What are the TNFD recommendations?
The TNFD recommendations are a nature-focused framework structured around four core themes of governance, strategy, risk and impact management, and metrics and targets. Key nature-related financial disclosures support these four overarching recommendations. There are recommendations for all organisations, as well as supplemental guidance for specific sectors.
Core themes
Governance: Disclose the organisation’s governance of nature-related dependencies, impacts, risks, and opportunities. (Three recommended disclosures)
Strategy: Disclose the effects of nature-related dependencies, impacts, risks, and opportunities on the organisation’s business model, strategy, and financial planning where such information is material. (Four recommended disclosures)
Risk and impact management: Describe the processes used by the organisation to identify, assess, prioritise, and monitor nature-related dependencies, impacts, risks and opportunities. (Three recommended disclosures)
Metrics and targets: Disclose the metrics and targets used to assess and manage material nature-related dependencies, impacts, risks, and opportunities. (Three recommended disclosures)
The 14 recommended disclosures are designed to sit alongside an organisation’s financial statements as a package of decision-useful information. A set of recommended indicators and metrics is provided to assess each disclosure. These can be found in ‘Annex 1: TNFD core global disclosure metrics’.6
Supporting guidance
To support organisations adopting the 14 nature-related financial disclosure recommendations, the taskforce has created a range of supporting materials and guidance. These materials provide a base of knowledge for understanding the interaction of nature and business, as well as how nature, society, and the economy fit together.
The supporting guidance includes:Getting started with adoption of the TNFD Recommendations8
This is a practical-steps guide for those new to the TNFD recommendations.Guidance on the identification and assessment of nature-related issues: the LEAP approach9
This is an important document for finance professionals who develop and maintain internal metrics.
LEAP is an approach involving four core phases of analytic activity:
Locate your interface with nature (four steps).
Evaluate your dependencies and impacts (four steps).
Assess your risks and opportunities (four steps).
Prepare to respond to nature-related risks and opportunities and report (four steps).
This approach is underpinned with scenario analysis and engagement with indigenous peoples, local communities, and affected stakeholders.
Guidance on biomes10
Biomes are defined as ‘Global-scale zones, generally defined by the type of plant life that they support in response to average rainfall and temperature patterns e.g. tundra, coral reefs or savannas.’11
The guide, reflecting the location-specific character of nature, supports organisations that affect certain ecosystem biomes, including:
Tropical and subtropical forests
Savannas and grasslands
Intensive land-use systems
Intensive land-use systems — Urban and industrial ecosystems
Rivers and streams
Marine shelf
Guidance on scenario analysis12
Scenario analysis is an important tool, used by finance professionals to understand future implications. The insights help build an organisation’s nature and climate adaptation plans, enlighten investment decision-making, and inform reporting of nature-related financial information. They can focus on the materiality of potential implications on an organisation’s ability to create value in the short, medium or long term, as well as inform business strategy and financial planning.
Creating scenario plans that integrate climate and nature will move an organisation from being either ‘net-zero’ or ‘nature-positive’ to becoming a ‘net-positive’ entity.13
In 2023, AICPA & CIMA published Accounting for Climate Resilience.14 Using the TNFD scenario analysis guidance in conjunction with this report can provide a systems approach to nature and climate issues.
Guidance on engagement with Indigenous Peoples, Local Communities and affected stakeholders15
For finance professionals who are in a finance business partner role, or who are connecting with external stakeholders in an organisation’s value chain, this guide provides invaluable insight.