Taskforce for Nature Related Financial Disclosures (TNFD) publishes 14 Disclosure Recommendations
The Taskforce for Nature Related Financial Disclosures (TNFD) has published its disclosure recommendations in a landmark moment for nature and biodiversity. The Taskforce consists of 40 senior executives from companies and financial instructions globally representing over $20Tr in assets under management with value chains in over 180 companies.
The disclosure and risk management framework published on the 19th of September 2023, is designed to be consistent with the structure and language of the TCFD and ISSB. It will accommodate different approaches to materiality, seen in the TCFD/IFRS Standards, and the GRI Standards.
The 14 recommended disclosures, which I will list below, follow the TCFD blueprint, using the four pillars of Governance, Strategy, Risk & impact management, and Metrics & Targets. The Global Biodiversity Framework published at COP15 in Montreal, Winter 2022, is considered in the TNFD Framework, including Target 15 on corporate reporting of nature risks.
This framework sends a clear message that Nature is no longer a corporate social responsibility issue for companies, but a strategic risk management issue on a par with climate change.
What do we mean by Nature?
Nature consists of the living and non-living environment on earth. Wild animals, natural processes such as the hydrosphere and even the earths soil, are part of what is defined as nature in the TNFD framework.
Through engagement with this framework, businesses will gain a greater understanding of the natural processes which their operations and supply chain rely upon. For tech companies, this can be the impact on biodiversity of upstream mining operations, the water used to cool their data centres, or the ecological footprint of a new office being built in the UK.
14 Disclosure Recommendations
Governance – Disclose the organisation’s governance of nature-related dependencies, impacts, risks and opportunities.
- Describe the board’s oversight of nature-related dependencies, impacts, risks and opportunities.
- Describe the management’s role in assessing and managing nature-related dependencies, impacts, risks and opportunities.
- Describe the organisations human rights policies and engagement activities, and oversight by the board and management, with respect to Indigenous Peoples, Local Communities, affected and other stakeholders, in the organisation’s management of, and response to, nature-related dependencies, impacts, risks and opportunities.
Strategy – Disclose the effects of nature-related dependencies, impacts, risks, and opportunities on the organisation’s business model, strategy and financial planning where such information is material
- Describe the nature-related dependencies, impacts, risks and opportunities over the short, medium and long term.
- Describe the effect nature-related dependencies, impacts, risks and opportunities have had on the organisation’s business model, value chain, strategy and financial planning, as well as any transition plans or analysis in place.
- Describe the resilience of the organisation’s strategy to nature-related risks and opportunities, taking into consideration different scenarios.
- Disclosure the locations of assets and/or activities in the organisation’s direct operations, and, where possible, upstream and downstream value chain(s) that meet the criteria for priority locations.
Risk & impact management – Describe the processes used y the organisation to identify, assess, prioritise and monitor nature-related dependencies, impacts, risks and opportunities.
- (i) Describe the organisation’s processes for identifying, assessing, and prioritising nature-related dependencies, impacts, risks and opportunities in its direct operations.
- (ii) Describe the organisation’s processes for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities in its upstream and downstream value chain(s).
- Describe the organisation’s processes for managing nature-related dependencies, impacts, risks and opportunities.
- Describe how processes for identifying, assessing, prioritising and monitoring nature-related risks are integrated into and inform the organisation’s overall risk management processes.
Metrics & targets – Disclose the metrics and targets used to assess and manage material nature-related dependencies, impacts, risks and opportunities.
- Disclose the metrics used by the organisation to assess and manage the material nature-related risks and opportunities in line with its strategy and risk management process.
- Disclose the metrics used by the organisation to assess and manage dependencies and impacts on nature.
- Describe the targets and goals used by the organisation to manage nature-related dependencies, impacts, risks, and opportunities and its performance against these.
If your business is interested in trying out the TNFD disclosure recommendations, there are several tips to help you get started.
Firstly, recognise that there is no single way to get started on adopting the TNFD recommendations, as every organisation is different and will have its own pathway.
Secondly, insights can be gained from the adoption of TCFD, chiefly that reporting ambition increased steadily over time, with the proportion of disclosures reported on by companies increasing steadily from 45% in 2017 to 70% in 2021. Steady ambition is key to success.
Thirdly, set a deadline for when you will publish your first TNFD report. This could be at the end of the 2025 financial year, a date with 70% of survey respondents believed was achievable for their organisation, or later. Submitting a partial report is better than submitting nothing, and the average survey respondent suggested they would start by disclosing half (7) of the recommended 14 disclosures.
Joining the TNFD Forum could help your business learn from peers about implementing the TNFD recommendations into your compliance regime.
Finally, the TNFD recommends a 7-step approach to adoption:
- Deepen your understanding of the fundamentals of nature;
- Make the business case for nature and gain buy-in from the board and management;
- Start with what you have, leveraging other work;
- Plan for progression over time and communicate your plans and approach;
- Encourage collective progress through engagement;
- Monitor and evaluate your own adoption progress; and
- Register your intention to start adoption the TNFD recommendations.
A breakdown of each of these steps can be found on the TNFD website.
techUK will be here to support members who choose to take part in TNFD, as well as tracking any policy changes around nature and biodiversity disclosures going forward. Please contact [email protected] or [email protected] for more information on the techUK programme of work.
Register now for our upcoming techUK Tech and Net Zero Conference (5 October).
This year’s conference will be focused on operationalising net zero for tech firms, looking forward to COP28, and the sectors’ role in decarbonising the wider economy.
The agenda includes:
- COP 28 keynote: UK priorities
- What does COP 28 and the global stocktake mean for tech?
- The tech sector’s own net zero journey
- Policy and regulatory roundtables
- Making the UK a clean tech leader in the face of increasing scepticism, the US IRA and EU Green Deal
- Tech sector decarbonisation roundtables
- Building a resilient tech ecosystem
- AI and Climate
Tickets are free for members - find full details and the registration link here.
To learn more about what techUK is doing on climate please visit our Climate Action Hub or get in touch on the details below.
techUK - Committed to Climate Action
Visit our Climate Action Hub to learn more or to register for regular updates.
By 2030, digital technology can cut global emissions by 15%. Cloud computing, 5G, AI and IoT have the potential to support dramatic reductions in carbon emissions in sectors such as transport, agriculture, and manufacturing. techUK is working to foster the right policy framework and leadership so we can all play our part. For more information on how techUK can support you, please visit our Climate Action Hub and click ‘contact us’.