What is TNFD? Disclosures, Framework & Reporting

What is the TNFD Report and its Purpose?

The TNFD report is an extensive report on disclosures that allow organisations to evaluate, manage, and report their nature-related risks and dependencies. Also known as the Taskforce on Nature-related Financial Disclosures report, it is a systematic document to help companies and financial institutions comprehend the role that their activities play in biodiversity and the well-being of ecosystems.

The main aim of the TNFD report is to give investors, stakeholders, and capital providers clear, consistent, and comparable information about the nature-related risks. Recording these dependencies and impacts, a TNFD report assists organisations to create resilience, reveal financial risks, and create opportunities to grow sustainably in an environmentally conscious global economy.

The TNFD Framework and General Overview

The TNFD framework consists of four pillars - governance, strategy, risk and impact management, and metrics and targets.

The TNFD framework comprises 14 major disclosure recommendations and seven guiding principles that aid organisations in using nature-related considerations in their decision-making process.

Taskforce on Nature Related Financial Disclosures and Why it was Established?

The Taskforce on Nature-related Financial Disclosures emerged from a recognised gap in corporate environmental reporting. Launched officially in 2021 with founding partners including:

• UN Environment Programme Finance Initiative, 
• UN Development Programme, 
• World Wildlife Fund, and 
• Global Canopy.

The Gap in Environmental Reporting

Although climate reporting had taken a very promising step through the TCFD framework, nature-related risks were still largely being undisclosed and underestimated. This initiative emerged because the global economy relies essentially on healthy ecosystems, but not many businesses take a systematic look at their dependence upon or influence on natural capital.

By 2025, more than 620 organisations from over 50 countries have publicly pledged to begin nature-related reporting in line with TNFD, and the figure has only risen since, with over 730 organisations now registered as TNFD Adopters worldwide.

How TNFD Reporting Works and What it Covers?

These are the main steps undertaken by organisations to implement TNFD reporting:

1. Locate Nature Interactions
   Begin by identifying where their operations and value chains interact with nature, whether through water consumption, land use, pollinator dependency, or supply chain sourcing.

2. Evaluate Dependencies and Impacts
   Next, evaluate which nature dependencies matter most to the business and where the activities create environmental impact.

3. Assess Financial Exposure
   The assessment phase involves quantifying financial exposure to nature-related risks, such as supply chain disruption or regulatory penalties.

4. Integrate and Disclose
   Organisations use such findings in their governance systems, strategic plans, and risk management procedures to ensure clear communication with the stakeholders.

Scope of Coverage

TNFD disclosures cover direct operations, upstream suppliers, and downstream customers and allow forming a comprehensive picture of nature-related exposure. The framework contains the disclosure of ecosystem degradation, water stress, soil depletion, and biodiversity loss, as well as related risks and opportunities for the organisation.

Benefits of TNFD for Organisations and Investors

Organisations that embrace TNFD reporting have various strategic benefits in financial, operational, and market levels.

For Organisations

• Early Risk Identification - Identify financial risks related to biodiversity early in time, before these disruptions turn out to be costly.
• Improved Brand Reputation - Lead in sustainability and build trust with the stakeholders.
• Capital Access - Improved access to capital where investors integrate nature-related risk assessments.
• Regulatory Readiness - Be on top of new mandatory disclosure demands in various jurisdictions.
• Operational Efficiency - Find ways of saving money by managing resources and supply chain resilience.

For Investors

TNFD to investors offers clear, comparative nature-related information required to evaluate financial risks in investment portfolios, information not available before. This allows for more effective risk analysis among the portfolios and the discovery of long-term value creation opportunities within the nature-positive companies.

Key Elements of TNFD Report Structure

A detailed TNFD report contains key structural elements that are consistent with the pillars of the framework.

Governance Component

Board-level management of nature-related risks, accountability, and nature considerations in strategic planning. This section clarifies who is responsible for nature-related decisions and how these issues escalate within the organisation.

Strategy Component

Explains the impact of nature dependencies and risks on business decision-making, positioning, and long-term planning, such as scenario analysis of various nature-loss futures. Organisations articulate how nature-related considerations shape strategic choices and resource allocation.

Risk and Impact Management

Details the processes for identifying and assessing nature-related exposures across the value chain, using tools like the LEAP framework and ENCORE analysis for biodiversity assessment.

Metrics and Targets Pillar

Establishes measurable KPIs for tracking nature performance, such as:

• Extent of habitat and biodiversity metrics.
• Water stress and consumption rates.
• Land use change indicators
• Nature-related impacts on enterprise value, where quantification is feasible.

Challenges in Preparing a TNFD Report

Organisations encounter major challenges in the preparation of a TNFD report, both in technical barriers and organisational readiness issues.

Data Availability and Quality

The available data on biodiversity and ecosystems is still fragmented geographically and not available in a standardised form. Organisations often struggle to find reliable, comparable data across their global operations and supply chains.

Supply Chain Visibility

Nature dependencies demand upstream and downstream value chain mapping that cannot be achieved without detailed supply chain visibility, which many organisations lack. This is especially difficult when the company has a complex, global sourcing network.

Nature-Related Financial Quantification

The nature-related financial effects are hard to quantify as the ecosystem valuation approaches are still evolving. In contrast to the carbon emissions that already have a set of conversion factors, nature metrics lack standardisation.

Despite these challenges, early adopters recognise that by investing in the implementation of TNFD today, they are already in a better position to be competitive with future regulatory requirements.

Key Takeaways on TNFD Reporting

The TNFD framework provides a proven methodology for assessing and disclosing nature-related risks and opportunities in ways that capital markets can understand and act upon.

Why TNFD Matters Now?

• Regulatory Momentum - Early TNFD adoption makes organisations ready to face forthcoming mandatory reporting.
• Risk Management - Limits financial and regulatory risks from nature-related disruptions.
• Operational Value - Leads to efficiency with better resources and supply-chain management.
• Market Leadership - Enhances competitiveness, access to capital, and attracting talents.

Oren provides in-depth ESG and sustainability reporting to facilitate the adoption of TNFD frameworks, assist organisations in evaluating the effects on nature effectively, create a solid governance mechanism, and produce investor-ready disclosures that adhere to the changing global standards.
‍Contact us today to accelerate your TNFD-aligned sustainability reporting!

Frequently Asked Questions (FAQs)

Q1. What is a TNFD report?

A TNFD report is a systematic report that describes the nature-related dependencies, effects, risks, and opportunities to investors and stakeholders of an organisation. 

Q2. What does the TNFD framework cover?

The TNFD framework deals with nature-related issues influencing business resilience and financial capacity, such as biodiversity loss, ecosystem deterioration, water stress, land use change, and pollution.

Q3. Who should prepare a TNFD report?

TNFD disclosures apply to organisations in all industries, but particularly those that have substantial environmental exposure and financial institutions that have a significant portfolio.

Q4. Is TNFD reporting mandatory?

TNFD reporting is not compulsory, but mandatory nature-related disclosures are appearing across the world. The EU’s CSRD aligns closely with TNFD and requires large companies to disclose nature-related risks.

Q5. How does TNFD relate to ESG reporting?

TNFD complements ESG reporting as it enhances the environmental pillar with a particular emphasis on biodiversity and ecosystems, which provide better guidance on nature-based risks beyond high-level ESG metrics.

Q6. What are nature-related financial disclosures?

These disclosures explain how nature-related dependencies and impacts affect risk, resilience, and value creation, helping stakeholders assess exposure to supply chain, regulatory, and market risks.

Q7. What is the difference between TNFD and other sustainability frameworks?

TNFD is specifically focused on financial risks and opportunities related to nature and biodiversity, complementing climate (TCFD/ISSB) and ESG frameworks.