The World Economic Forum in Davos, Switzerland, the Taskforce on Nature-related Financial Disclosures (TNFD) recently unveiled three different initiatives in order to expand consultation with market/industry participants and various stakeholders on the design and development of the TNFD’s recommendations on nature-related risk and opportunity management.
The TNFD framework, currently in prototype format, should allow corporates and financial institutions to assess as well as disclose on their nature-related risks and opportunities, with the goal of helping to shift financial flows from “nature-negative” to “nature-positive” outcomes.
Final recommendations from the Taskforce are reportedly due in September of next year.
Efforts to create the TNFD’s nature-risk framework are being led by 34 individual Taskforce Members, who are representing major financial institutions, businesses and market service providers, and supported by more than 400 institutions across the globe who constitute the TNFD Forum.
A first ‘beta’ framework was launched in March of this year with input now being received from various market participants and relevant stakeholders from more than 60 countries through a market-led, open innovation process to co-create the recommendations.
The TNFD framework is also attracting interest from policy makers and regulators as efforts continue within jurisdictions towards integrated sustainability reporting guidelines.
TNFD Consultation Groups are being activated at a national / regional level in order to expand outreach and engagement in markets where interest in the work of the Taskforce has been established.
Consultation Groups are market-led, with a convening organization from the private sector bringing together business, finance, public sector and civil society organizations in order to discuss nature-related business and finance matters and the potential adoption of the global TNFD framework.
The six Consultation Groups are as follows:
- Australia and New Zealand, convened by the Responsible Investment Association Australasia (RIAA)
- India, convened by the Confederation of Indian Industry (CII)
- Japan, convened by TNFD Taskforce member MS&AD Insurance Group Holdings
- Netherlands, convened by TNFD Taskforce Member Rabobank and the Dutch Banking Association
- Switzerland, convened by TNFD Taskforce Member UBS on an interim basis
- United Kingdom, convened by the Green Finance Institute (GFI).
Participation in consultation groups is currently open to institutional members of the TNFD Forum from that jurisdiction.
Additional Consultation Groups are expected to be confirmed throughout 2022 and 2023 based on demand and interest from market participants.
FSD Africa through the African Natural Capital Alliance (ANCA), Global Canopy, UNEP-FI, and the World Business Council for Sustainable Development (WBCSD) have now been confirmed as the first of the TNFD’s piloting program partners.
They will each run a portfolio of pilot tests with firms and financial institutions of the ‘beta’ framework during the next 12 months.
With their support, the TNFD will pilot test various aspects of its beta framework with a diverse range of businesses and financial institutions across geographies and sectors to inform the iterative development of the TNFD’s recommendations.
These four pilot testing partners will aim to leverage their networks of market participants to pilot specific elements of the framework.
Outside of these programs, interested individual business and financial institutions of all sizes are able to pilot test the framework using the TNFD’s interactive online platform for the beta framework at: framework.tnfd.global.
The TNFD is currently exploring additional initiatives to encourage pilot testing in biodiversity hotspots in emerging markets and with Indigenous community enterprises and other stakeholders.
The window for pilot testing and feedback from market participants and other stakeholders is open until May 31, 2023.
TNFD is working with the International Union for Conservation of Nature (IUCN) to engage with Indigenous Peoples and Local Communities (IPLCs).
Leveraging IUCN’s networks and relationships with IPLCs, over the next 12 months, this consultation process will ensure the voices and perspectives of IPLCs are incorporated into the design and development phase of the TNFD Framework.
Indigenous Peoples and Local communities steward the natural resources and serve a key role in safeguarding nature.
As noted in the update, their communities are dependent on nature for their livelihoods and Indigenous-led enterprises are often pioneers in sustainable business models.
As noted in the announcement:
“There is an urgent need and huge opportunity to mobilize the innovative power of finance and business to move quickly from developing one-dimensional solutions to three-dimensional solutions that address climate, nature, and social dimensions as a bundle. The TNFD is working closely with a range of other risk management and disclosure initiatives to contribute to the development of the global baseline of integrated sustainability reporting requirements that market participants are looking for.
David Craig and Elizabeth Mrema, Co-Chairs, TNFD, said:
“A strong and inclusive consultation process on nature-related risk management and reporting is fundamental to our success. Crowding in insights from a wide range of market players and stakeholders across different sectors and geographies will help the Taskforce deliver a practical framework that has been co-created by both those who will use it as well as those that will feel the impact the most.”
The first (v0.1) beta version of the framework was released in March of this year.
A further three releases of the beta framework that incorporate feedback from market participants and additional framework components are planned for June 2022 (v0.2), October 2022 (v0.3) and February 2023 (v0.4).
This should culminate in the final release of the TNFD’s recommendations (v1.0) in September 2023.