With governments and markets showing a clear trend towards transparency and regulation on nature-related issues, many businesses are choosing to get ahead and provide nature disclosures aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD). As previously reported, some 320 organisations from more than 46 countries have already committed to TNFD-aligned disclosures for 2025. 

While the TNFD’s recommendations remain voluntary, they are already informing regulations and reporting standards, such as the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards (ESRS).

Mandatory nature reporting is coming

In December 2022, under target 15 of the Kunming-Montreal Global Biodiversity Framework (GBF), nearly 200 governments committed to introducing mandatory reporting of biodiversity-related risks, dependencies and impacts for large companies and financial institutions by 2030. 

Mandatory reporting requirements are already being introduced in some countries. The EU Corporate Sustainability Reporting Directive (CSRD) will mandate disclosures by certain companies operating in the EU from 2025, in accordance with ESRS, which include nature (eg, ESRS E4 focuses on biodiversity and ecosystems).

National regulations are also driving corporate nature disclosures in India, Brazil, France and Germany. In February 2024, China’s three major stock markets released draft mandatory nature reporting requirements for consultation. 

The UK, Australia, New Zealand, Japan and other countries are taking steps towards introducing mandatory disclosures, potentially aligned with ISSB standards. IFRS Sustainability Disclosure Standards already require consideration of nature when preparing climate-related disclosures for investors. The ISSB has also recently announced a new research project on nature disclosures, paving the way for nature to be fully integrated into its suite of global standards in the future.

Other regulations focus on reporting of specific nature impacts, such as deforestation. From 2025, under the EU Deforestation-Free Products Regulation, companies will be prohibited from selling certain products on the EU market or exporting from it, unless they file a due diligence statement proving those products are deforestation-free. In the UK, proposals have been made to bring in similar legislation through the 2021 Environment Act.

Where does the TNFD fit in?

TNFD disclosure recommendations and guidance are designed to support organisations in voluntarily starting to measure, manage and disclose their nature-related risks and opportunities. The aim is to encourage a shift in financial flows away from nature-negative outcomes and toward nature-positive outcomes, aligned with the GBF.

To encourage integrated climate-nature reporting, the TNFD has 14 recommended disclosures around the pillars of governance, strategy, risk and impact management, and metrics and targets. The TNFD recommendations are designed to accommodate the different approaches to materiality being used by different jurisdictions, including the information needs for investors from a financial materiality perspective (as required under ISSB and ESRS), and the needs of other stakeholders from a broader impact perspective (as also required by ESRS and the Global Reporting Initiative, for example).

The TNFD has also provided tools to aid businesses in preparing disclosures. This includes additional guidance on how to identify and assess nature-related dependencies and impacts across an organisation’s value chain, and the risks and opportunities these generate. This guidance explains the ‘LEAP approach’, which stands for: locate, evaluate, assess, prepare.

How the TNFD can help you

As ICAEW previously highlighted, getting started on nature reporting may be easier than you think, but will involve a learning curve. Below are some of the key questions you may have and how the TNFD can help. 

1) Which nature reporting requirements are relevant to my company?

It will be important to understand which existing and upcoming mandatory and voluntary nature reporting requirements are relevant to your company. For companies that might need to consider multiple frameworks, such as those with complex international value chains, this may be challenging.

While there are some commonalities across frameworks, there are also differences. With its comprehensive coverage of nature-related issues, and accommodation of both financial and impact materiality perspectives, aligning disclosures with the TNFD framework from the outset may be a sensible, future-proofed approach. The information can then be used for reporting to investors, for wider stakeholders, and/or in relation to due diligence statements to regulators, for example.

2) How can I build support within my company for nature reporting?

As the TNFD emphasises, establishing ownership and accountability for managing nature-related issues within your leadership and management structure will be key. Therefore, building and demonstrating the business case is likely to be important for securing the mandate and resources needed.

Framing nature alongside climate as a strategic management issue, rather than just a reporting exercise, can help reporting to be integrated into governance and long-term strategy from the outset. The process of preparing disclosures will generate information that can add value to a wider range of other business functions, such as risk management, strategy and financial planning. Nature can play a key role in your net-zero strategy, for example eliminating deforestation from your supply chains can both reduce emissions and contribute to nature recovery goals.

3) How do I identify which nature-related issues to focus on?

The TNFD disclosure recommendations and guidance can help you to start thinking about which issues to prioritise. The TNFD recommends considering your company’s dependencies and impacts on nature, as both can generate risks and opportunities that may be financially material and hence of interest to investors. This approach will also provide you with the information needed to report to other stakeholders from a broader impact perspective, where needed. 

Material nature-related issues will vary by organisation, sector and region. The TNFD LEAP approach incorporates initial scoping and screening steps to help identify which nature-related issues may be most material and should be considered for reporting against. Organisations are encouraged to get started based on a limited set of disclosures and increase the scope and ambition over time.

Exploring how nature connects with your climate-related disclosures can also help to identify initial priorities, such as impacts on high-carbon ecosystems and nature-based carbon removal solutions. This will also help you to prepare for integrated climate-nature disclosures.

4) How do I collect the data needed?

Following the first three stages of the TNFD LEAP guidance can help inform data collection and analysis. This involves identifying priority locations where your company interfaces with nature (eg, in operations, and upstream and downstream value-chains), evaluating the company’s dependencies and impacts on nature at these locations, and finally assessing the associated nature-related risks and opportunities. Scenario analysis can also provide insights into how nature risks and opportunities may evolve in the longer-term.

A review of your existing nature-related data may reveal you already have more than you think to support this process, for example on nature-related impacts and controls. Organisations that prepare climate-related disclosures will also have a head start. For example, data collected on suppliers for carbon accounting purposes can help in identification of supplier locations and activities. 

However, applying LEAP is likely to require modifying existing data collection processes (eg, expanding existing supplier engagement and due diligence processes to cover nature issues) and new data collection processes (eg, to gather information on the context in which dependencies and impacts occur, such as whether they are in a water-stressed, highly biodiverse or protected area). 

5) How can I learn more about the TNFD and nature reporting?

You can learn more through the TNFD disclosure recommendations, TNFD additional guidance, TNFD in a Box and the TNFD Knowledge Hub. You can also read the TNFD’s guide to getting started with adoption of the TNFD recommendations. 

Learning from the TNFD’s pilot case studies can provide valuable insights to help you get started. You can also access support and collaborative learning activities through the TNFD Forum and relevant national or regional TNFD consultation group. 

Are you ready to embed nature into your risk management, strategy and reporting? Find inspiration, information and resources at ICAEW’s nature and biodiversity hub.

Toby Roxburgh, Sustainability Manager, Nature and Biodiversity, ICAEW