Upcoming release of final recommendations
In the midst of the upheaval around the new EU Corporate Sustainability Reporting Directive (CSRD), another organisation is preparing the release of its final recommendations on the disclosure of specific risks and opportunities. The Taskforce on Nature-related Financial Disclosures (TNFD) will publish its global framework for risk management and reporting on biodiversity metrics in September 2023.
Why is this important?
For one thing, the TNFD framework builds on the same four pillars of the TCFD approach and all 11 of the TCFD recommended disclosures have been incorporated into the TNFD final draft. For those that need a small reminder, TCFD is the Taskforce on Climate-related Financial Disclosure, a framework on the disclosure of climate-related risks and opportunities, which has been made mandatory in countries such as the UK and Switzerland. Secondly, TNFD contains guidance and recommendations on how to go about to identify relevant risks and opportunities related to nature. Undoubtedly, this type of support is urgently needed by most companies. The framework also draws from and is aligned with other important standards and regulations such as the Sustainable Finance Disclosure Regulation (SFRD), the Global Reporting Initiative (GRI) and CSRD.
Why should you know more about the TNFD Framework?
There is a common misconception among many CEOs that biodiversity is not material to their business activities. But how many companies can state with certainty that their businesses are not reliant on any form of raw materials, or do not have any negative impacts on nature? For sure, some sectors are more in focus than others (e.g. food and beverages, pharmaceuticals, metals & mining, chemistry, textiles, energy and infrastructure), but any organisation with vulnerable supply chains must assess and manage its nature-related risks to prevent disruption and ensure long-term business viability. Here, the TNFD framework provides a useful structure and methodology based on its LEAP approach – Locate, Evaluate, Assess and Prepare. Furthermore, the aim of TNFD is to provide financial institutes with more and better information on their investees, in order to shift global financial flows away from nature-negative toward nature-positive outcomes. Again, TNFD helps by ensuring comparability between companies and improving transparency on nature-related risks and opportunities. Thus, companies can expect, and are already today experiencing, a growing pressure from their investors to report on nature-related impacts. Therefore, companies are well-advised to start analysing their impacts and dependencies on biodiversity now, not only to be prepared for upcoming disclosure regulation, but to minimize risks along the value chain and, put quite simply, to help preserve and restore nature – a responsibility that we all share.
Support from DFGE
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Feel free to check out our other blogpost: Biodiversity and Reporting Obligations