The Taskforce on Nature-related Financial Disclosures (TNFD) has released additional guidance covering eight real economy sectors, updated additional guidance for financial institutions, and guidance on value chains. These resources are designed to help companies implement the TNFD Recommendations more effectively. The TNFD Recommendations are structured around four core pillars: (i) Governance, (ii) Strategy, (iii), Risk and Impact Management, and (iv) Metrics & Targets. They are aligned with the International Sustainability Standards Board’s IFRS Sustainability Standards, which incorporate the Task Force on Climate-related Financial Disclosures recommendations (see our earlier bulletin here). Additionally, the TNFD Recommendations support the goals and targets of the Kunming-Montreal Global Biodiversity Framework (see our earlier bulletin here).
TNFD also announced that it has experienced a surge in adoption, with a 30% increase in companies implementing its reporting recommendations since January. This growth is attributed to 96 additional firms committing to TNFD’s nature-related disclosure framework, bringing the total number of committed firms to 416.
This bulletin provides a brief overview of the TNFD’s additional guidance and important information about ongoing stakeholder consultations.
Additional sector guidance. The TNFD recognizes significant sectoral differences for corporations implementing the TNFD’s ‘LEAP’ (Locate, Evaluate, Assess and Prepare) approach. To address this variation, it has provided additional sector-specific guidance that is supplemental and intended to complement the TNFD’s Guidance on assessment of nature-related issues: the LEAP approach. The additional guidance offers detailed instructions on applying the TNFD core global disclosure metrics, core sector metrics, and the LEAP approach within the following sectors:
- Aquaculture;
- Biotechnology and Pharmaceuticals;
- Chemicals;
- Electric Utilities and Power Generators;
- Food and Agriculture;
- Forestry and Paper;
- Metals and Mining; and
- Oil and Gas.
Additional guidance for financial institutions. The updated additional guidance for financial institutions (version 2.0) provides additional guidance for financial institutions to apply the TNFD Recommendations, and is applicable to banks, re/insurance companies, asset managers and owners, and development finance institutions. Key focus areas include:
- guidance for financial institutions on the TNFD Recommendations;
- guidance on the TNFD metrics architecture for financial institutions, including a set of final TNFD disclosure metrics for financial institutions;
- a list of reference sectors to support the application of the core disclosure metric for financial institutions on exposure to sectors;
- a mapping to the TNFD core global metrics of the European Sustainable Finance Disclosure Regulation (SFDR) Principal Adverse Impact metrics; and
- additional resources and references on nature-related issues for financial institutions.
Guidance on value chains. The guidance on value chains offers enhanced support to organizations for identifying and assessing dependencies, impacts, risks, and opportunities within their upstream and downstream value chains. It highlights when full traceability is necessary and when using secondary data can be a suitable alternative to directly measuring dependencies and impacts. Key focus areas include:
- outline of value chain characteristics that can create challenges in assessing nature-related issues;
- how organizations can approach these issues using the LEAP approach;
- an overview of data needs for assessing value chains and how to address them; and
- how related disclosure frameworks and standards approach value chains.
Consultation and feedback. The TNFD is seeking feedback on the development of additional sector guidance for the following five sectors:
- Fishing;
- Engineering, construction and real estate;
- Construction materials;
- Beverages; and
- Apparel, accessories and footwear.
Interested stakeholders are encouraged to submit feedback by September 27, 2024.
For assistance with preparing comments or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.
*Special thanks to Anuja Purohit for her assistance in preparing this bulletin.
