8 min read
The Taskforce on Nature-related Financial Disclosures (TNFD) is a voluntary framework. ESRS E4 is not. For a company inside the EU reporting perimeter, that one difference decides how to read the TNFD recommendations: not as another standard to adopt, but as the method layer underneath a disclosure obligation that already exists. This page covers the bridge: which TNFD recommendation lands in which ESRS E4 requirement, why double materiality is the practical entry point, and what a first nature screening takes.
The four pillars, LEAP and the TNFD recommendations in plain terms
The framework has 14 disclosure recommendations sorted into four pillars: governance, strategy, risk and impact management, and metrics and targets. Eleven of the 14 are inherited from the TCFD structure, which is why a company with a climate report already has most of the scaffolding (IFRS Foundation). Around the recommendations sit two layers of guidance: general requirements that apply to everyone, and additional guidance by sector and by biome. Financial institutions get their own set, because a bank's exposure to nature-related issues runs through its book, not its sites.
LEAP is the process the framework suggests for getting there. Four steps, each with a data source you have to name before you start:
- Locate: which sites and supplier regions sit in or near biodiversity-sensitive areas. Source: your site and supplier register, matched against protected-area and water-stress layers.
- Evaluate: which dependencies and impacts each activity carries. Source: sector dependency ratings.
- Assess: which of those become material nature-related issues. Source: your existing risk register.
- Prepare: what gets disclosed, and under which standard you file it.
My position on the sequence: for a mid-sized company already inside the CSRD perimeter, running LEAP as a standalone programme is the wrong order. The framework was written for organisations with no reporting obligation. If you have one, the obligation defines the scope and LEAP supplies the method inside it.
TNFD and ESRS E4: what maps, what doesn't
The CSRD does not ask for a TNFD report. It asks for ESRS E4, biodiversity and ecosystems, if that topic comes out material. How the two line up in filing practice:
| TNFD pillar | ESRS counterpart | Where it differs |
|---|---|---|
| Governance A to C | ESRS 2 GOV-1 to GOV-3, applied to E4 | ESRS asks the governance questions once for all topics. TNFD asks them again for nature. |
| Strategy A to D | ESRS 2 SBM-3, E4-1 transition plan, E4-6 anticipated financial effects | TNFD Strategy D wants priority locations. In ESRS that content sits in IRO-1 and E4-5, not in the strategy block. |
| Risk and impact management A to C | E4 IRO-1, E4-2 policies, E4-3 actions and resources | Closest fit of the four. IRO-1 is where you describe how you identify and assess impacts, risks and dependencies, and LEAP is an accepted way to describe it. |
| Metrics and targets A to C | E4-4 targets, E4-5 impact metrics | ESRS prescribes the datapoints. TNFD leaves the metric set largely to you, so a TNFD-shaped metric often has to be recut for E4. |
Two things do not map. TNFD is built on the ISSB logic of financial materiality, so a TNFD-complete disclosure can still miss the impact side that ESRS requires. And TNFD asks for disclosure on engagement with Indigenous Peoples and local communities, which in the ESRS architecture lands in S3 affected communities rather than in E4. Anyone reusing a TNFD report as an E4 draft has to add both.
Timing matters too: under the ESRS quick fix, first-wave reporters may omit biodiversity datapoints for the 2025 and 2026 financial years. That is a deferral of the filing, not of the analysis, because the materiality assessment that decides whether E4 applies is still due.
If you want to go deeper: Which Platforms Monitor Biodiversity Risk in Supply Chains, and What Each Can Answer.
Double materiality as the entry point to nature disclosure
Double materiality asks two questions at once: what your business does to nature, and what nature does to your business. ESRS requires both directions (European Commission). TNFD, coming from the TCFD and ISSB lineage, leads with the financial direction. That asymmetry is exactly why the assessment, not the framework, should come first.
In practice the nature screening bolts onto an assessment you have already run. A food manufacturer with roughly 600 employees in southern Germany had a complete double materiality assessment for climate, water and workforce, and had parked biodiversity as not material without documenting why. The gap was not analytical capacity, it was that nobody had put site coordinates next to protected-area data. Two of eleven sites sat inside a water-stressed catchment with a designated area a few kilometres away. E4 became material through the impact side, and the assessment record carried the reasoning, not a new LEAP project.
Target 15 of the Global Biodiversity Framework commits governments to making large companies disclose their nature dependencies and impacts, and the EU implements that through ESRS E4, not through TNFD.
My position: if biodiversity came out non-material in your last assessment, the honest question is not whether to adopt TNFD. It is whether that non-material verdict was ever evidenced with location data. In most files I see, it was not.
What a first nature screening takes in practice
A screening that holds up in an audit needs four inputs, and three of them already exist in the company:
- A site list with coordinates, own sites plus the tier-1 supplier locations you can name. Usually from facility management or procurement, rarely from sustainability.
- Public geodata layers: protected and key biodiversity areas, water stress, land cover. The TNFD Tools Catalogue lists providers, but being listed is not a quality check.
- Sector dependency ratings to sort activities before you look at any single site.
- The existing materiality assessment, so the result lands in a document that already has governance sign-off.
The effort sits mostly outside the sustainability function. Facility management supplies the coordinates, procurement the supplier regions, finance validates whichever effects reach E4-6. Budget calendar time for those handovers, not for the analysis, which is short once the location list is complete. The output is not a TNFD report. It is an evidenced material or non-material verdict for E4 plus a shortlist of sites worth a closer look next cycle, which is what your CSRD reporting needs.
A question that follows the E4 verdict: does a voluntary TNFD report still add anything? For most mid-sized filers it does not. It earns its cost with one audience, the banks, insurers and investors who screen nature-related risks and opportunities across their own book and ask portfolio companies for TNFD-shaped answers rather than ESRS references. If no lender or shareholder has asked, a TNFD report restates work you have already filed. If one has, the cheaper route is to recut the E4 content against the four pillars and flag the two gaps named above, not to run a separate LEAP cycle.
FAQs
What is in the TNFD additional guidance?
Two layers beyond the core recommendations. Sector guidance interprets the disclosures for specific industries, including a separate set for financial institutions, and biome guidance does the same for ecosystem types such as forests or freshwater. Both are interpretive: they tell you which nature-related issues typically matter in your context, they do not add disclosure requirements.
How do the TNFD recommendations relate to ISSB and TCFD?
TNFD reuses the TCFD's four-pillar structure, and 11 of its 14 disclosure recommendations derive from it. The IFRS Foundation has signalled that a future ISSB standard on nature would build on the TNFD work, which makes TNFD alignment a reasonable hedge for companies that also report under ISSB standards. For EU filers the binding text remains ESRS E4.
Is TNFD mandatory for EU companies?
No. TNFD adoption is voluntary and stays voluntary. What is mandatory, for companies in scope of the CSRD, is ESRS E4 once biodiversity and ecosystems come out material in the double materiality assessment. Adopting TNFD is a method choice; filing E4 is a legal obligation. Confirm your own first reporting year before planning either, since the Omnibus revision moved both scope and timing.
