Reporting on financial risks associated with nature loss and degradation: Latest TNFD Framework Updates for Sumday Advisors
Sumday is here to help advisors stay up to date on the latest developments in non financial reporting frameworks. The fourth and final version (v0.4) of the voluntary Taskforce on Nature Related Financial Disclosures (TNFD) framework is now available. You can now view the full framework, including the proposed approach to disclosure metrics here.
For more context read on.
What is it and why is it relevant?
The voluntary framework and recommendations from the TNFD will be released in September, this latest version is a good update so you know what to expect.
Basically, it provides the building blocks for thinking about how nature and business interact and the risks involved in that which stakeholders want to know about. For clients or companies in Agriculture, Mining, Forestry, Energy, Aquaculture, Energy and Consumer Goods particularly, the frameworks may be useful for starting the conversation on how the organisation may begin thinking about and reporting on nature related risks.
If you’ve left more meetings than you can count where everyone agrees nature is important, it impacts the business, we should focus on this more etc…but nobody really knows how - well here’s your likely jumping in point.
In four steps, this is what you’re helping your internal or external clients do (what’s called the LEAP approach)
- Locate their interface with nature;
- Evaluate their dependencies and impacts;
- Assess their risks and opportunities; and
- Prepare to respond to nature-related risks and opportunities and report.
The TNFD states:
The LEAP approach is voluntary guidance intended to support internal, nature-related risk and opportunity assessments within corporates and financial institutions, and ultimately become embedded in the enterprise risk management and portfolio management mindset and process.
So what do these look like as disclosures?
Here’s what the TNFD recommends:
A recap on the TNFD
The Taskforce on Nature Related Financial Disclosures (TNFD) was launched in July 2020. It is a global initiative that seeks to develop a framework for companies and financial institutions to report on the financial risks associated with nature loss and degradation. It exists to provide a comprehensive reporting framework that can be used by organizations to assess their dependencies and impacts on nature, and to disclose this information to investors, lenders, and other stakeholders. The TNFD recognizes the need to address climate and nature risks together and seeks to facilitate the transition towards a sustainable, nature-positive economy.
How does it all fit together again?
We know what you’re thinking - this is a maze. The good news is that everyone gets that and these organisations are working together to establish a global baseline for sustainability reporting as we move towards a world of apples to apples when it comes to the inputs, frameworks and disclosures and reporting.
The TNDF will now be working with standard-setting organisations including ISSB, GRI and others, on the translation of the TNFD’s recommendations into voluntary standards and the emerging global baseline for sustainability reporting.
