Two years since the launch of the initial consultation process, TNFD, a network of 40 investors with more than $20 trillion in assets under management has outlined a set of 14 recommendation, aimed at incorporating disclosures on nature risk into firm’s governance, strategy, risk and impact management, and metrics and targets. These four pillars mirror those of TCFD reporting standards.
The recommendations aim to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes and the goals of the Kunming-Montreal Global Biodiversity Framework.
With the announcement of the final recommendations, TNFD aims for companies to start adopting the new guidelines as early as this week. GSK is among the first firms which has committed to adopting the standards from 2026 based on 2025 data.
While adoption of the new guidelines is not compulsory, the taskforce will track their adoption on an annual basis, similar to the TCFD disclosures.
And there are material incentives for taking the recommendations on board, as David Craig, co-chair of the TNFD and founder and former CEO of Refinitiv stressed: “Nature-risk is sitting in company cash flows and capital portfolios today. The costs of inaction are mounting quickly.”
“Businesses and financial institutions now have the tools they need to take action. Building on the language, structure and approach of the TCFD and consistent with the ISSB’s sustainability reporting baseline, the adoption of the TNFD Recommendations represent a step-change in the momentum and capacity for business and finance to identify, assess and disclose their exposure to nature-related issues in a manner consistent with climate-related-reporting” he added.
“Nature-risk is sitting in company cash flows and capital portfolios today. The costs of inaction are mounting quickly.”
The announcement was welcomed by James Alexander, chief executive of the UK Sustainable Investment and Finance Association: “We encourage international standard setters and regulatory authorities to consider how the framework can be rapidly adopted into corporate reporting requirements. The International Sustainability Standards Board (ISSB) should now turn its attention towards introducing comparable and decision-useful disclosure standards for biodiversity and ecosystem services, drawing heavily on the TNFD’s finalised framework.”
But others highlighted potential challenges. Simon Connell, senior associate at the Cambridge Institute for Sustainability Leadership (CISL) and director at Baringa warned that financial institutions remained dependent on their clients and counterparties to disclose nature-related risks. “We've got the same 'dance' we had with TCFD, where financial institutions are reliant on their clients and counterparties' disclosures to disclose themselves. In numerous conversations with corporates over recent months, the greatest pressures they are experiencing are coming from investors and lenders, who are rapidly passing on disclosure expectations.”
TNFD’s recommendations build on those of the Task Force on Climate-related Financial Disclosures (TCFD) and are consistent with the global sustainability standards of the International Sustainability Standards Board (ISSB) and the impact materiality approach used by the Global Reporting Initiative (GRI) and incorporated into the new European Sustainability Reporting Standards.
