Task Force for Nature-based Financial Impacts (TNFD) launches Beta Framework

Yesterday, the Task Force for Nature-based Financial Disclosures (TNFD) launched the first Beta version of its risk management Framework. IEMA's Policy and Engagement Lead on Biodiversity and Natural Capital Lesley Wilson reports.

The TNFD is an alliance of 34 individuals from across business, finance, institutions and market service providers with operations in over 180 countries as well as 13 ‘knowledge partners’ that includes the Cambridge Institute for Sustainability Leadership, The Capitals Coalition, and the WWF. The TNFD’s work has previously been endorsed by Zac Goldsmith, Minister of State for the Pacific and the International Environment and Emma Howard Boyd, Chair of the Environment Agency.

The publication of the Framework exemplifies the shift in focus to include nature in business decisions, worldwide. The framework aims at improving business decision-making through better understanding of dependencies on nature as well as negative and positive impacts on nature, and by creating a framework within which to measure and report this.

The TNFD beta Framework aims to help businesses manage risk, feed into strategies, and provide useful information to investors, the finance industry and key stakeholders. The Framework consists of three parts:

• Foundational, fundamental guidance which includes ‘science-based concepts and definitions’, and aims to allow a wide range of users to understand nature and nature-related risks and opportunities
• Recommendations for disclosure that are aligned to the Task Force on Climate-related Financial Disclosure (TCFD) in terms of language, approach and the four underlying pillars.
• Practical guidance on nature-related risk and opportunity assessment to integrate into risk management and other business processes

The principles behind the Framework include: market useability, that it’s science-based, that it’s purpose-driven (with minimal granularity), and that it is aligned with existing disclosures and standards.

The Framework takes what it calls the LEAP approach to risk and opportunity assessment: Locate the interface with nature, Evaluate dependencies and impacts, Assess risks and opportunities, Prepare to respond to the risks and opportunities report. The Framework also notes that location is an important feature of nature-based reporting and includes location-specific disclosure.

To reflect the urgent need for this kind of tool, the TNFD have used an ‘open innovation’ approach, inviting business to use and feedback on the Beta Framework over 18 months. This Beta Framework is the first of three iterations and further versions will be published in June, October and February 2023 with the final TNFD recommendations in September 2023.

The TNFD is the sister publication to the Task Force on Climate-Related Disclosure, currently due to come into regulation in the UK on 6 April. Last year IEMA members responded to the Government’s consultation to mandate the TCFD in the UK, a result of which was that some of the IEMA recommendations were incorporated into the final policy.

This new TNFD Beta Framework for risk management seems to be another useful tool in the box for businesses who are looking to manage their impacts on nature. The Framework will be relevant to many IEMA members working in environmental teams, finance teams and company Boards for measuring, reporting and integrating nature-based information into business strategies and processes.