The second version includes guidance on metrics and how companies can conduct dependency and impact evaluation.
On 28 June 2022, the Taskforce on Nature-related Financial Disclosures (TNFD) released version 0.2 of its framework for nature-related risk and opportunity management and disclosure (the Framework). The announcement builds on the release of the first iteration in March 2022, which was broadly received positively by market participants in a public feedback process hosted on the TNFD website.
The TNFD was established to develop a risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. As the name may suggest, the TNFD has based much of its fundamental structure, including many aspects of the core disclosure recommendations, on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The TNFD hopes that the Framework will therefore have the market impact that the TCFD recommendations have had in the climate space, and provide a basis by which companies can represent their natural capital-linked risks and opportunities in a clear and comparable manner for investors.
While much of the new version of the Framework has not been significantly altered from the version published in March (including the drat disclosure recommendations and core concepts), this iteration includes several modifications and additional elements that have been developed by the TNFD over recent months. These include:
- an architecture for metrics and targets and an illustrative set of assessment metrics;
- guidance on how companies can undertake dependency and impact evaluation;
- an overview of TNFD’s approach to the future development of additional guidance, including sector classification aligned with the approach taken by the International Sustainability Standards Board (ISSB), the Sustainability Accounting Standards Board (SASB) Standards, and the TCFD; and
- additional practical guidance for market participants interested in starting to pilot test the Framework from 1 July 2022 to 1 June 2023.
In relation to the additional guidance on metrics and targets, the Framework distinguishes between “assessment metrics” and “disclosure metrics”, recognising that the information that gets disclosed to investors is often only a subset of the data that companies may seek, or need, to analyse internally. The Framework contains a set of illustrative metrics for dependencies and impacts of nature, drawn using existing metrics currently used in the market. The TNFD has indicated that this set of illustrative metrics will be expanded to include risk, opportunity, and response assessment metrics as well as disclosure metrics in future updates to the Framework scheduled for November 2022 and February 2023.
The TNFD aims to deliver the final version of the Framework in September 2023, and, many financial institutions and large companies across sectors have already expressed support for this initiative.