The Rapid Rise of Nature-Related Disclosures: Navigating the TNFD Landscape
In the dynamic and ever-evolving world of corporate sustainability, a significant milestone has been reached with the Taskforce on Nature-related Financial Disclosures (TNFD) now boasting over 400 adopting organisations. This surge in adoption underscores the growing recognition that nature-related risks and opportunities can no longer be ignored by businesses and financial institutions.
The TNFD, launched in June 2021 with the backing of the G20 Sustainable Finance Working Group and various governmental and philanthropic supporters, has emerged as a game-changer in the realm of environmental reporting. Providing a comprehensive framework for assessing, disclosing, and acting on nature-related issues, the TNFD has quickly become the go-to standard for organisations seeking to integrate nature into their decision-making processes.
The Adoption Snowball: Over 400 Organisations Commit to TNFD Reporting
The latest announcement from the TNFD reveals a staggering 30% increase in adopters since the beginning of 2024, bringing the total number of committed organisations to an impressive 416. These adopters span 49 jurisdictions and 62 of the 77 SICS sectors, representing over $6 trillion in market capitalization – an increase of 50% since the TNFD’s Early Adopter announcement in January.
Notably, the pool of adopters now includes 114 financial institutions, representing a staggering $15.9 trillion in Assets under Management (AuM). This figure encompasses 25% of the world’s systemically important banks (GSIBs), underscoring the financial sector’s growing embrace of nature-related disclosures.
“The ongoing uptake of the TNFD’s recommendations is further evidence that the mindset in business and finance is quickly shifting to a recognition that accelerating nature loss is imposing costs and risks on society as a whole as well as to individual business models and capital portfolios,” said David Craig, Co-Chair of the TNFD.
Some of the notable new adopters include:
- Financial institutions LGIM, Generation Investment Management, and MUFG Asset Management
- Diverse companies across sectors, such as global carmaker Volvo, technology leader Ricoh, dairy giant China Mengniu Dairy Ltd., and sustainable infrastructure solutions provider Acciona
These organisations have signalled their intention to begin adopting the TNFD recommendations and publishing TNFD-aligned disclosures as part of their annual corporate reporting for the 2024 or 2025 financial years.
Sector-Specific Guidance: Empowering Organisations to Tackle Nature-Related Risks
Recognising the need for tailored support, the TNFD has also unveiled its first set of Additional Sector Guidance, covering eight real economy sectors and providing Additional Guidance for Financial Institutions. This sector-specific approach aims to equip organisations with the tools and metrics necessary to effectively disclose their nature-related impacts, risks, and opportunities.
The Additional Sector Guidance includes recommendations for the following real economy sectors:
- Agriculture, Food, and Beverage
- Forestry and Forest Products
- Mining and Metals
- Oil and Gas
- Chemicals
- Electric Utilities
- Construction and Real Estate
- Transportation
The Additional Guidance for Financial Institutions offers specific recommendations and disclosure metrics for banks, re/insurance companies, asset managers and owners, and development finance institutions.
“This sector guidance includes recommended sector-specific metrics for disclosure in line with the TNFD disclose recommendations published in September 2023,” explained Duncan Wanblad, Chief Executive of Anglo American and a TNFD Taskforce Member. “Our sector has an important synergistic association with nature, and as a sector, we have a great opportunity to be an enabler of positive change.”
Driving Sustainable Outcomes: The TNFD’s Role in the Global Biodiversity Framework
The TNFD’s rapid growth and the release of sector-specific guidance come at a critical juncture for global biodiversity efforts. With the upcoming 16th session of the Conference of the Parties (COP16) on the United Nations Convention on Biological Diversity, the world’s attention is firmly focused on accelerating the implementation of the Kunming-Montreal Global Biodiversity Framework.
As the TNFD’s Co-Chair, David Craig, noted, “Voluntary uptake now of the TNFD recommendations is the best way to meet these shifting expectations and the best way to meet new regulatory requirements such as CSRD.”
The TNFD’s sector guidance, particularly for industries with a significant impact on nature, such as agriculture, forestry, and mining, will play a pivotal role in enabling companies to align their operations with the Global Biodiversity Framework’s targets. This includes Target 15, which calls for businesses to disclose and reduce their biodiversity-related risks and impacts.
“We welcome the release of the TNFD agriculture sector guidance,” said Michelle Gortan, CEO of the Macdoch Foundation. “This guidance reminds us not only of agriculture’s dependence on nature, but the significant role agriculture plays in supporting and restoring nature. This guidance, including recommended disclosure metrics for the first time, will play a key role in strengthening corporate risk management across the food system and better accountability for impacts on land.”
The Path Forward: Integrating Nature into Corporate Decision-Making
The rapid growth of the TNFD and the release of sector-specific guidance underscore the urgency with which businesses and financial institutions must address nature-related risks and opportunities. As the world moves towards a more sustainable future, the integration of nature-related considerations into corporate decision-making has become a strategic imperative.
“By adopting the TNFD recommendations, organisations can integrate nature into their decision-making, supporting the renewal of nature in our cities,” said Davina Rooney, CEO of the Green Building Council of Australia. “This collective commitment is crucial for building a sustainable future.”
The TNFD’s framework provides a roadmap for organisations to navigate the complex landscape of nature-related disclosures, empowering them to make informed decisions, manage risks, and unlock new opportunities aligned with the global biodiversity agenda.
As the TNFD continues to gain momentum, with over 400 organisations now committed to its recommendations, the IT Fix blog encourages readers to stay informed and engage with this transformative initiative. By embracing nature-related disclosures and aligning with the TNFD, businesses and financial institutions can play a pivotal role in safeguarding our planet’s natural resources and driving sustainable progress.
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