September 24, 2024
Authors
Key Points
- Nature disclosure is the new norm for companies, due to mandated disclosure under the Corporate Sustainability Reporting Directive (CSRD) alongside rapidly increasing investor and stakeholder expectations.
- The Taskforce on Nature-related Financial Disclosures (TNFD) is the principal voluntary framework for nature disclosure and is closely aligned with CSRD.
- Companies already have some data ready to disclose under TNFD—particularly those utilizing TCFD, the Taskforce on Climate-related Financial Disclosures—and assessing readiness to disclose helps identify gaps and priority actions in understanding and acting on your company’s nature-related risks.
Nature disclosure has become the new norm for companies, due to both regulation and stakeholder pressure. Mandatory disclosure is now here, with companies around the world subject to the Corporate Sustainability Reporting Directive (CSRD) and its nature-related disclosures: ESRS E4-Biodiversity and Ecosystems, E3-Water and Marine Resources, E5-Resource Use and Circular Economy, and E2-Pollution. The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) will also require companies to assess their impacts to the environment throughout the value chain.
At the same time, investors and stakeholders are increasingly expecting companies to disclose their nature-related impacts and risks. The new norm of corporate nature disclosure reflects the growing recognition of the financial and operational risks nature loss poses to companies and their supply chains, as well as companies’ roles in impacting and remediating impacts to biodiversity and ecosystems.
The Taskforce on Nature-Related Financial Disclosures (TNFD) is the principal framework for voluntary nature-related disclosure, representing a new pathway for companies and financial institutions to act on nature loss. TNFD is closely aligned with CSRD, and the TNFD LEAP approach—Locate, Evaluate, Assess, Prepare—supports companies in assessing their nature-related impacts, dependencies, risks and opportunities necessary for disclosing under both frameworks. Indeed, TNFD and LEAP are expressly mentioned throughout CSRD, so they represent a useful framework to support companies’ mandatory and voluntary disclosure.
Market trends suggest that TNFD uptake will mirror that of its climate cousin, the Task Force on Climate-Related Financial Disclosures (TCFD), but at a more rapid pace. More than 320 companies have already committed as “early adopters” to disclose under TNFD in the next two years, representing listed companies based in 46 developed and emerging economies. Nearly a third of early adopters (100 of the total 320) are financial institutions, including asset owners and managers, collectively representing US$14 trillion in assets under management.
While reporting on nature-related impacts, dependencies, risks, and opportunities may seem daunting, companies already have some data available to report. Companies already reporting under TCFD likely have or could easily incorporate nature into existing processes and data.
Limited data is not an excuse for inaction, since similar to the TCFD, the majority of the recommended disclosures focus on process descriptions that do not require quantitative metrics to start reporting. Indeed, many companies already have a significant amount of existing data available (e.g., ERM, nature-related policies, substances of concern procedures, secondary data sources such as LCA and climate data, etc.) to disclose under TNFD, so conducting a gap assessment can be a good first step in understanding your readiness to disclose and where further action is needed.
To support our members in disclosing under TNFD, BSR provides a TNFD Readiness Check service to assess if a company is prepared. Key steps include:
- Holding a TNFD learning session with relevant employees to establish a strong foundation for the assessment. The session provides an overview of how TNFD fits into the broader reporting landscape, including CSRD, Global Reporting Initiative (GRI), and Carbon Disclosure Project (CDP).
- Conducting a peer benchmark—specific to TNFD—to understand industry norms and trends, best practices, and insight into market positioning.
- Carrying out a gap assessment of company data against TNFD reporting requirements and summarizing both promising starting points and remaining gaps.
- Based on the results of the benchmark and gap assessment, developing strategic and tactical recommendations for approaching TNFD.
Overall, our support seeks to ensure companies have a solid understanding of TNFD and how it fits into the broader disclosure landscape, clarity on their readiness to disclose and the actions needed to close gaps, as well as overall insights on their priority actions and positioning within the market. While we also support companies on CSRD reporting, BSR’s TNFD support provides a rapid and nature-focused assessment of existing data to support companies on their nature journeys.
Please contact our Nature team to find out more and discuss how we might support your company’s TNFD disclosure. While what we share here outlines our standard approach, we are pleased to customize our approach to best fit your company’s needs, timeline, and budget.
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