Insight | TNFD Framework, a New Chapter for Biodiversity Reporting?

Insight | TNFD Framework, a New Chapter for Biodiversity Reporting?
A post by:
Victor Surel Victor Surel
Constance von Briskorn Constance von Briskorn
Maud Minuit Maud Minuit
Eliette Verdier Eliette Verdier

September saw the launch of the official framework produced by the Taskforce on Nature-related Financial Disclosure (TNFD) during Climate Week.

This launch, the culmination of two years of co-construction with companies, financial institutions and non-governmental organisations, is the product of an iterative process of testing and sharing feedback, in which I Care participated on several occasions, in the form of pilot tests and a position paper.

For a better understanding of the TNFD and how to implement it, you can consult the summary of our pilot on the agricultural and agri-food sector here.

Companies and financial institutions that volunteered now have a set of recommendations for assessing and disclosing the impacts and dependencies of their activities on nature, as well as estimating the associated risks and opportunities. The framework incorporates the 4 pillars of the TCFD (Governance, Strategy, Risk and Impact Management, Metrics and Objectives) and also seeks to be consistent with existing standards and regulations, such as the ISSB standards, the regulations put in place in the European Union (CSRD, SFDR) and the Kunming Montreal Accord.

What’s new

This launch was an opportunity to reaffirm some of the elements already shared in the various beta versions, as well as to communicate the new elements that have been added. Among the many publications and new features in this first official version, here are the ones that stood out:

Clarifications and additions to the 14 reporting recommendations:

  • On the governance pillar: the TNFD now asks the company or financial institution to describe its human rights policy, particularly with regard to indigenous peoples and local communities that could be affected by its activities, thus reaffirming the need to involve these stakeholders.
  • On the strategy pillar: it is recommended to disclose the locations of the organisation’s direct activities and, if possible, those of the upstream and downstream value chain(s) that meet the priority location criteria. Here, the TNFD enables an understanding of the specific nature of biodiversity issues, i.e. the importance for a stakeholder of locating its interfaces with nature.
  • On the risk and impact management pillar: recognising that for the majority of companies, the main challenges lie in the value chain, TNFD stresses the importance of disclosing their process for identifying, assessing and prioritising nature-related dependencies, impacts, risks and opportunities, distinguishing between the analysis covering their own operations and that of their value chain.

Additional guidance :

  • For the financial sector: in order to meet the specific needs of financial institutions, the TNFD has published a set of dedicated guidelines. This complementary publication deals in particular with the question of the metrics needed to guide investment choices towards greater consideration of biodiversity. It also includes a set of sector-specific recommendations aimed at clarifying the TNFD’s expectations based on the specific challenges of the various economic sectors. Further recommendations for 6 sectors with high impacts and dependencies on nature are expected in November.
  • Details on the LEAP process (a process enabling stakeholders to identify and assess their impacts, dependencies, risks and opportunities associated with nature) have been set out in a dedicated publication. These new features include:
    ➔ Simplified and more precise questions on the preliminary Scoping phase, which is now limited to a rapid, macro preliminary analysis of internal and external data in order to limit the time spent on this stage. The aim is to formulate an initial estimate of the DIROs (Dependencies, Impacts, Risks and Opportunities) and to agree on the objectives, timescales and scope of the study.
    ➔ An evolution of the questions on the Location phase, now formulated as funnels through different filters, with the aim of facilitating the identification of “priority locations”.
    ➔ The addition of a phase to assess the materiality of the impact, risks and opportunities once these have been assessed. The TNFD reaffirmed the importance of giving stakeholders the freedom to assess the materiality threshold themselves, in order to be aligned with the regulation to which they are subject, such as the CSRD for European stakeholders.
    ➔ The highlighting of links between the various LEAP components and the TNFD’s 14 reporting recommendations.

Our analysis

We warmly welcome the launch of this framework, which by virtue of its comprehensiveness is set to become a major standard for businesses and financial players in identifying, managing and disclosing their impacts, dependencies, risks and opportunities with regard to biodiversity.

Its clarity is particularly noteworthy given the complexity of the issues. The TNFD’s approach is designed to be educational: a range of resources, case studies and guides have been made available to help players tackle the subject independently.

Given these two main qualities, the TNFD framework represents an important step towards a more harmonised and transparent treatment of biodiversity, while ensuring consistency with the treatment of the climate issue. Built on the structure of the TCFD, but complementing and adapting it, the framework adopts an integrated approach to climate and nature-related risks, thus facilitating the joint treatment of these two issues in reporting in the future.

Challenges remain, however, and it is important to address them as we go along. We would like to highlight three of them:

  • Ensuring the convergence of metrics: due to the very nature of biodiversity, the absence of a universally accepted metric such as the CO2 equivalent for the climate has generated a profusion of indicators – particularly for measuring impact – that should be made to converge towards a few complementary indicators. The TNFD has identified more than 3,000 nature-related metrics as part of its work. Ensuring the convergence of these metrics is a particularly complex and key challenge for the future;
  • Continue to refine and structure the concept of “nature-related opportunities”: to date, in the TNFD, this concept encompasses, without distinction, “sustainability performance” opportunities (reduction of negative impacts and positive contributions) and “business” opportunities (development of new markets, regulations, etc.). These two types of opportunity are not in perfect alignment: although the viability of businesses is key to the successful implementation of “sustainability performance” opportunities, the former are clearly more fundamental to achieving the internationally agreed objective set at COP15 of “nature-positive” by 2030. In this context, a more refined definition of the concept of nature-related opportunities seems an important issue for the TNFD;
  • Moving from transparent reporting to setting targets: as comprehensive as it is, the TNFD framework constitutes a set of reporting recommendations that now need to be fulfilled. Over and above the issues of disclosure, it is essential that private players make a firm commitment to reducing their negative impact on nature and making a positive contribution. In this respect, they will also benefit from taking advantage of initiatives such as the SBTN methodology (science-based targets for nature developed by the Science Based Targets Network) to take action by setting themselves concrete, science-based objectives and thus contribute, at their own level, to achieving the major objectives and targets of the Global Biodiversity Framework.

Taking action

Apparent shortcomings in terms of the availability or quality of data should not be a barrier to getting to grips with the subject of biodiversity. As emphasised in the handbook “Getting started with the adoption of the TNFD” published to coincide with the launch of the framework, the challenge for organisations is to get started and move forward by iteration, as part of a continuous improvement process. In addition, it is possible to take advantage of existing reporting, auditing and compliance processes.

Urgent, collective action is needed to halt the decline in biodiversity. In this context, the TNFD calls on all companies and financial players intending to adopt the TNFD framework to come forward.

The I Care team is at the disposal of all players wishing to adopt this framework, which, like the TCFD, is becoming a key element in the transition to a more sustainable, and resilient economy.


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