TNFD is here: What does it mean for your business, how do you get started, and how does this relate to SBTN.

We stand at a pivotal moment in history, where our actions can either perpetuate the degradation of our planet or pave the way towards a nature-positive future. There are ample opportunities for businesses to manage risks, engage in a sustainable way with nature, and achieve positive outcomes for nature, their organisations and society… and yet most companies, investors and lenders today inadequately account for nature-related risks and opportunities in their decision making. This is where the Taskforce on Nature Related Financial Disclosures (TNFD) comes in.

The TNFD framework is a risk management and disclosure framework for businesses to identify, assess, respond and, where appropriate, disclose their nature-related issues. It will encourage early action by any organisation (corporate, investor, government) to begin disclosing nature-related dependencies, impacts, risks and opportunities. The TNFD has been developed to highlight the interrelationship between nature and climate and provide a platform for integrated nature-related disclosures in the same way the Taskforce on Climate-related Financial Disclosures (TCFD) did for climate.

The TNFD leverages the LEAP (Locate, Evaluate, Assess, Prepare) framework to guide nature-disclosures, sitting within the same TCFD disclosure requirements for an organisation to identify the governance, strategy, risk management and metrics and targets it will undertake to address the identified risks.

However, the LEAP framework concludes at prepare (for reporting); preparation should not be an end point, but rather the beginning of a broader nature journey. It is simply not enough to prepare to respond and report: companies must actually do something about their impacts on nature.

At this point the TNFD recommends companies use the Science-Based Targets for Nature (SBTN) guidance for setting a target for their nature impacts. Despite published guidance, the interaction between these two leading frameworks is not particularly simple.

There are eight common outputs, and at a first glance the frameworks may appear interchangeable. In practice though, relying on TNFD’s LEAP process and tacking on SBTN at the end may detract from SBTN's role of identifying material impacts upfront and acting where impacts can be most realised. This approach risks minimising the depth of materiality within the supply chain that SBTN aims to uncover.

Conversely, working solely to set an SBTN could potentially minimise an organisation’s ability to discover and disclose meaningful data which could be of value to many organisations and influential beyond.

The interaction between these two frameworks, and the relevance of each, will be different for each company. A large retailer with less direct dependencies and risks on nature may be better suited to the more detailed supply chain assessment that SBTN endorses, before proceeding to using the data and analytical outputs generated to apply parts of the TNFD’s LEAP approach for a nature-related risk and opportunity assessment. However, in the same position, a smaller corporate with specific goods may benefit from reporting their nature-related dependencies, impacts, risks and opportunities, and using these disclosures to then create a nature strategy with informed science-based targets.

Whether an organisation should align with TNFD or SBTN (or both) is not as simple as an either/or decision; each organisation’s experience of the interaction between the frameworks will be unique. Ultimately, it is not about starting with the end-point framework for disclosing impacts and targets, but about creating a strategy to understand and address your organisation’s relationship with nature. Taking this approach, starting with an overarching plan for how your organisation will approach nature, provides your organisation with the space to plan to do this properly – avoiding risks of greenwashing, greenhushing or greenrushing.

At Edge, we can offer an understanding of both of these frameworks, and are working with companies to create a tailored, specific nature strategy. We acknowledge that every organisation’s impacts, dependencies, goals, and capacity are different, and the real impacts will come from positioning your organisation beyond being committed to addressing nature, but addressing nature in your unique context.

We appreciate that when talking about nature in the context of avoiding the climate crisis, time is not on our side. But we’ve only got one chance to set this global mindset up to succeed, and if we want to ensure nature efforts are taken seriously, we need to make sure each organisation is doing what’s within their specific capacity to act.

Key takeaway: as new driving frameworks roll out in this space, there is no one-size-fits-all solution for companies. To address nature in a meaningful way, companies should come up with a strategy informed by the framework(s) relevant to their context.