The Taskforce on Nature-related Financial Disclosures (TNFD) published the first complete recommendations to help organizations understand and disclose their relationship with nature.
We now have a global framework for assessing and disclosing the nature-related risks and opportunities for businesses. It can help investors and corporations to understand the specific ways in which their assets and operations depend on and impact biodiversity. In Europe, the CSRD requires companies to report holistically and ambitiously on their relationship with nature and its biodiversity, if the theme is material to their business. The TNFD recommendations provide guidance to many of these reporting requirements. Since many companies’ value chains rely heavily on ecosystem services, biodiversity is likely to rise increasingly often in the double materiality analyses, and thus, they may need to adopt a nature-positive approach, just like they have done with net zero for climate.
Reporting requirements are just one reason to act on nature-related risks and opportunities. The regulation reflects the underlying reality of nature considerations. We have an economic system that uses our most valuable asset for free, as the Dasgupta report stated a few years ago. We are consuming nature’s services faster than they can regenerate, leading to local and global nature loss. Consequently, no organization is safe from nature-related risks, nor excluded of the opportunities of nature-positive transition.
Every company is unique – same basic steps of getting started still apply
The first complete and ready version of the TNFD recommendations was published on Sept. 18, 2023, along with a Getting started guide. In their launch webinar, the TNFD representatives emphasized that even though nature is complex, we should not make addressing and acting on the challenge complicated. This is a good rule of thumb to keep in mind. While acknowledging that every company is in a unique situation, the guide outlines seven potential starting steps for considering a company’s relationship with nature. We particularly appreciate how the Getting started guidance highlights all the work needed to prepare and reach a decision of adopting TNFD recommendations, or, in fact, any other sustainability framework. The steps are useful in building a good foundation for biodiversity work even if TNFD-aligned disclosures would be years away in the company’s future.
Deepen your understanding and make the business case (steps 1-2)
The first step is to deepen your company’s or teams’ understanding of nature. Measuring impacts and identifying dependencies is still an art that is very much in development, so you should not expect all the answers to be ready and available. The key here is to be curious and learn from others when gathering information to reach the second step: making a business case for nature, specific to your company.
A business case is necessary to gain the internal buy-in to unlock the resources needed for further steps. The TNFD lists the required angles: the economic and financial value of nature, risk management and mitigation needs, opportunities, and the long term viability of business models. However, since we measure quarterly results in our economic system, it can be extremely challenging to advocate for nature considerations with the long-term perspective to the leadership. It is thus vital to be able to form a sense of urgency and to find a way to show acute risks and opportunities that have business value in the near future.
Leverage, plan and engage (steps 3-5)
The third step is to start with what you have, leveraging previous work. Drawing the knowledge and understanding from the steps 1 and 2, you should identify how nature consideration relates to the existing sustainability, reporting and risk management efforts. In this step, the TNFD recommends the LEAP approach as a practical guide to scan the existing knowledge, and to identify the most critical gaps as well as the actions needed next.
The fourth step the TNFD proposes is making a plan of progression and communicating it. This can mean creating a nature roadmap or a substream of a sustainability roadmap, which includes a consideration of whether and when to start adopting the TNFD recommendations, and how to expand the work over time. The fifth step emphasizes the importance of continuous engagement and communication with stakeholders. This can be especially important for the complex topic of nature and the speed of the transition required by regulation, stakeholders and nature-risks.
Monitor, evaluate and register your intention (steps 6-7)
As a sixth step, the TNFD recommends monitoring and evaluation of the adoption process, and highlights that many pilot organizations have emphasized the importance of putting a monitoring system in place. This is a natural element to accompany the roadmap formed in step 5, and it can be extended to form a system to track the development of the regulation, knowledge, tools, and market for nature-positivity as well.
Finally, the seventh step of Getting started with the TNFD recommendations is to register your intention to adopt them in the coming years. This way, your company can signal its ambitions level, encourage others, and let your stakeholders know the hard work done in preparation, before the actual TNFD-aligned disclosures are ready.
The nature-positive transition has begun
The impact and number of first adopters of the TNFD recommendations remain to be seen, but at Gaia we see that driven by regulation, internal and external stakeholders, many large companies are moving fast in their nature considerations, seeking susformation. At the same time, many emerging companies are building their business model on regenerating nature or solving nature loss. The transition to nature-positivity seems to progress even faster than the climate net zero transition, but there are still considerable uncertainties that companies have to deal with. We are happy to help you navigate the TNFD recommendations, CSRD or other nature-related considerations. Let’s not make perfect the enemy of good, but start somewhere, opening the opportunities of nature-positive and regenerative business.
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