TNFD

The Taskforce on Nature-related Financial Disclosures (TNFD) provides a risk management and disclosure framework for organizations to report and act on evolving nature-related dependencies, impacts, risks, and opportunities. Released in September 2023, the TNFD framework mirrors the structure of TCFD while addressing the unique complexities of nature-related issues across biodiversity, ecosystems, and natural capital.

Framework Overview

TNFD adopts the same four-pillar structure as TCFD (Governance, Strategy, Risk & Impact Management, Metrics & Targets), integrating all 11 TCFD-recommended disclosures by substituting references to "climate" with "nature." This design enables organizations to integrate nature-related disclosures into existing climate reporting processes.

The Four Pillars

Governance — Oversight and management of nature-related dependencies, impacts, risks, and opportunities

Strategy — Actual and potential impacts of nature-related issues on business model, strategy, and financial planning

Risk & Impact Management — Processes for identifying, assessing, and managing nature-related risks and opportunities

Metrics & Targets — Metrics and targets used to assess and manage relevant nature-related issues

The LEAP Approach

The LEAP approach (Locate, Evaluate, Assess, Prepare) provides a structured process for identifying and assessing nature-related issues across the value chain:

Locate — Identify the interface with nature across direct operations, upstream, and downstream value chain. Use spatial analysis to understand where operations and value chain intersect with sensitive ecosystems.

Evaluate — Identify dependencies and impacts on nature. Dependencies are aspects of ecosystem services that an organization relies on (e.g., water provision, pollination). Impacts are changes to the state of nature caused by business activities (e.g., habitat loss, pollution).

Assess — Assess material risks and opportunities. Evaluate physical risks (ecosystem degradation affecting operations), transition risks (policy, market, reputational changes), and systemic risks (ecosystem collapse). Identify opportunities from nature-positive solutions.

Prepare — Prepare to respond and report. Develop strategies to manage risks, seize opportunities, and disclose according to TNFD recommendations.

Disclosure Requirements

TNFD recommends 14 core disclosures across the four pillars, with additional guidance for specific sectors (agriculture, food & beverage, forestry, mining, energy, financial institutions).

Key Disclosure Elements

Strategy Disclosures:

• Description of nature-related dependencies, impacts, risks, and opportunities identified over short, medium, and long term
• Effect of nature-related issues on business model, value chain, strategy, and financial planning
• Resilience of strategy to nature-related scenarios
• Locations of assets and activities in or near sensitive ecosystems (priority biomes, key biodiversity areas)

Metrics & Targets:

• Core metrics: Dependencies (ecosystem services relied upon), Impacts (pressures on nature), Risks and opportunities (financial implications), Response (actions taken)
• Sector-specific metrics aligned with Science Based Targets Network (SBTN) guidance
• Targets for managing nature-related dependencies, impacts, risks, and opportunities

Implementation Guidance

Phase 1: Scoping and Assessment (Months 1-3)

Governance Setup — Establish board-level oversight, assign management responsibilities, integrate nature into risk management frameworks

LEAP Analysis — Conduct initial LEAP assessment for direct operations and tier 1 suppliers. Use spatial data tools (IBAT, ENCORE, Trase) to identify ecosystem interfaces.

Materiality Assessment — Determine which nature-related issues are material to the business and stakeholders. Consider both impact materiality (effect on nature) and financial materiality (effect on enterprise value).

Phase 2: Disclosure Preparation (Months 4-6)

Data Collection — Gather baseline data on dependencies (water use, pollination services), impacts (land use change, pollution), and state of nature (biodiversity metrics, ecosystem condition).

Scenario Analysis — Explore resilience under nature-related scenarios (e.g., ecosystem collapse, policy shifts toward nature-positive economy).

Target Setting — Set science-based targets aligned with SBTN guidance for pressure reduction (e.g., zero deforestation, freshwater use within planetary boundaries).

Phase 3: Reporting and Integration (Months 7-12)

Disclosure — Publish TNFD-aligned disclosures in annual report, sustainability report, or standalone nature report.

Integration — Embed nature considerations into capital allocation, procurement, product development, and risk management processes.

Engagement — Engage with suppliers, customers, investors, and local communities on nature-related issues.

Why TNFD Matters

Nature loss poses systemic risks to the global economy. The World Economic Forum estimates that $44 trillion of economic value generation (more than half of global GDP) is moderately or highly dependent on nature and its services. The IPBES Global Assessment (2019) found that 1 million species are threatened with extinction.

As of 2025, over 500 organizations have committed to adopting TNFD recommendations, and regulatory requirements are emerging in the EU (ESRS E4), UK (SDR), and other jurisdictions.

Business Benefits

Risk Management — Identify and mitigate nature-related risks before they materialize into financial losses. Examples include water scarcity affecting operations, biodiversity loss disrupting supply chains, and regulatory penalties for ecosystem damage.

Access to Capital — Investors increasingly require nature-related disclosures. Financial institutions use TNFD to assess portfolio nature risks and align with nature-positive finance commitments.

Operational Resilience — Understanding dependencies on ecosystem services (water, pollination, climate regulation) enables proactive management and reduces vulnerability to nature degradation.

Market Differentiation — Nature-positive products and services appeal to environmentally conscious consumers and B2B customers. Early adopters gain competitive advantage.

Regulatory Preparedness — Proactive TNFD adoption prepares organizations for emerging mandatory nature disclosure requirements (EU CSRD, UK SDR, potential SEC rules).

Challenges

Data Availability — Nature-related data is less mature than climate data. Ecosystem condition metrics, biodiversity baselines, and value chain impacts are difficult to quantify.

Spatial Complexity — Nature impacts are location-specific. A factory in a biodiversity hotspot has different implications than one in a degraded area. Spatial analysis requires geospatial tools and expertise.

Value Chain Scope — Most nature impacts occur in upstream supply chains (agriculture, forestry, mining). Obtaining supplier data is challenging, especially beyond tier 1.

Methodological Uncertainty — Emerging methodologies for assessing dependencies, impacts, and financial risks lack standardization. Different tools (ENCORE, IBAT, Integrated Biodiversity Assessment Tool) produce varying results.

Resource Requirements — TNFD implementation requires cross-functional collaboration (sustainability, risk, finance, operations, procurement) and investment in tools, training, and external expertise.

Primary Source Documents

From ESG Library

• ESG Reporting Made Simple (IFRS/SASB) — Includes guidance on integrating nature-related disclosures alongside climate disclosures
• ESG & GRI Reporting Made Simple — GRI 304 (Biodiversity) complements TNFD disclosures

View all books →

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