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Disclosure & ImplementationLesson 1 of 45 min readTNFD Recommendations v1.0, Section C

TNFD Disclosure Recommendations

TNFD Disclosure Recommendations

The Taskforce on Nature-related Financial Disclosures published its final recommendations in September 2023, following more than two years of consultation and iteration through 14 beta framework versions. The final recommendations comprise 14 recommended disclosures organised under four pillars that mirror the structure of the Task Force on Climate-related Financial Disclosures (TCFD): Governance, Strategy, Risk and Impact Management, and Metrics and Targets. This architectural alignment with TCFD is deliberate - TNFD is designed to be used alongside TCFD by organisations already reporting on climate, and to be adopted by the same regulatory and voluntary frameworks that have driven TCFD uptake.

The Four Pillars and 14 Recommended Disclosures

Each of the four TNFD pillars contains a set of recommended disclosures (designated by the letters G, S, R, and M for the four pillars respectively). The full set of 14 recommendations is:

Governance (Disclosures G1-G2)

  • G1: Describe the board's oversight of nature-related dependencies, impacts, risks, and opportunities
  • G2: Describe management's role in assessing and managing nature-related dependencies, impacts, risks, and opportunities

Strategy (Disclosures S1-S4)

  • S1: Describe the nature-related dependencies, impacts, risks, and opportunities the organisation has identified over the short, medium, and long term
  • S2: Describe the effect of nature-related dependencies, impacts, risks, and opportunities on the organisation's businesses, strategy, and financial planning, including transition plans
  • S3: Describe the resilience of the organisation's strategy to nature-related risks and opportunities, including the results of scenario analysis
  • S4: Disclose the locations of assets and/or activities, as relevant, in or near biodiversity-sensitive areas, and areas of high nature risk in direct operations and upstream and downstream value chains

Risk and Impact Management (Disclosures R1-R3)

  • R1: Describe the organisation's processes for identifying and assessing nature-related dependencies, impacts, risks, and opportunities in its direct operations
  • R2: Describe the organisation's processes for identifying and assessing nature-related dependencies, impacts, risks, and opportunities in its upstream and downstream value chain
  • R3: Describe the organisation's processes for managing nature-related dependencies, impacts, risks, and opportunities and actions taken in relation to those processes

Metrics and Targets (Disclosures M1-M5)

  • M1: Disclose the metrics used by the organisation to assess and manage material nature-related risks and opportunities in line with its strategy and risk management process
  • M2: Disclose the metrics used by the organisation to assess and manage dependencies and impacts on nature
  • M3: Describe the targets and goals used by the organisation in relation to nature and disclose performance against these targets
  • M4: Disclose the organisation's overall assessment of its alignment with, or progress towards meeting, national and international nature goals and targets
  • M5: Disclose the organisation's overall assessment of its negative and positive impacts on nature

Key Difference from TCFD: Locations Matter

One of the most important differences between TNFD and TCFD is that TNFD is inherently spatial. Climate risk is largely location-agnostic: a tonne of CO2 emitted in Indonesia has the same global warming impact as one emitted in Germany. Nature risk is intensely location-specific: a factory in a watershed adjacent to a Key Biodiversity Area has very different nature risk exposure than an identical factory in an already-degraded industrial zone. TNFD's Disclosure S4 - requiring companies to disclose the locations of assets and activities in or near biodiversity-sensitive areas - reflects this fundamental difference and makes geographic mapping of operations and supply chains a core component of TNFD disclosure.

TNFD Metrics: Core Global and Sector Metrics

TNFD provides a tiered metrics architecture. Core Global Metrics apply to all organisations and provide a common baseline for cross-company and cross-sector comparison. Core Sector Metrics provide additional disclosures specific to 15 high-priority sectors. Additional Metrics are recommended for organisations with more advanced capabilities or where specific nature issues are particularly material.

Core Global Metrics include:

  • Land use and ecological sensitivity (area of operations in or near protected areas and KBAs)
  • Water use intensity (water withdrawal and consumption, with location and stress context)
  • Greenhouse gas emissions (linked to climate-nature nexus)
  • Waste and pollution (tonnes of pollutants discharged to water and land)
  • Species impact (threatened species affected by operations)

Early Adopter Examples

By early 2024, over 320 organisations across 46 countries had committed to TNFD adoption, with more than 60 organisations publishing early TNFD-aligned disclosures. Sectors represented include financial services, food and agriculture, chemicals, utilities, and consumer goods.

Example: Structure of an Early TNFD Disclosure

A leading food and beverage company published one of the first comprehensive TNFD-aligned disclosures in 2024. The disclosure included: (1) Governance: descriptions of how the board's sustainability committee reviews nature-related risks quarterly, with specific board-level nature competencies identified; (2) Strategy - S1 and S2: the top three material nature-related risks identified through a LEAP assessment (water scarcity in key sourcing regions, deforestation in the cocoa supply chain, and soil degradation affecting crop yields), with financial impact ranges estimated; (3) Strategy - S4: a geographic overlay showing the percentage of agricultural sourcing from areas within 50km of KBAs; (4) Metrics - M3: a commitment to 100% certified deforestation-free cocoa sourcing by 2026 and a 30% reduction in water use intensity per tonne of product by 2030. The disclosure explicitly cross-referenced climate disclosures under TCFD to show how nature and climate commitments are integrated.

Reporting Guidance and TNFD Adoption Process

TNFD recommends a phased adoption approach, particularly for organisations that are new to nature-related risk assessment. In year one, organisations are encouraged to conduct an initial LEAP assessment, identify their priority locations and most material nature issues, and produce a first disclosure that is transparent about its limitations and scope. Over subsequent years, the assessment scope expands, data quality improves, and targets become more specific and measurable.

TNFD disclosures should be made in mainstream financial reports (annual reports and accounts) rather than standalone sustainability reports, reflecting TNFD's view that nature-related risks are financially material and should be reported to investors and other financial stakeholders alongside other material financial risks. This mainstream reporting expectation aligns with the approach taken by IFRS Sustainability Disclosure Standards (ISSB) and the CSRD in Europe.

Analogy: TNFD as a Nature Balance Sheet

Traditional financial reporting gives investors a balance sheet showing what a company owns (assets) and owes (liabilities). TNFD's 14 recommended disclosures function like a "nature balance sheet" - showing what the company depends on from nature (its natural capital assets or ecosystem service inputs), what it impacts (its liabilities to nature), how it manages those dependencies and impacts (governance and risk management), and what it is doing to improve its relationship with nature over time (targets and strategy). Just as investors use financial statements to assess financial health, TNFD disclosures allow investors and other stakeholders to assess a company's nature-related health and resilience.

Key Takeaways

  • 1TNFD comprises 14 recommended disclosures across four pillars (Governance, Strategy, Risk and Impact Management, Metrics and Targets) that mirror TCFD's structure, enabling joint climate-nature disclosure
  • 2A defining feature of TNFD relative to TCFD is its spatial nature: Disclosure S4 requires companies to report the locations of assets and activities near biodiversity-sensitive areas, making geographic mapping of operations and supply chains essential
  • 3TNFD uses a tiered metrics architecture with Core Global Metrics (applicable to all organisations) and Core Sector Metrics (for 15 high-priority sectors), with land use, water use, and species impact as key core global metrics
  • 4Over 320 organisations across 46 countries committed to TNFD adoption by early 2024, with disclosures expected in mainstream financial reports rather than standalone sustainability publications
  • 5TNFD recommends phased adoption: starting with an initial LEAP assessment and limited disclosure in year one, progressively expanding scope, data quality, and target specificity over subsequent years

Knowledge Check

1.How many recommended disclosures does TNFD comprise in total, and how are they organised?

2.Which TNFD disclosure requires companies to report the locations of assets and activities in or near biodiversity-sensitive areas?

3.Where does TNFD recommend that nature-related disclosures should be made?

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