Who will encounter the TNFD recommendations?
Audiences for the TNFD recommendations include corporates, investors and financial institutions, regulators, stock exchanges, assurance and accounting firms, data providers, credit rating agencies and financial service providers.21
Within organisations, the recommendations and guidance will be useful for those who are developing their internal understanding of nature-related issues, managing nature-based resources and preparing reports.
The overarching aim must be a journey for entities, nations, and countries to becoming ‘nature-positive’, complementing the carbon-neutral strategy of many organisations as they transition towards net-zero business models. The TNFD defines the term ‘nature-positive’ as ‘a high-level goal and concept describing a future state of nature (e.g., biodiversity, ecosystem services and natural capital) which is greater than the current state’.22 For an organisation, this means that its activities and impacts on nature — species and ecosystems — should focus on restoration and regeneration rather than facilitating its decline.
Many organisations’ contribution to a nature-positive future state may be small; however, the collective action of sectors, industries, and nations will make a difference and bring change.
Organisations
The introduction of the TNFD recommendations into an organisation demonstrates the direction of travel towards being nature positive. However, this direction must be embedded in an organisation’s purpose and compelling vision. The organisation must then integrate nature factors into its governance, strategies, business models, and performance management systems. This will require a move from mechanistic thinking, where the focus is on increasing efficiency, to systemic thinking, where the focus is on being effective.
Finance professionals
The TNFD’s approach to metrics will be of particular interest to finance professionals. These have been helpfully broken down into these areas:
Metrics for internal assessment: The LEAP approach will guide the identification and assessment of nature-related issues. Actions will include the inclusion of nature issues into enterprise risk management (ERM) systems, strategic target setting, and performance metrics.
Metrics for external disclosure: The 4 core themes and 14 recommended disclosures will help report preparers focus on their organisation’s scope.
Finance functions
The TNFD recommendations make clear that ‘Nature is no longer a corporate social responsibility issue, but a core and strategic risk management issue alongside climate change.’23 This is a development that AICPA & CIMA welcome. Global biodiversity loss over recent decades has been accelerated by climate change. For example, during the intense heat of the summer of 2023, the world witnessed the fastest warming of its oceans, which in turn lead to sea-level rises and ocean acidification, threatening the survival of the existing marine ecosystems, causing coral bleaching and the loss of breeding grounds for fishes and mammals. Because the two issues are deeply intertwined, a coordinated business response to both issues is imperative. As organisations integrate climate and nature disclosures, transition planning, and adaptation strategies, the role of the accounting professional becomes increasingly critical to helping organisations become more climate- and nature-resilient.
The TNFD have collaborated with Forico, an Australian forestry company, on an illustrative disclosure report that integrates climate (TCFD) and nature (TNFD) disclosures: Illustrative Example of Integrated TCFD + TNFD Disclosures for The Tasmanian Forest Trust.24