The Taskforce on Nature-related Financial Disclosures (TNFD) is forming a working group that will explore incorporating nature into corporate and financial institution transition plans, technical director Emily McKenzie told Responsible Investor.
Interest in nature’s place in transition plans has been growing over the past year.
In November, the UK’s Transition Plan Taskforce (TPT) published its final disclosure framework for climate transition plans, which included advice on incorporating nature.
And later that month, RI revealed that GFANZ was set announce plans to start work on how nature could be incorporated into financial institutions’ transition to net zero. This was later confirmed by the alliance in its 2023 progress report.
“Net zero transition plans would be disclosed under the equivalent TCFD/S2 disclosures. But we’d like to see integrated climate-nature reporting and transition planning, following the TNFD general requirements,” McKenzie said.
In its recommendations, the TNFD said nature-related disclosures “should be integrated with other business and sustainability-related disclosures whenever possible”. “Integration of climate and nature-related disclosures is of particular importance,” it added.
McKenzie told RI: “Nature-positive outcomes are important for the achievement of net zero and should be part of transition plans, and conversely, achieving nature positive outcomes depends on mitigating climate change, and should be part of nature transition plans.”
The working group is due to be convened in January. As with all TNFD working groups, it will be composed of taskforce members with “interest and expertise in this area”. The workplan and deliverables will be decided early next year.
The TNFD is also in discussion with its knowledge partners and wider partners working on targets and transition plans “to identify areas for collaboration and where we can add value to this important area”, McKenzie said. These include Science-Based Targets for Nature, GFANZ, Finance for Biodiversity Foundation, UNEP FI, the TPT and WWF.
She noted that TPT and GFANZ are currently looking at how nature contributes to the climate transition.
“We think the TNFD can contribute not only to this dimension, but also transitions needed to achieve nature goals as set out in the Global Biodiversity Framework (GBF),” McKenzie added. “So we’ll have that broader frame of nature in transition plans for both net-zero and nature-positive goals.”
Work on metrics continues
When the TNFD launched its final recommendations, it cited the lack of “widely accepted metrics” for measuring invasive alien species and the state of nature as a reason for including them in its core global disclosure indicators as “placeholder indicators”.
During an RI webinar around the time of the launch, TNFD executive director Tony Goldner said the initiative “didn’t feel it was our role to pick one [metric] over the other” and wanted to see “further innovation in this space”.
“There’s a whole universe of different indices being developed,” he said. “We acknowledge that they all exist, and we encourage people to use them… But fundamentally, we don’t think we’re ever going to get to a single metric that’s going to capture everything we’re looking for in relation to impact on nature.”
Goldner added that the TNFD would “continue to watch this space” and work on it with scientists and other partners. He also indicated that the initiative would provide additional guidance on metrics.
McKenzie told RI that the initiative is establishing a working group on data and measurement and one of its focus areas will be to look at the placeholder indicators. “We’ve been talking with our knowledge partners on how to make progress.”
She said she was “particularly excited” about an upcoming report on business and biodiversity by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), which is due to include a chapter on measurement.
“Although it won’t be out until 2025, IPBES is the credible science authority, so it will be really important for informing our thinking,” McKenzie said. She also pointed to work by the Nature Positive Initiative, where she sits on the measurement working group, and the Align Project. “We expect that will also provide some useful food for thought.”
McKenzie said it was too early to say if there will be any further guidance from the TNFD on the placeholder indicators in 2024-25. “We’ll just have to see how quickly the science community moves.”
On metrics, the TNFD is also undertaking an interoperability mapping with EFRAG on how the taskforce’s disclosure recommendations and metrics align with the ESRS.
“Both the ESRS and the TNFD recommendations are designed to foster relevant and comparable reporting on nature-related dependencies, impacts, risks and opportunities by businesses and financial institutions, exhibiting a robust alignment with high potential for interoperability,” McKenzie said.
The aim is for the results to be published in early 2024.