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TNFD

NATURE IN
SCOPE
A summary of the proposed
scope, governance, work plan,
communication and resourcing
plan of the TNFD

T N
F D
Bringing together a Taskforce on
Nature-related Financial Disclosures

1 2021
June TNFD Nature in Scope
Foreword

We are pleased to have served as Co-Chairs The IWG engaged 75 members covering
of the Informal Working Group (IWG) to the financial institutions, regulators, corpo-
Taskforce on Nature-Related Financial Disclo- rates and others influential actors with over
sures (TNFD). This has been an exciting and US$  8.5 trillion in assets. We were further
dynamic preparatory phase towards the supported by the United Nations, with UNDP
launch of this much-needed market-leading and UNEP Finance Initiative playing the
transformative effort. role of ‘Accelerator Team’, WWF and Global
Canopy. Inputs were widely received from
According to estimates by the World
observers and an initial group of stakehold-
Economic Forum, more than half the world’s
ers. We will continue to broaden engagement,
economic output—US$  44tn of economic
seeking out the views of further groups and
value generation—is moderately or highly
experts including representatives of indig-
dependent on nature. The TNFD is expected
enous peoples and affected communities
to support the shift in finance by providing
through the work of the full Taskforce. The
a framework for organisations to report and
groups and individuals in the IWG workedin-
act on evolving nature-related risks, in order
tensively over 9 months through member-led
to support a shift in global financial flows
workstreams and with commissioned techni-
away from nature-negative outcomes and
cal support to craft and deliver the material
toward nature-positive outcomes.
summarised herein.

2 TNFD Nature in Scope


The result is this ‘Nature in Scope’ paper which for the aims of the initiative, we are pleased
summarizes practical recommendations for to welcome the TNFD Co-Chairs: Elizabeth
the technical scope and operating model of Maruma Mrema, Executive Secretary of the UN
the TNFD. Delivery of these is supported by Convention on Biological Diversity and David
a well-crafted two-year work plan anchored Craig, Founder & CEO of Refinitiv and Group
in building, testing and consultation—in the Head of Data and Analytics for London Stock
continuum of evolving risk, that is being itera- Exchange Group (LSEG).
tive and adaptive to this rapidly evolving space.
We look forward to supporting the incoming
The governance of the TNFD has been estab- co-Chairs and the members of the Taskforce
lished to enable a market-led initiative in the and wish them the greatest success in carrying
service both of financial risk identification and forward the delivery of this important initiative,
management, as well as positive outcomes for which is needed to turn the tide of nature loss
nature and economic stability more broadly. worldwide and limit the exposure of biodiversi-
ty-related risks on financial stability.
Following the completion of the preparatory
phase, having secured widespread support

The IWG TNFD Co-Chairs:

Mariuz Calvet Antoine Sire Rhian-Mari Thomas


Grupo Financiero Banorte BNP Paribas Green Finance Institute

Catalyzed by the founding partners:

The work of the TNFD is supported by an anchor investment by the Global


Environment Facility (GEF). Other donors are expected the be confirmed soon

www.theGEF.org

3 TNFD Nature in Scope


A summary of the
proposed scope,
governance, workplan,
resourcing and
communications needs
of the TNFD.

This report is based on 9 months of work by the five workstreams of the Informal Working Group
(IWG) of the TNFD set up in September 2020. It has been prepared for the members of the IWG
and is available for public distribution.

The Informal Working Group (IWG) was led by market players and developed this paper through
a number of workstreams, bringing together the collective knowledge and experience of dozens
of organisations. As a culmination of this effort, the paper summarizes the way forward for the
coming two-year effort, and sets the stage for a market-wide shift in how nature-related risks are
reported and acted upon.

Proposed Goal of the TNFD:


The goal of the TNFD is to provide a framework for organisations to report
and act on evolving nature-related risks, in order to support a shift in
global financial flows away from nature-negative outcomes and toward
nature-positive outcomes.

4 TNFD Nature in Scope


Proposed
TNFD Principles:

1. Market Usability: Develop frameworks directly useful and valuable to market report-
ers and users, notably corporations and financial institutions, as well as policy and other
actors.

2. Science-based: Follow a scientifically anchored approach, incorporate well established


and emerging scientific evidence and aim to incorporate other existing science-based
initiatives.

3. Nature-related Risks: Address nature-related risks that include immediate, material


financial risks as well as nature dependencies and impacts and related organisational
and societal risks.

4. Purpose-driven: Be purpose driven and actively target reducing risks and increasing
nature-positive action by using the minimum required level of granularity to ensure
achievement of the TNFD goal.

5. Integrated & Adaptive: Build effective measurement and reporting frameworks that can
be integrated into and enhance existing disclosures and tandards. Account for and be
adaptive to changes in national and international policy commitments, standards and
market conditions.

6. Climate-Nature Nexus: Employ an integrated approach to climate- and nature-related


risks, scaling up finance for nature-based solutions.

7. Globally Inclusive: Ensure the framework and approach is relevant, just, valuable, acces-
sible and affordable worldwide, including emerging and developed markets.

5 TNFD Nature in Scope


Market Usability Science Based Nature-related Risks

Purpose Driven Integrated & Climate-Nature Globally Inclusive


Adaptive Nexus

The TNFD Scope is focused on living nature and elements relating to living nature such as
air, soil and water. In addition to shorter-term financial risks, the scope includes longer
term risks represented by its impact and dependencies on nature. The TNFD is not a new
standard but an aggregator of the best tools and materials to promote worldwide consis-
tency for nature-related reporting.

TNFD Work Plan


The TNFD Work Plan is presented as a means to put the goal, principles and scope into
action over a two-year period (2021–2023). It includes detail on how the TNFD framework
will be developed with the best available scientific and technical input, piloted broadly
with institutions globally priority sub-sector, consulted on widely with all interested stake-
holders, and eventually launched for wide adoption in the market from 2023 onwards.

TNFD Governance Structure


The TNFD Governance structure is a streamlined approach best suited to a market-led
initiative, with appropriate accountability and guardrails. It involves two Co-Chairs who
represent both the public and private sector, global North and South plus topic exper-
tise in nature and finance. The Taskforce membership comprises 30 individuals from the
financial sector, data reporters and supporters such as data providers and accountants.

6 TNFD Nature in Scope


Highlights: Who benefits from TNFD’s work?
Investors can make informed and robust capital allocation decisions based on clarity, confidence
and trust in natural capital and environmental opportunities and risks disclosed by a company,
alongside climate change.

Analysts can be better equipped to utilise environmental and natural capital-related information
in determining impacts on future cash flow and ultimately company valuations, alongside climate
change. 

Companies can use the TNFD Framework to incorporate environmental and natural capital-re-
lated information in mainstream financial reports alongside data on climate, assisting companies
in achieving a holistic view of how climate change and natural capital can affect their perfor-
mance and the necessary actions they could take to address the risks and opportunities.

Regulators can benefit from standards-ready material and a framework that can be immediately
adopted or referenced as a method of compliance in regulation/guidance, informing business
decision-making related to the use of natural resources, land and sustainable behaviour. 

Stock exchanges can consider new voluntary and mandatory listing requirements linked to
material environmental and natural capital-related risks and opportunities alongside climate
change.

Accounting firms can provide more comprehensive assurance of companies reporting on envi-
ronmental and natural capital-related performance.

7 TNFD Nature in Scope


Proposed TNFD Scope

The TNFD framework will adopt a four-pillar approach, structured around how organizations
operate: governance, strategy, risk management, metrics and targets (see Figure 1 below and
glossary for definitions). This is the same structure used by the Task Force on Climate-related
Financial Disclosures’ (TCFD) framework. However, in recognition of the particular challenges
of measuring nature, broader policy and market developments, and the systemic nature of
the risk, the TNFD will incorporate a broader definition of the term “risks and opportunities”
into each pillar. We recommend the use of the term “nature-related risks and opportuni-
ties” to broadly refer to the risks and opportunities to an organization posed by the linkages
between its activities and nature. In addition to shorter-term financial risks, this includes
longer term risks represented by its impact and dependencies on nature. Precise definitions
of each of these components are provided below.

This means organizations should disclose not just how nature may (positively or negatively)
impact the organization’s immediate financial performance (“outside in”), but also how the
organization (positively or negatively) impacts nature (“inside out”). This approach to risk is
consistent with TCFD’s broad approach to financial materiality that extends beyond immedi-
ate risks to consider transition risks through the use, for example, of scenarios. Moreover, it
reflects the direction of emerging debate and practice across financial institutions and regula-
tors concerning how environmental risks and opportunities should be managed. Each orga-
nization’s governance, strategy, risk management, metrics and targets should be designed
to mitigate risks to the organization (“outside in”) including risks associated with its impact
on nature (“inside out”). This two-way approach is necessary to robustly identify, assess and
manage systemic nature-related risks and, in turn, inform estimations of long-term risks to
individual organizations.

Following from this, the TNFD will broadly seek to align with the two global targets in the
CBD’s zero-draft Global Biodiversity Framework of “no net loss by 2030 and net gain by 2050.”
The TNFD framework will provide a structure for organizations to report against the four
pillars. The framework will be supported by guidance on how non-financial companies and
financial institutions can align their business practices and financing respectively to manage
their impacts and dependencies on nature.

8 TNFD Nature in Scope


Figure 1 – Core elements of recommended nature-related financial disclosures

Governance: The organisation’s


governance around impacts, depen-
dencies, risks and opportunities.

Strategy: The actual and potential


Metrics and targets: The effect of the organisation’s impacts
metrics and targets used to and dependencies on nature and
assess and manage relevant associated risks and opportunities
impacts and dependencies on on its business, strategy, and
nature and associated risks financial planning.
and opportunities.
Risk management: The processes
used by the organisation to identify,
assess and manage its impacts
and dependencies on nature and
associated risks and opportunities.

Nature related risks: In each of the above pillars, the organisation must consider its impacts
on nature, dependencies on nature, and the resulting financial risks and opportunities.

Source: IWG TNFD’s Informal Technical Expert Group, drawing from TCFD (2017):
Recommendations of the Task Force on Climate-related Financial Disclosures
The TNFD framework will align with and draw from existing initiatives, frameworks and standards
relevant to its scope. Building from the important work already done on nature-related risks and
opportunities and avoiding the duplication of work is paramount to the TNFD’s approach. The
TNFD does not intend to develop a standard (either for disclosure or broader activities) itself.
The TNFD intends for its outputs to be integrated into existing frameworks and standards in
the space, such as those published by GRI, SASB, CDSB and the forthcoming IFRS Sustainability
Board (this list is illustrative only).iii It will moreover engage with and draw from the work of key
bodies and networks, including the Financial Stability Board (FSB) and the Network of Central
Banks for Greening the Financial System (NGFS). Following on from this, the TNFD intends for
reporting entities to integrate TNFD-aligned reporting within mainstream corporate reporting, as
opposed to the creation of a dedicated “TNFD report”.

When compiling TNFD-aligned reporting material, financial institutions will be able to use data
from both corporate disclosure and from third party data sources. Third party data sources
could include traditional financial research, ratings and data service providers, remote sensed
data, public databases, sources and references such as the UN SEEA framework, the data and
metrics used for the UN CBD Post-2020 Global Biodiversity Framework, and those provided by
other relevant stakeholders such as NGOs.iv As data from corporate disclosure and data from
third party data sources will be collected and managed in different ways, the TNFD will need to
provide guidance to financial institutions on how to use each for disclosures. This represents an
extension of scope relative to the TCFD.

9 TNFD Nature in Scope


Definition of nature-related risks and opportunities
We recommend the term “nature-related risks and opportunities” to broadly refer to the risks
and opportunities to an organization posed by the linkages between its activities and nature. In
addition to shorter-term financial risks, this includes longer term risks represented by its impact
and dependencies on nature. As a result, this term includes an organization’s impacts on nature,
dependencies on nature, as well as the financial risks and opportunities resulting from these
impacts and dependencies. Precise definitions of each of these components are provided below.

◾ Impacts: We recommend the TNFD adopts the definition of impacts offered by the Science-
Based Target Network (SBTN): “positive or negative contributions of a company or other actor
toward the state of nature, including pollution of air, water, soil; fragmentation or disruption
of ecosystemsv and habitats for [human and] non-human species; alteration of ecosystem
regimes.”vi
◾ Dependencies: We recommend the TNFD adopts the definition of dependencies offered by
the SBTN: “aspects of nature’s contributions to peoplevii [ecosystem services] that a person
or organisation relies on to function, including water flow and quality regulation; regulation
of hazards like fires and floods; pollination; carbon sequestration.”viii Note that the impacts of
one business or sector on nature can generate significant financial risk for other businesses
or sectors through their dependencies on nature. These risks may impact virtually all market
participants and sectors of society.
◾ Nature-related financial risks and opportunities: All financial risks and opportunities to the
organisation as a result of impacts and/or dependencies on nature. This includes but is not
limited to financial loss resulting from negative impacts on nature, through regulation, market
access or otherwise, and the costs stemming from the loss of certain species, genetic variety
and/or key ecosystem services on which the organisation depends. A full analysis of impacts
and dependencies can also present opportunities, such as the potential financial benefits
resulting from positive impacts on nature or the strengthening of nature on which the organ-
isation depends. The TNFD should give early consideration to developing clear definitions of
nature-related financial risks, which at a high level can be classified into two broad categories,
which aligns with the approach taken by the TCFD:ix
◽ Nature-related physical risks and opportunities: Physical risks resulting from nature
loss can be categorized as event driven (acute), or longer-term shifts (chronic) in the
way in which natural ecosystems function—or cease to function. Physical risks may
have financial implications for organisations, such as direct damage to assets, the loss
of (local and regional) ecosystem services crucial to production processes or employee
well-being, and indirect impacts from supply chain disruption. These risks may also
have financial and non-financial implications for other parties, such as the loss of global
ecosystem services crucial to human well-being. Examples include local and regional
financial losses in the agricultural sector from reduced pollination from insects, and
global financial losses in the medicine. Physical opportunities may also have financial
implications for organisations, such as increased resilience of business production
processes or demand.

10 TNFD Nature in Scope


◽ Nature-related transition risks and opportunities: Transitioning to a nature-positive
economy may entail extensive policy, legal, technology, and market changes.x Transi-
tion risks resulting from nature may occur when businesses suffer financially due to
changes that penalize the negative impact they have on nature, including reputation,
compliance, and liability or litigation risks. In some cases, this may result in an asset
becoming unprofitable and “stranded”. Transition opportunities may occur when busi-
nesses benefit financially due to changes in market preferences/demands that reward
the positive impact they have on nature. Economy-wide impacts on nature, commit-
ment frameworks such as the Science-based Target Network (SBTN), and international
frameworks such as the CBD’s Post-2020 Global Biodiversity Framework will all inform
credible future nature-related goals. In turn, these frameworks goals will define the
changes that may need to be made and hence, the drivers of transition risk. In this
way, impacts on nature can create material financial risks in the future, even if they are
not financially material today. Digitalization has also accelerated citizen engagement in
financial decision-making by providing citizens both access to the impact of their invest-
ments as well as a platform to voice their demands. If this trend continues, citizen (and
hence consumer and employee) responses to an organisation’s impact on nature may
become more pronounced and immediate, becoming an important driver of transition
risk and opportunity.

Organisations should follow a scientifically anchored approach to identify which impacts, depen-
dencies, financial risks and opportunities are relevant to their business practices and/or financing
activities. Examples include the initial guidance for businesses from SBTN on setting science-
based targets for nature and IUCN’s recently published guidelines for planning and monitoring
corporate biodiversity performance.xi The guidance divides the five main pressures on nature
loss identified by Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem
Services (IPBES) into more specific drivers of nature loss.xii Organisations could use the SBTN
sector-level materiality assessment to identify which of these drivers of nature loss are relevant
to their business practices and/or financing activities, and hence which could indicate relevant
impacts and dependencies.

Nature-related systemic risks: In addition to the financial risks to the organisation itself,
impacts and dependencies across the economy can create nature-related systemic risk. Systemic
risks can refer to (i) the risk that a critical natural system no longer functions properly; (ii) risks
that arise at portfolio-level (rather than at organisation or transaction-level) of a financial insti-
tution; and (iii) a risk to system-wide financial stability. Reporting entities should be required to
consider (i) and (ii) within their assessment of nature-related risks (these are subsets of physi-
cal and transition risk). Reporting entities should not be required to assess and report on (iii)
although the TNFD itself should consider risks to system-wide financial stability. Nature-related
risks to system-wide financial stability are of particular importance for macroprudential author-
ities, typically economy-wide (often global), and lead to significant impacts across all industries
simultaneously.xiii The risk that a critical natural system no longer functions properly can refer to
“tipping points”, after which ecosystems may collapse beyond the point of repair.

11 TNFD Nature in Scope


Proposed Outputs and Role
The TNFD will produce the following outputs over the coming two-year period:

1. Series of definitions concerning nature-related risks and opportunities: The TNFD


will provide clear, precise and scientifically-anchored definitions of impacts, dependencies,
and the financial risks and opportunities resulting from these impacts and dependencies,
supported by consensus across engaged TNFD stakeholders, and for use by non-financial
companies and financial institutions. The definitions provided in the previous section should
be considered and adjusted by the Taskforce when launched. In doing so, the TNFD will
focus on ensuring alignment of definitions between reporting frameworks and standards.

2. Stakeholder landscape: The TNFD will produce a landscape assessment that demonstrates
the position and role of the TNFD relative to other stakeholders relevant to in the identifica-
tion, assessment, disclosure and management of nature-related risks and opportunities. This
will include frameworks, standard setters, regulators and relevant initiatives in the nature-fi-
nance space such as those advancing target-setting.

3. User principles: The TNFD will produce a set of principles to help users understand how
to adapt the TNFD framework to the context of their organisation. The Taskforce when
launched should assess whether such principles should vary across industries or regions.

4. Classification system for nature-related risks and opportunities by industry: Drawing


from the existing evidence and frameworks (including but not limited to work by ENCORE,
SASB, WEF and DNBxiv), the TNFD will provide a typology of impacts on nature, dependencies
on nature, and the financial risks and opportunities resulting from these impacts and depen-
dencies, organized by industry.

5. Staged framework for disclosure: The TNFD will define the metrics and information
reporting entities are required to report within TNFD-aligned reporting.xv The focus will be
to identify a finite number of metrics that are meaningful to corporates, financial institutions
and broader stakeholders. Requirements will be organized across three progressive stages
of sophistication, allowing for flexibility in implementation. This draws from the iterative
approaches described in the Natural Capital Protocol and BS 8632 Natural Capital Account-
ing for Organisations.xvi

6. Detailed implementation guidance: The TNFD will produce more detailed technical guid-
ance for reporting entities on how to fulfil the requirements of the framework for example,
guidance on metrics, what types of data can be used, example responses, and how to prior-
itize. Financial institutions this guidance will cover any differences in how data from third
party data sources should be used relative to data from corporate disclosure. The TNFD will
also provide broader guidance on how to identify, assess and manage nature-related risks
and opportunities, and will support other actors to develop frameworks and standards in
these areas. In addition to guidance, the TNFD will support and encourage other organisa-
tions to undertake capacity building for reporting entities to assist them in implementing
TNFD-aligned reporting. The detailed implementation guidance will also discuss how organ-
isations can use scenario analysis to estimate their nature-related financial risks and oppor-

12 TNFD Nature in Scope


tunities.xvii This will focus on scenarios that define both end-goals and sectoral pathways, to
be further defined by the Taskforce.xviii The TNFD must adopt and consider the outcomes
of the CBD process (among others) as they emerge, and they must be considered in the
construction of scenarios. This must also consider the way in which the climate and nature
transitions will. The TNFD will support consensus-building between non-financial companies,
financial institutions, policy makers and the scientific community on how scenarios should be
used. The TNFD will engage third parties undertaking scenario development to ensure these
align with TNFD guidance, but not develop scenarios itself.

7. Piloting opportunities: Informed by a draft framework for corporates to report to inves-


tors on their nature-related risks, refined and agreed upon through a testing process a
draft TNFD reporting framework will be tested with financial institutions and corporates, in
close collaboration with relevant financial regulators. TNFD will engage with broader market
participants: to ensure that the TNFD recommendations are decision useful, implementable
by market participants so will be widely consulted and piloted throughout the programme,
anticipating much broader engagement than the immediate. The testing will be coordinated
by UNEP FI, the testing by data developers will be coordinated by a business platform organ-
isation, such as the WBCSD and others to include SME inclusion.

Beyond the outputs discussed above, the TFND will also have a role in engaging other actors to
accelerate uptake and use of the TNFD framework. Two of the most critical stakeholder groups
are listed below as an example, though there are many more:

Engage with standard-setting bodies: Alongside promoting voluntary uptake, the TNFD will
engage with relevant standard-setting bodies to ensure that, as standards are produced and
embedded in mandatory reporting requirements, TNFD-aligned data requirements and reporting
are incorporated. The TNFD will seek to input to standards and frameworks that currently exist.xix
Where possible, the TNFD will propose alignment of definitions, rather than the creation of new
definitions and typologies, between TNFD and existing reporting frameworks and standards so
as to reduce the overall reporting burden.

Engage with data providers: The TNFD recognizes the need to engage with both the data
and analytic communities in addition to reporting entities to support the implementation of its
framework. The TNFD framework will generate increased demand for use, interpretation and
improvement of existing data, as well as new data not currently readily available. The TNFD will
engage data providers, platforms and downstream data service providers as well as non-financial
corporates in a coordinated fashion to encourage the development of the data infrastructure
required to meet its framework. This includes encouraging the development of new data, stan-
dardizing data, and making data more accessible, which could include encouraging others to
develop data platforms and guidance on how to collect and manage relevant data. This necessi-
tates that the TNFD itself should have sufficient technical capacity and knowledge to understand
the data requirements and broader data developments needed.

13 TNFD Nature in Scope


TNFD Work Plan

The TNFD Work Plan consists of 5 phases: build, test, consult, disseminate and market uptake. A
preparatory phase termed phase 0 (zero) includes the guidance of the Informal Working Group,
the launch of the TNFD and preparatory studies and piloting to set up the TNFD Framework
for success.

Figure 2: Development phases of TNFD Framework

Phase 0 Launch of the TNFD: this includes a Market Readiness study of 15-20
Prepare financial institutions, a resource mapping study of existing tools, and
beginning the ITEG-suggested phased priority sector approach.

Phase 1 Building the draft framework: refine the purpose, objective, output
Build and outcome of the TNFD, and develop the draft framework and
recommendations. Technical work includes that on data stacks, scenarios,
and the climate-nature nexus.

Phase 2 During the testing process a draft TNFD reporting framework and
Test recommendations will be tested with FIs and companies, in close
collaboration with relevant financial regulators.

Phase 3 Draft framework launch: The draft Framework report will be edited in
Consult response to consultation feedback and launched on the TNFD website.
Consultations: to help to facilitate widespread adoption
in relevant sectors and geographies.

Phase 4 TNFD full launch and promotion: An internal and external communications
Disseminate plan across the project to determine when and how key milestones will be
communicated and supported TNFD launch recommendations.

Phase 5 With agility, a client focussed and ‘learning by doing’ at its heart, TNFD will
Uptake continue to iterate providing #NextGen detailed guidance in the coming
years on risk management, scenario analysis and more to help the market
action the framework.
Deep global uptake will be supported through targeted sectoral and
geographic events with, stakeholders, members and targeted research
across all phases.

14 TNFD Nature in Scope


Phase 0: Prepare & Launch TNFD
Preparation for the TNFD began in September 2020. This phase consists of 3
elements: the deep research and experience that has framed the recommen-
dations of the 75-strong Informal Working Group for TNFD, the launch of TNFD
in the second half of 2021, and a proof of concept pilot along with a market
readiness study which together assesses the practical considerations as well
as current state of metrics, data, risk management, stress testing, tools and key
practices to inform decisions on nature-related risks and dependencies across
the private and public sector in the building phase of the framework.

Phase 1: Build
During this phase, TNFD members will draft a practical Framework, using a
data-centric, sectoral and staged approach to ensure it is actionable, accessible
and built on cutting edge research and innovation from all regions. The Frame-
work should be fully aligned with the TNFD Principles and Scope and build on
the Market Readiness Study and the proof of concept pilot.

Figure 3: Overview of the TNFD Framework elements

Proposed Sectors
Priority sectors based on high impact and high dependency

Data and Metrics Reporting Standards Scenarios


The TNFD will engage data A comparison of existing Assess forward-looking
providers, platforms and reporting standards of nature scenarios by industry
downstream data service impacts, dependencies and based on appropriate goals,
providers to encourage the opportunities pathways, models and data
development of the data
infrastructure required to
meet its framework.

Tiers
1. Basic 2. Intermediary 3. Comprehensive

15 TNFD Nature in Scope


See figure 3 alongside for the key elements TNFD will consider when developing the Framework.
Following the launch of the TNFD Framework in 2023, scenario analysis co-created with leading
partners will encourage broader and deeper uptake. The building of the TNFD Framework will
be led by the market i.e. corporates and financial institutions. It will be supported by additional
stakeholders, at the request of TNFD members, such as: standards organisations, regulators,
data providers, NGOs, research organisations etc. The building stage includes developing a draft
disclosure framework (or elements of a framework that could be adopted by other frameworks—
the term ‘reporting framework’ should be read from this definition) and recommendations on
steps for testing and consulting the Framework along with user surveys for feedback.

Phase 2: Test
The draft TNFD Framework will be tested with financial institutions and corpo-
rates, in close collaboration with relevant financial regulators. Balanced repre-
sentation across geographies from banks, investors, insurers, public finance
institutions and corporates will be sought from high impact and high depen-
dency sectors. The Framework is expected to be tested in 20 emerging markets,
in addition to the pilots in developed capital markets. The draft TNFD Frame-
work will be revised in response to the piloting.

Phase 3: Consult
The TNFD Secretariat will conduct a consultation on the second draft of the
Framework informed by the piloting experiences in Phase 2. The consultation
should help to facilitate widespread adoption of the Framework in relevant
sectors and geographies, even beyond those represented in the testing phase,
via strategic external consultations with a balanced range of: financial regu-
lators, data preparers and data users on how each can assess and disclose
nature-related risks to support nature positive global financial flows. The
consultation will also help actively build on recommended tools, measurement
systems and reporting protocols among FIs, corporates and public authorities.

16 TNFD Nature in Scope


Phase 4: Disseminate
The TNFD Framework is expected to be launched during the second half of
2023 for global dissemination and initial uptake. It will be supported by strategic
advocacy campaigns and in addition to increasing awareness, will also provide
assistance for its application and wider uptake by partnering with leading think-
ers and doers.
◾ Launch TNFD Framework: Across geographies via key events, with support
from governments, financial regulators and standard-setting bodies
◾ Promote & Advocate Adoption: An internal and external communica-
tions plan will be executed to position and embed TNFD in the financial and
corporate ecosystem.

Phase 5: Uptake & Next Steps | September 2023 – onwards


The development and launch of the TNFD Framework over 2 years will be the
first step in assessing approaches for physical and transition risks and oppor-
tunities. It would inform methodologies that are adaptable and flexible to finan-
cial institutions and corporates across geographies and that would promote
consistency and comparability. It is expected that more detailed guidance will
follow after 2023 including practical approaches for evaluating these risks using
nature scenario analyses supported by technical partners from nature model-
ers to nature risk experts. With agility, a client-focus and ‘learning by doing’ at
its heart, TNFD will continue to iterate providing next generation guidance in
the coming years on risk management, scenario analysis and more to help the
market action the Framework. Deep global uptake will be supported through
targeted sectoral and balanced geographic events, stakeholders, members and
research across all phases.

17 TNFD Nature in Scope


TNFD Governance

The Taskforce on Nature-related Financial Disclosure (TNFD) incorporates the input and guid-
ance of a growing movement of experts. The work of the TNFD has been supported until now
by the 75-strong Informal Working Group (IWG), representing some of the world’s biggest banks,
investors and companies with an AUM value of over US$ 8.5 trillion, as well as governments and
regulatory bodies. The governance structure of the TNFD will include Chair/s, a Secretariat, a
Membership Group, a Stewardship Group and a Stakeholder Group. Figure 4 provides an over-
view of this structure.

Figure 4: Overview of the proposed TNFD governance structure

TNFD Co-Chairs

Secretariat
Stewardship Group
Technical Research Hub

TNFD Members

Corporates Financial Institutions Service providers

Working Working Working Working Working


Group 1 Group 2 Group 3 Group 4 Group 5

Stakeholder Group

18 TNFD Nature in Scope


Members
The Taskforce will consist of 30 members from industry, with an equal representation of financial
and “real economy” corporates from the global North and South. Given the focus on disclosure,
rating agencies and reporting/accounting firms as well as data providers may be included as
members. Members are selected in their personal capacity, in accordance with the selection
criteria and also taking into account the competences needed for the development of the TNFD
Framework, as well as the sectorial, geographical and gender balance. Members will meet regu-
larly in plenary, approximately every 6 weeks, and also be asked to actively participate in at least
one Working Group , which are organized to enable a well-prepared delivery of the TNFD goal
and work plan.

Secretariat
The TNFD Secretariat will work under the oversight of the Co-Chairs. The Secretariat will be led
by an Executive Director and staffed with a team of full-time experts on drafting of disclosure
requirements, member engagement, project management and communications, and bring in
part time expertise as needed to accelerate the deliverables of the TNFD outlined in the work
plan. The Secretariat will support the work of the Co-Chairs, coordinate the working groups,
manage the day-to-day work and maintain regular contacts with Members and other TNFD
contributors. The Secretariat’s institutional host or hosting arrangement(s) will be formalized by
the IWG Steering Committee before the launch of the TNFD.

Technical Research Group


The TRG will provide independent expertise and technical advice to the TNFD Working Groups
upon their request, primarily acting as a distributed virtual hub that delivers the scientific and
technical expertise needed to realise the TNFD goal. The TRG will be overseen and deployed by
the Technical Director—a core member of the TNFD Secretariat,

Stewardship Group
The Stewardship Group consists of the founding TNFD partners (Global Canopy, UNDP, UNEP FI
and WWF) and can include representatives from major donors. In addition to these members,
some international organisations or networks such as relevant financial regulators or stan-
dard-setting might be invited to join the Stewardship group The Stewardship Group supports
the Co-Chairs, provides technical support, helps guide core decisions to ensure alignment with
TNFD principles and can call on the Stakeholder Group in specific cases if the Co-Chairs deviate
from the TNFD goal on important topics captured in the TNFD Principles.

Stakeholder Group
The Stakeholder Group bring together a wide range of stakeholders (e.g financial institutions,
corporates, service and data providers, governments, regulators, multilaterals, financial and busi-
ness consortia, NGOs, think tanks, research organisations) that take an interest in the TNFD and
have invested time in bringing it to life or creating an enabling ecosystem for it to flourish. Any
stakeholder with an interest to follow the developments for the TNFD Framework, and contrib-
ute to it as needed, are invited to join this group, unless they represent a significant conflict of
interest or reputational risk for the TNFD.

19 TNFD Nature in Scope


TNFD Resourcing
and Communication

The resourcing target set for TNFD’s workplan (mid-2021 until mid-2023) is US$ 15 million.
To date, approximately 8% has been contracted, 78% is under proposal or discussion from a
wide variety of donors (governments, UN agencies, philanthropic organisations). The remain-
ing 14% will be sought largely through in-kind support from the private sector. This will be
for secondments or pro-bono internal or external research, testing and dissemination by
the finance sector and corporations. We expect that the level of in-kind support for TNFD
will exceed the 14% above, and this will enable the Taskforce to extend its reach worldwide,
beyond what is currently predicted in the workplan.

The TNFD communication objective is to contribute to mobilising strong commitments


across sectors and geographies for the TNFD Framework that will, in turn, drive widespread
uptake of the Framework and support from ‘the market’. This includes developing compel-
ling communication around the ambitious and coherent vision, scope and actions for the
TNFD. TNFD communications will need to build on the work prepared during the IWG phase
and finalize a communications strategy that includes identification of the key messages
for the different ‘audiences’ for TNFD, focus on communicating to the primary audience—
financial institutions, building communication for corporate audiences and other key stake-
holders such as NGOs and civil society and with global media, and internal and external
communications approaches and actions.

20 TNFD Nature in Scope


Acknowledgement

The TNFD Blueprint has been powered by the expertise of the:

Co-Chairs of the Informal Working Group for the TNFD:


Mariuz Calvet, Grupo Financiero Banorte; Antoine Sire, BNP Paribas; and Rhian-Mari Thomas,
Green Finance Institute

Workstream Leads of the IWG TNFD:


TNFD Governance: Sylvain Vanston, AXA; TNFD Work Plan & Budget: Bas Rüter, Rabobank and
Ravi Abeywardana, CDSB; TNFD Resourcing: Scott Mesley, KPMG; and TNFD Communications and
Knowledge Management: Helen Crowley, WEF now Kering, EY now HSBC Pollination.

Informal Working Group for TNFD:


Financial Institutions
Aggrego Consultores, Brazil Lloyds Bank, UK
AXA, France Manulife Investment Management, Singapore
BPCE/Natixis, France Maua Capital, Brazil
BNP Paribas, France Mirova, France
Banco del Progreso, Colombia NatWest Group, UK
Banco Sudameris, Paraguay Pimco, USA
Banorte, Mexico Rabobank, Netherlands
Citigroup, USA Raiffeisen Switzerland
Credit Suisse, Switzerland Robeco, Netherlands
DBS Bank, Singapore Standard Chartered, UK
Danske Bank, Denmark Storebrand Asset Management, Norway
FAMA Investimentos, Brazil Sumitomo Mitsui Trust Asset
Management, Japan
FirstRand, South Africa
Wells Fargo Asset Management, USA
HSBC Pollination Climate Asset Management
Yes Bank Ltd, India
Impax Asset Management, UK

21 TNFD Nature in Scope


International & Regional Financial Institutions:

AFD: Agence Française de EBRD: European Bank for Reconstruction


Développement, France and Development

BNDES: Brazilian Development Bank EIB: European Investment Bank

CAF: Latin American Development Bank IFC: International Finance Corporation

World Bank

Corporates & Private Firms:

BP, UK Shareholder Services, USA

EcoAdvisors, Canada JBS

Ernst & Young, UK Kering

GlaxoSmithKline, UK KPMG

H&M, Sweden Reckitt Benckiser, UK

Iberdrola, Spain Rio Tinto

ISS ESG: Institutional Tesco, UK

Governments, Regulatory & Supervisory Bodies

CNBV: Comisión Nacional Bancaria Government of Peru


y de Valores, Mexico Government of Switzerland
COFEMA, Argentina Government of the United Kingdom
Government of France RBA: Retirement Benefits Authority, Kenya
Government of the Netherlands

Think Tanks & Consortia:


CBD: Convention on Biological Diversity IIF: Institute of International Finance
CDSB: Climate Disclosure Standards Board IIGF: International Institute of Green Finance

CEBDS: Brazilian Business Coun- OECD: Organisation for Economic


cil for Sustainable Development Co-operation and Development

CEDAF, Dominican Republic PRI: Principles for Responsible Investment

CIFAL Argentina SusCon Japan

Ecoacsa, Spain SIF: Sustainable Insurance Forum

FC4S: Financial Centers for Sustainability WBCSD: World Business Coun-


cil for Sustainable Development
Finance for Tomorrow
WEF: World Economic Forum
GEF: Global Environment Facility

Green Finance Institute (GFI)

22 TNFD Nature in Scope


Partner Group:
Global Canopy, UNDP, UNEP FI and WWF

Informal Technical Expert Group:


Note: ITEG members contribute in their personal capacities. Organisa-
tional affiliations are specified for identification purposes only.

Co-Leads:
Nicky Chambers, Global Canopy | Simon Zadek, Finance for Biodiversity

Andre Chanavat, London Katia Karousakis, OECD


Stock Exchange Group Luciane Moessa de Souza, Soluções
Clara Barby, Impact Management Project Inclusivas Sustentáveis
Claudia Kruse, APG AM Ma Jun, Institute of Public and Envi-
Corli Pretorius, UN Environment Programme ronmental Affairs, China
World Conservation Monitoring Centre Marianne Haahr, Green Digi-
Frank Hawkins, International Union tal Finance Alliance
for the Conservation of Nature Robin Millington, Planet Tracker
Gregory Watson, Inter-Ameri- Rowan Douglas, Willis Towers Watson
can Development Bank Siobhan Cleary
Joris van Toor, De Nederlandsche Bank Vian Sharif, FNZ Group

Intellectual Property Rights and Disclaimer


The TNFD will make its frameworks and reports freely available for use by all interested parties
(including use by all Members) on ‘Creative Commons’ terms or other ‘free to use’ terms that
the TNFD selects.

Note: The views expressed in the TNFD Nature in Scope paper indicative of the views of members
of the Informal Working Group for the Taskforce on Nature-related Financial Disclosures (IWG
TNFD), supported by the Partner Group. They are presented from the informal preparatory
process as recommendations to the incoming Taskforce and its co-Chairs. The use of logos and/
or the feedback provided by these organisations does not necessarily represent an endorsement
or investment recommendation and does not reflect any policies or positions of the organisations.

The work of the TNFD is supported by an anchor investment by the Global


Environment Facility (GEF). Other donors are expected the be confirmed soon

www.theGEF.org

23 TNFD Nature in Scope


End notes:

i. There has been much discussion of how to incorporate an organisation’s impact on the environment in
debate around environmental risks and opportunities including financial institutions such as DWS; stan-
dard-setting bodies such as SASB; intergovernmental organisations such as the OECD and European
Commission; and central banks and financial supervisors including the Network for Greening the Financial
System (NGFS).
ii. CBD: BIODIVERSITY AND THE 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT and 2050 Vision
iii. GRI: Global Reporting Initiative; SASB: Sustainability Accounting Standards Board; CDSB: Climate Disclosure
Standards Board; IFRS: International Financial Reporting Standards.
iv. Examples of data service providers include S&P Global and Bloomberg. Examples of public accounts include
publicly held company records, land registries and other datasets.
v. The term “ecosystem” refers to a dynamic complex of plant, animal and micro-organism communities and
their non-living environment interacting as a functional unit. CBD (2020): Use of Terms.
vi. SCIENCE-BASED TARGETS for NATURE (2020): Initial Guidance for Business
vii. IPBES defines “nature’s contribution to people” (NCP) as “all the contributions, both positive and negative,
of living nature (i.e. diversity of organisms, ecosystems, and their associated ecological and evolutionary
processes) to the quality of life for people. Beneficial contributions from nature include such things as food
provision, water purification, flood control, and artistic inspiration, whereas detrimental contributions include
disease transmission and predation that damages people or their assets. Many NCP may be perceived as
benefits or detriments depending on the cultural, temporal or spatial context.”
viii. SCIENCE-BASED TARGETS for NATURE (2020): Initial Guidance for Business
ix. TCFD (2017): Recommendations of the Task Force on Climate-related Financial Disclosures
x. The normative framing of the TNFD’s work, including but not limited to the definition of “nature-positive”, will
be informed by inter-governmental and international agreements.
xi. SCIENCE-BASED TARGETS for NATURE (2020): Initial Guidance for Business; IUCN (2021): Guidelines for
planning and monitoring corporate biodiversity performance
xii. The five IPBES pressures on nature loss are (i) land/sea/water use change; (ii) resource exploitation; (iii)
climate change; (iv) pollution; and (v) invasives and other.
xiii. Please see the discussion of systemic risk in Annex I for a description of how these risks can materialize.
xiv. https://encore.naturalcapital.finance/en; https://www.sasb.org/standards-overview/materiality-map/; WEF
(2020): Nature Risk Rising; DNB (2020): Indebted to nature, Exploring biodiversity risks for the Dutch financial
sector.

24 TNFD Nature in Scope


xv. While the specific requirements of the TNFD framework will be determined by the Taskforce after its launch,
examples of such requirements could include answers to the following questions: (i) How is nature dealt with
at Board level? (ii) What governance or process is in place to manage nature-related impacts, dependencies,
risks and opportunities? (ii) What policies exist to manage nature-related impacts, dependencies, risks and
opportunities? (iv) What strategic or operational plan exists to manage nature-related impacts, dependencies,
risks and opportunities?
xvi. https://www.bsigroup.com/en-GB/our-services/events/webinars/2020/bs-8632/ ; https://capitalscoalition.org/
capitals-approach/natural-capital-protocol/
xvii. Broader guidance on how to manage nature-related financial risks and opportunities is likely to offer practi-
cal actions that non-financial companies and financial institutions can take to reduce their risks and leverage
opportunities.
xviii. An end-goal sets a destination point for the scenario, typically defined by a small set of metrics. A sectoral
pathway describes the transformation over time of a given sector, usually linked to changes in production
processes and technology adoption. In the context of nature-related scenarios, the latter will consider trans-
formation across the full value chain.
xix. It will also draw from the wider ecosystem of relevant frameworks and standards including but not limited
to ISO standards, The Natural Capital Protocol, The Economics of Ecosystems and Biodiversity (TEEB), the
British Standards Institute, and the Global Footprint Network.

25 TNFD Nature in Scope


Taskforce on Nature-related
Financial Disclosures

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