Introduction:
Creating robust, internationally consistent nature disclosures
In October 2020, AICPA® & CIMA® started a program of thought leadership to explore accountancy and sustainability, highlighted in Sustainability and Business — The Call to Action: Build Back Better1 This report was created as part of a series of briefs exploring the topic of sustainability, business, and the key role that finance professionals can play. These briefs will help organisations consider sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
This paper has been designed as a summary of a specific standard or framework. Although it has been written from the management accounting perspective, attest and assurance issues will also be considered because they are vitally important in the evolving world of sustainability reporting.
A framework or a set of standards? The difference
A framework is a set of principle-based guidance for how information can be structured and prepared, as well as what broad topics should be covered. A set of standards is a collection of specific, replicable and detailed rules-based requirements for what should be reported for each topic.
Background
The Taskforce on Nature-related Financial Disclosures (TNFD) formed in June 2021. Its formation came from a September 2020 market-led initiative of 74 ‘financial institutions, corporates, governments, regulators, multilaterals, NGOs and consortiums’.2 September 2021 saw the appointment of taskforce members and the creation of a support secretariat.
The taskforce’s mission is:‘To develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and towards nature-positive outcomes.’3
Between March 2022 and March 2023, the TNFD released 4 beta versions of a nature framework for extensive market consultations and pilot testing. The taskforce received 3,400 pieces of feedback and 200 market participant pilot tests of the beta versions.
The TNFD recommendations and additional guidance were released in September 2023. These recommendations ‘provide companies and financial institutions of all sizes with a risk management and disclosure framework to identify, assess, manage and, where appropriate, disclose nature-related issues’.4
For finance professionals, the TNFD recommendations and supporting guidance are valuable tools to build your nature literacy.