What is the Task Force on Nature Related Disclosures (TNFD) ?
The TNFD has been established to develop a framework for financial institutions and organisations to manage, act on and disclose nature-related risks and opportunities. The overarching goal of this framework is to drive financial investments away from degrading nature to nature-positive outcomes.
‘Nature loss is as big a business risk as climate change. We must tackle both with equal urgency’ says David Craig, Co-Chair of the TNFD. According to the World Economic Forum, $44 trillion in economic value is moderately to highly dependent on natural resources, from forests, oceans, soils, water systems and to wider ecosystems. This research suggests that more than half of global GDP is currently exposed to risks from nature loss, and this in turn poses a significant threat to businesses who rely on these resources. It also represents how our economies are embedded within nature and reliant on it to operate efficiently. The WEF global risk report illustrates how impacts of extreme weather events and biodiversity loss are now second and third behind climate change as the most severe risks identified on a global scale over the next 10 years. We are therefore at a critical point in time, where investments and resources must diverge from degrading nature but rather focus on regenerating it. This is important as investment in climate change mitigation and adaptation will only be successful if we incorporate nature-based solutions.
What’s the difference between TCFD and TNFD?
With the release of the first beta version of TNFD this week, we are closely monitoring any developments to understand what this will mean for our clients. The TNFD framework will build upon the structure and foundation of Task Force on Climate-Related Financial Disclosures (TCFD) and apply the same four pillars: governance, strategy, risk management, and metrics and targets.
Whilst metrics and scenarios are still being defined, the TNFD has incorporated a more location-specific approach. Location matters to how we identify and assess nature-related risks. For example, a textile company sees decreasing yields of cotton within their supply chain as a result of poor soil fertility at a certain location, caused by increased drought events. Whilst TCFD would look at the changes in the climate and increase in drought events, TNFD focuses on soil fertility loss and its implications. Therefore, nature and environmental risks include loss of biodiversity and degradation of ecosystems. While climate change and nature are intrinsically linked issues, they are considered standalone under the two frameworks. Therefore, the foundation of TCFD will aid TNFD in the classification of nature-related risks and opportunities: physical risks resulting from nature loss, and risks associated with the transition to a nature-positive economy (including policy, legal, technology, and market changes).
Why Carbon Intelligence has joined the TNFD Forum
For the past year, we have been supporting various companies in aligning to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and conducted in-depth climate-related risk and opportunity assessments and deep-dive modelling projects to enable better financial and strategic business planning. We have joined the TNFD forum as we believe that this framework will enable companies to make fundamental changes to the ways in which they extract and use natural resources. With the development of the TNFD, companies from 2023 will need to do a further deep dive assessment into environmental risks and opportunities with the view of how capital flows can be diverted to positive action. We are closely monitoring progress and updates to understand and communicate what implications this will have to our clients.
What can companies do to prepare for TNFD?
- Align to TCFD: In order for companies to prepare themselves for this framework we recommend to start to, or continue to, align to TCFD due to their similarity. Experience in adopting the TCFD framework can prepare companies for aligning to TNFD.
- Familiarise yourself with the TNFD framework: On 15 March 2022 the TNFD released their beta version of the framework. Developing an early understanding of the key elements will help facilitate early discussions on the implications of TNFD for your business.
- Develop an understanding of risks: Define what nature-related risks means for your business.
- Consider Science-based Targets for Nature: Exploring the concept of Science-based Targets for Nature to facilitate internal conversations and aid in the TNFD process.
- Join us in becoming a member of the TFND forum: We are pleased to be part of the forum and are staying close to developments.
If you would like to speak to one of our experts about TCFD and TNFD reporting or your organisation’s net zero pathway please email firstname.lastname@example.org.