Revealed: Guidance from the Nature-Financial Disclosure Taskforce now public
The Task Force on Nature-related Financial Disclosures (TNFD) has been making waves in the financial sector with its recent releases of sector and biome guidance. This new guidance aims to demonstrate how value chains interact with different biomes and the ecosystem services they provide.
The TNFD's guidance on engagement with Indigenous Peoples, local communities, and affected stakeholders is a significant step forward. It builds on existing international law and best practice international standards, providing a series of relevant legislation and guidelines for conducting cultural, environmental, and social impact assessments. This guidance also includes a set of questions which could be used throughout the LEAP approach when engaging with these groups.
The TNFD's sector guidance for financial institutions is based on the Sustainability Accounting Standards Board's standards and the EU's Sustainable Finance Disclosure Regulation (SFDR). This guidance provides proposed TNFD disclosure metrics that present SFDR principal adverse impact equivalents for each driver of nature change.
The additional biome guidance maps organizational activities that rely on ecosystem services and how such activities would be impacted if the ecosystem services are disrupted or changed in the future. This sector guidance is expected to be published in its final version in 2024.
In June 2023, the Australian Securities and Investments Commission (ASIC) hosted a series of workshops with industry bodies to pilot the application of the draft TNFD framework in Australia. ASIC chair Joe Longo has warned professional services about the seismic expectation for organizations to collect and analyze data for Environmental, Social, and Governance (ESG), climate change, and nature amid the changing regulatory framework in favor of reporting on environmental protection.
The need for informed, professional, commercial, and nature-attuned legal guidance has never been more critical. Other countries, such as Canada, have also been piloting the TNFD framework. The TNFD's guidance on engagement with Indigenous Peoples, local communities, and affected stakeholders also includes a list of disclosures that organizations should include to meet the TNFD's general requirements.
However, it's worth noting that the search results do not provide information about which organizations have participated in the TNFD project or how their collaboration is structured. This could be an area for future improvement to increase transparency and accountability.
In conclusion, the TNFD's new guidance represents a significant step towards sustainable finance and responsible engagement with Indigenous Peoples, local communities, and affected stakeholders. As the financial sector continues to grapple with the challenges posed by climate change and nature loss, the TNFD's guidance offers a valuable framework for navigating these complex issues.
