The Taskforce on Nature-related Financial Disclosures Framework

The world is adopting approaches to protect the environment. In response to the growing demand for more transparent and dependable environmental, social, and governance (ESG) and sustainability data, many frameworks have been launched in the market. These frameworks enable organisations across the globe to disclose relevant information effectively and identify and assess areas that can affect the organisations’ overall performance (financial and non-financial). 

The Taskforce on Nature-related Financial Disclosures (TNFD) is a group of experts acting on behalf of banking and financial institutions, service providers, and other such associations. It is developing a new framework in line with the recommended disclosure of TCFD (Task Force on Climate-related Financial Disclosure) to aid firms in recognising, evaluating, and tackling threats to nature and adopting valuable ideas. All organisations and businesses across sectors and countries irrespective of their size will be able to adopt the TNFD risk management and disclosure framework regardless of their methods of overseeing their material issues. Sector-specific guidance for four industries (agriculture, metals and mining, utilities, and banking and financial institutions) and four biomes (marine shelf, tropical forests, intensive land use systems, and rivers and streams) will also be available to help the organisations understand the definitions, concepts, and requirements of the TNFD framework. 

The interrelations between TFND and TCFD will be helpful for understanding, identifying, managing, and assessing both the nature and climate-related risks together since both frameworks’ disclosure requirements are based on common lines. Considering the substantial monetary losses associated with nature-related risks, organisations would need to continue their business in line with such frameworks and adopt robust business strategies. According to public sources, almost 50% of global economic activity, or over US$40 trillion in economic value creation, is somewhat or heavily reliant on nature. 

 

The table below highlights the proposed structure of the TNFD framework and how Organisations can use it;

Nature

The TNFD model is expected to draw the attention of businesses and financial institutions towards the essential natural components of the earth’s atmosphere. The primary focus of this framework is to aid the flow of money in the international economy, attracting nature-positive investments and integrating nature (as an important agenda) into the business and financial decision-making of investors while reducing nature-negative events or consequences and encouraging financial institutions to make more knowledgeable credit, insurance, and investment decisions. TNFD’s disclosure is expected to be one of the criteria for the evaluation of investments in the market. 

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