[Explanation] What is the TNFD? A new bridge between finance and the natural environment

The TNFD has been increasingly heard of in recent years.

Many of you may be wondering about the final recommendations as they are about to be published.

But what exactly is TNFD?

This article describes the background to its establishment, its specific contents and the process of information disclosure.

What is TNFD?

The Taskforce on Nature-related Financial Disclosures (TNFD) is a framework for financial institutions and companies to properly assess and disclose the relationship between their business activities and nature. By understanding and disclosing the impact of their operations on the natural environment and biodiversity, and conversely the risks to companies from changes in nature, companies can identify their own risks and expect to receive appropriate recognition from investors and society.

The TNFD's final recommendations are due to be published on 18 September 2023.The TNFD is "aShift global financial flows from negative to positive outcomes for nature.companies and financial institutions for the purpose of "..."[1].Report on nature-related risks and opportunities for their own operations.するためのフレームワークの開発、提供を目指しています。2021年6月に設立されて以降、4度に渡ってβ版フレームワークが発表されてきました。

The TNFD is positioned as the 'natural version' of the Task Force on Climate-related Financial Disclosures (TCFD),[2] to which more than 90% of TSE Prime listed companies already comply. After the full version is released, it is expected that even more companies will move towards full-scale disclosure, but what is the actual process?

Figure 1: TNFD positioning (Source: TNFD Full Beta Summary v0.4)

Composition of the TNFD

To begin, the elements that make up the TNFD are summarised: as of Framework v0.4, published in March 2023, the TNFD consists of the following elements

Four pillars of recommendations for disclosure

Four common pillars with the TCFD that can be tied to four recommendations that can be widely adopted.

1. governance
2. strategy
3. risk & impact management
4. metrics & targets

Recommended Disclosures.

14 specific recommendations, located under the four pillars (Figure 2).

General Requirements

Six general requirements across the four pillars of the disclosure recommendations

1. approach to materiality
2. scope of disclosures
3. consideration of nature-related dependencies, impacts, risks and opportunities
4. location
5. integration with other sustainability-related disclosures.
6. stakeholder engagement

LEAP Approach

Voluntary guidance recommended to inform disclosure by the TNFD. The four stages of Locate, Evaluate, Assess and Prepare provide guidance in assessing nature-related risks and opportunities.

Figure 2: Draft TNFD disclosure recommendations (Source: TNFD Full Beta Summary v0.4)

Of these, the LEAP approach is not mandatory for disclosure, but is recommended for use as a means of preparing information disclosure on nature-related issues. On the other hand,For disclosure recommendations based on the four pillars and the general requirements that cut across them, it is necessary to disclose information in compliance with these andYes.

Indicators used to measure and evaluate disclosure recommendations were first published in Framework v0.4The following is a summary of the results of the study.Global Core Disclosure Indicators, which are strongly required to be disclosed in all sectors.The following are some of the most important

index numbercategoryOverview.
C1.0climate changeScope 1, 2 and 3 GHG emissions
C2.0Changes in land/freshwater/sea useTotal change in land/freshwater/sea use
C2.1Changes in land/freshwater/sea useChanges in terrestrial/freshwater/sea use in priority ecosystems.
C3.0Pollution / decontaminationTotal amount of pollutants released into the soil by type.
C3.1Pollution / decontaminationTotal volume of wastewater discharged and concentration of major pollutants in the wastewater.
C3.2Pollution / decontaminationTotal hazardous waste generated.
C3.3Pollution / decontaminationTotal air pollutants other than GHGs
C4.0Resource use/rechargeWater abstraction and consumption from water-stressed areas
C4.1Resource use/rechargeAmount of high-risk natural resources sourced from land/freshwater/sea
C4.2Resource use/rechargeQuantity and percentage of natural resources sourced from priority ecosystems
C5.0Nature-related risksPercentage and total annual revenue exposed to 1) physical risk and 2) transition risk.
C5.1Nature-related risksPercentage and total value of assets exposed to nature-related 1) physical risks and 2) migration risks.
C5.2Nature-related risksPercentage and value of assets/annual income at risk by risk rating (e.g. high, medium, low)
C5.3Nature-related risksPercentage and total value of property values/annual revenues that are heavily dependent on ecosystem services or have a significant impact on nature.
C6.0Nature-related opportunitiesValue of capital allocated to nature-related opportunities, by type
Table 1: Global Core Disclosure Metrics (Source: prepared by the author from TNFD Disclosure Metrics Annexes)

Industry and compliance trends where publication of the TNFD is a priority.

The TNFD has proposed priority sectors for each of the financial and non-financial sectors in Framework v0.2 (Table 2). These sectors and industries are considered to have 'greater natural dependencies and impacts and are more financially sensitive than others'[3] and priority sector-specific guidance/recommendations will be developed. On the flip side, these are the industries most likely to be required to disclose information in compliance with the TNFD.

sector(the) industry
Food and beveragesMeat, poultry and dairy products / agricultural products / alcoholic and non-alcoholic beverages / processed foods
Renewable resources and alternative energy sourcesForest management / Pulp and paper products / Biofuels
infrastructureEngineering and construction services / Water supply and distribution services / Electricity and power generation
Mining, mineral processingBuilding materials / Metals and mining / Oil and gas
health careBiotechnology and pharmaceuticals
resource transformationchemistry
consumer goodsApparel, accessories and footwear
transportationShipping companies/maritime transport
financingBanks / insurance companies / asset managers / asset owners / development finance institutions
Table 2 : Priority sectors proposed by the TNFD (Source: prepared by the author from The TNFD framework beta v0.2)

Although the TNFD has not yet published its final recommendations, an increasing number of organisations and companies are already developing their reports. Below is a representative list of companies that have published TNFD reports by August 2023.

Company NameOpen to the publicreport
Kirin Holdings Company LimitedJuly 2022 July 2023'Environmental Report 2022', 'Environmental Report 2023'.
Sumitomo Mitsui Financial GroupApr 2023.'SMBC Group 2023 TNFD Report'
Kao Corporation Accenture Ltd.Apr 2023.'Business risks and opportunities posed by biodiversity - TNFD assessments - case studies based on regional characteristics'
Shiseido Co.May 2023.'2023 Shiseido Climate/Nature-related Financial Disclosure Report'.
KDDI Corporation Jun 2023.'TNFD Report 2023'.
NEC CorporationJuly 2023.'NEC TNFD Report 2023.'
Tokyu Land Holdings LimitedAug 2023.'TNFD Report - Contribution to Nature Positive in the Tokyu Land Holdings Group'
Table 3 : Companies publishing TNFD reports (as of August 2023)

Processes required for TNFD disclosure.

The TNFD covers the huge concept of 'nature' and is in the process of standardising its definitions and indicators. Many companies may get stuck at the entrance when trying to formulate a report. This section examines the necessary process based on the common features of TNFD reports that have already been published and the disclosures that should be prioritised for investigation.

The four pillars of disclosure recommendations are key to compliance with the TNFD. Namely, disclosure is required for each of 'Governance', 'Strategy', 'Risk and Impact Management' and 'Metrics and Targets'. Of these, the requirements for 'governance' and part of 'risk and impact management' can be met to some extent by describing the company's actual systems and initiatives with regard to nature-related dependencies and impacts. On the other hand, 'Strategy' and 'Metrics and targets' require the disclosure of quantitative indicators and their measurement methods throughout the supply chain.It is not easy to obtain primary data for all required indicators. In fact, many of the TNFD reports published so far have been adapted from existing sustainability reports or focused on individual environmental initiatives, and it is likely that a form of information disclosure covering all required indicators will not be established until after the full version is published.

The first step in aiming for disclosure is to understand the extent of your company's dependence on and impact on nature for each of your business locations and industries, and to identify the priority areas and activities to be considered. The active use of the LEAP approach in this process can make the analysis process more convincing.


The impact of the penetration of the TNFD is not limited to large companies. Businesses upstream and downstream in the supply chain may increasingly be required by their suppliers to disclose information on nature-related risks. It will become more important than ever for companies to understand their dependence on and impact on nature in their business activities, even if this does not mean developing a full report at once.

aiESG can provide support from the basics of TNFD to the actual disclosure of non-financial information. aiESG is happy to assist companies that need help in complying with TNFD.

Enquiries about services:



*Related page*.
[Commentary] TNFD disclosure status and issues.

[Commentary] Key points of the TNFD final recommendations and the responses required from companies.

aiESG participates in the Task Force on Nature-related Financial Disclosures (TNFD) Forum.