Why are the TNFD recommendations needed?
The equal treatment of the six capitals could be called into question when we consider that “natural” capital represents life on earth and the ecosystem, without which the other five are rendered meaningless.
Regulators and governments are progressively focused on the topic of nature and biodiversity loss, with the result that increased legislation and reporting will affect organisations over the next five years. The TNFD recommendations and supporting guidance can help organisations adapt to these rapid changes.
The Kumming-Montreal Global Biodiversity Framework
At COP15, the UN Biodiversity Conference in December 2022, 196 countries agreed to the Kumming-Montreal Global Biodiversity Framework (GBF) — a bold and ambitious set of practical commitments to halt and reverse nature loss by 2030 and to live in harmony with nature by 2050. The framework’s vision states that ‘By 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people.’17
Target 15 of the GBF, one of 8 targets focused on tools and solutions for implementation and mainstreaming, states:
‘Take legal, administrative or policy measures to encourage and enable business, and in particular to ensure that large and transnational companies and financial institutions: (a) regularly monitor, assess and transparently disclose their risks; (b) provide information needed to consumers to promote sustainable consumption patterns; and (c) report on compliance with access and benefit-sharing regulations and measures.’18
The adoption of the GBF will help governments focus on developing national goals, targets, and measures to reverse biodiversity loss. Once national country plans have been developed, organisations will be tasked with supporting their implementation. The TNFD recommendations and supporting guidance provide a framework to assist organisations in the disclosure of their risks, dependencies, and impacts on biodiversity, as articulated in Target 15 of the GBF.
Corporate Sustainability Reporting Directive
Mandatory nature disclosure within the European Union takes effect from January 2024 with the introduction of the Corporate Sustainability Reporting Directive (CSRD). Among the five environmental European Sustainability Reporting Standards (ESRS), ESRS E4, Biodiversity and ecosystems, provides insight into future mandatory reporting standards on nature. It is clear from the ESRS E4 standard that reporting organisations should focus on strategies and business models that are ‘compatible with the transition to achieve no net loss by 2030, net gain from 2030 and full recovery by 2050’.19
Reporting organisations will be expected to describe their nature transition plans and policies, addressing:
Material biodiversity and ecosystems-related impacts
Their contribution to material biodiversity loss drivers
Material dependencies and material physical and transition risks and opportunities
Biodiversity-friendly production, consumption and sourcing of raw materials
Screening and engaging with suppliers on biodiversity and ecosystems
The social consequences of biodiversity and ecosystems-related dependencies and impacts20