The Taskforce on Nature-related Financial Disclosures (TNFD) is a group of 40 individuals from market service providers, financial institutions and corporate entities working together to devise a framework for reporting and acting on nature-based impacts. It’s still in its infancy, but companies across many sectors are already working to appreciate how to adopt the principles of the framework. It is the beginning of a journey that will have significant positive impact on nature, and help Canada take strides towards a net zero future.
WSP Canada’s Patrick Lafrance, national vice-president of Ecology and Environmental Impact Assessment, is already working with clients to reduce their impact on nature. He provides his insights on the importance of the release of Version 0.4 of the TNFD Framework, and the work ahead to help businesses adopt its principles.
For anyone unfamiliar, what exactly is TNFD and how and when was it created?
TNFD is an initiative to develop a framework for companies and organizations to disclose their impacts and dependencies on nature. It was formally launched in June 2021 by a group of financial institutions, governments, NGOs, and academic experts, including the Global Canopy, the United Nations Development Program, and the World Wildlife Fund.
The TNFD is modeled after the Task Force on Climate-related Financial Disclosures (TCFD), which was created in 2015 by the Financial Stability Board to provide a standardized framework for companies to disclose their climate-related risks and opportunities. The final version of the TNFD framework will be launched in September 2023 for organizations to improve data collection and better integrate nature-related risks into decision-making. The framework will be structured around four pillars: governance, strategy, risk management, and metrics and targets. The TNFD hopes to encourage financial institutions and other organizations to consider their impacts on nature and to invest in more sustainable practices.
How does TNFD help businesses and organizations understand their impact on our natural environment?
The initiative helps businesses and organizations understand their impact on the natural environment by providing a framework for disclosing their impacts and dependencies on nature. The TNFD aims to develop a standardized set of metrics and disclosures that companies can use to report on their nature-related risks and opportunities.
The TNFD framework is designed to be flexible and adaptable to different types of businesses and sectors. It includes guidance on how to assess and report on a range of nature-related risks, including biodiversity loss, water usage, and land use change.
By using the TNFD framework, businesses and organizations can better understand their impacts on nature and take steps to reduce their negative impacts and enhance their positive contributions. This can help to protect and restore natural ecosystems and to ensure the long-term sustainability of our planet. Additionally, by disclosing nature-related risks and opportunities, businesses can enhance their transparency and accountability, which can help to build trust with investors, customers, and other stakeholders.
Why would businesses want to disclose this information?
There are several reasons why businesses would want to disclose their impacts and dependencies on nature:
- Regulatory compliance: In some countries, there are laws and regulations that require businesses to disclose their environmental impacts, including their impacts on nature. By disclosing their nature-related impacts and dependencies, businesses can ensure that they are complying with these regulations.
- Risk management: Nature-related risks such as biodiversity loss, and water scarcity can have significant impacts on businesses. By disclosing these risks, businesses can better manage them and take steps to reduce their exposure to them.
- Reputation management: Consumers and investors are increasingly concerned about the environmental impact of the businesses they support. By disclosing their nature-related impacts and dependencies, businesses can show that they are taking these concerns seriously and are committed to reducing their environmental footprint.
- Innovation and opportunity: Disclosing nature-related risks and opportunities can help businesses identify new areas of innovation and opportunity. For example, businesses that can reduce their environmental impact by using sustainable materials or renewable energy sources may be able to gain a competitive advantage.
Overall, disclosing nature-related impacts and dependencies can help businesses to better understand and manage their environmental impact, enhance their reputation, and identify new opportunities for innovation and growth.
How is this information then used to create a pathway to more positive impacts on nature?
The TNFD process will lead businesses to develop action plans that focus on reducing their impact and dependencies on nature. The implementation of those action plans will be monitored using science-based metrics and targets to measure progress, which will result in businesses reducing their impact on nature and better manage their nature dependencies. The TNFD also provides guidance on how to identify and disclose opportunities for businesses to support nature conservation and restoration, which could also have a positive impact on nature.
How do businesses and organizations get started on their TNFD journey?
Businesses need to start evaluating their corporate goals and priorities with respect to nature, and define a corporate strategy for nature. Once that strategy is in place, they need to analyze their business impacts and dependencies on nature to help pinpoint key locations, risks, and opportunities for their strategy. Results of this analysis can then be used to refine corporate biodiversity strategy and create action plans including clear targets, an implementation schedule, and measurable performance indicators. This will allow them to monitor the performance of their action plan and apply corrective action if needed. Finally, the progress being made should be disclosed annually to shareholders, investors, and employees.
Of course, this isn’t something that a company has to do on its own. WSP is already working with a number of sectors, including mining, industrial, and finance, to help them evaluate their impact, and the impact of their investments, on the natural environment.
Patrick Lafrance, National Vice-President of Ecology and EIA at WSP Canada can be reached at: firstname.lastname@example.org.
Featured image credit: Getty Images.