP stage.

Do we need to assess our entire value chain?

Not immediately. The TNFD recommends a proportionate approach, starting with direct operations and priority supply chain segments. Focus on value chain segments with the highest nature dependencies and impacts. For many sectors, the most material nature interactions occur upstream (e.g., agricultural supply chains) rather than in direct operations. Use the LEAP Locate phase to identify priority areas and expand scope progressively in subsequent reporting cycles.