Task Force on Nature-Related Financial Disclosures (TNFD) Strategy

Task Force on Nature-Related Financial Disclosures (TNFD) Strategy

TNFD has received growing attention recently after the introduction of Task Force on Climate-Related Financial Disclosures (TCFD) framework. Using the LEAP methodology, CECEPEC provides corporates and financial institutions with nature-related services, including ecological assessment, TNFD disclosure, and business strategy consulting. We help organizations' boards, senior management, and working groups stay updated on related policy changes and market trends. Through workshops and training programmes, we help clients achieve enhanced understanding and strategies for effective nature-related financial risk management.

The Relationship between Nature and Business

Nature refers to a construct of four realms – Land, Ocean, Freshwater, and Atmosphere from TNFD’s perspective. The four realms provide an entry point for understanding how organizations and people depend on, and have impacts on, the Natural Capital that provides the resources and services. Natural Capital is the stock of natural resources that combine to yield a flow of benefits to people. Biodiversity is an essential characteristic of nature that grant ecosystem to be productive, resilient, and able to adapt to change. Nature-related dependencies can result in changes in earning and cashflow, which can transmit into a broader range of financial risks, including market, credit, and liquidity risks in the corporate views. On the other hand, corporate can have nature-related opportunities through several ways, including reducing nature-related risks.

From TCFD to TNFD: a Nature-related Business Risk Management and Disclosure Framework

Nature loss, in addition to climate change, poses a major risk to businesses, while moving to nature-positive investments offers opportunity. Supported by major international organizations including the United Nations, the G7, and the G20, the market-led, science-based Taskforce on Nature-related Financial Disclosures (TNFD) framework will enable companies and financial institutions to integrate nature into decision making. The TNFD’s complete recommendations will be published in September 2023.

The TNFD Framework and Methodology

The core components of TNFD Framework includes the Disclosure Recommendations, Risk & Opportunity Assessment Approach (LEAP), Core Concepts & Definitions, Data, Metrics & Targets, as well as Additional Guidance.

Disclosure recommendations are based on the disclosure approach and guidance developed by TCFD, including governance, strategy, risk and impact management, metrics and target. Besides, TNFD has further developed the disclosure framework by adding a new section named societal dimensions of nature-related risk assessment and disclosure, which focuses on the nature-related risks and impacts on indigenous peoples and local communities.

Particularly, in order to provide market participants with a simple, accessible guidance on how to understand and respond to nature-related risks and opportunities, TNFD has innovatively developed an integrated assessment process for nature-related risk and opportunity management called LEAP.

Locate your interface with nature;

Evaluate your dependencies and impacts;

Assess your risks and opportunities;

Prepare to respond to nature-related risks and opportunities and report.