Understanding TNFD: Integrating Nature Risks and Opportunities in Financial Decisions

Executive Summary: The Taskforce on Nature-Related Financial Disclosures (TNFD) represents a fundamental shift in how financial institutions and companies assess nature-related dependencies, impacts, risks and opportunities. As of 2025, over 500 organisations have published TNFD-aligned reports, with thousands more integrating its metrics into investment disclosures—demonstrating that nature-related financial disclosures have transitioned from emerging practice to mainstream financial expectation. With the International Sustainability Standards Board (ISSB) now developing formal nature-related standards drawing on TNFD recommendations, and countries like the UK and Switzerland already mandating disclosure, understanding the TNFD framework is critical for organisations managing evolving nature-related risks effectively.

What is the TNFD Framework?

The TNFD framework, formally known as the Taskforce on Nature-Related Financial Disclosures, provides a structured approach for companies and financial institutions to identify, assess, manage and disclose nature-related dependencies, impacts, risks and opportunities. Published in September 2023, the TNFD recommendations align with the International Sustainability Standards Board (ISSB) and Global Reporting Initiative (GRI), replicating the structure of climate-related financial disclosures from TCFD.

This market-led, global initiative emerged from collaboration between organisations including the United Nations Development Programme, United Nations Convention on Biological Diversity, World Wildlife Fund and Global Canopy. The task force developed 14 disclosure recommendations that integrate nature-related issues into corporate reporting and risk management processes, addressing the business grand challenge of reversing nature loss whilst maintaining economic viability.

The TNFD framework distinguishes itself through its comprehensive approach to nature intelligence, requiring organisations to examine relationships with natural capital across four environmental domains: land, freshwater, ocean and atmosphere. For financial institutions managing investment portfolios, this means assessing nature-related financial risks alongside traditional climate risks.

Key Concepts in the TNFD Framework

Natural Capital and Ecosystem Services

TNFD defines natural capital as the stock of renewable and non-renewable natural resources—plants, animals, air, water, soil and minerals—that provide ecosystem services essential for economic activity. These environmental assets subdivide into distinct biomes ranging from coral reefs to urban environments.

Ecosystem services categorise into:

1. Provisioning services: Crops, timber, freshwater and raw materials
2. Regulation and conservation services: Water flow regulation, climate stabilisation, pollination
3. Cultural services: Recreation, aesthetic value and spiritual significance

Understanding these nature-related dependencies proves critical for assessing business continuity risks. Pharmaceutical companies depend on biological diversity for drug discovery, whilst textile manufacturers rely on water flow regulation.

Biodiversity and Nature Loss

Biological diversity refers to the variability of living organisms across environmental domains. Biodiversity determines ecosystem resilience—the risk of reaching ecological tipping points where cumulative effects cause irreversible biodiversity loss represents a material nature-related financial risk that few organisations adequately quantify.

The Taskforce on Nature-Related Financial Disclosures works closely with Science Based Targets for Nature (SBTN) to ensure metrics address biodiversity alongside freshwater, land, ocean and climate considerations. For organisations implementing ESG criteria, integrating biodiversity metrics extends existing sustainability reporting frameworks.

Nature-Related Dependencies, Impacts, Risks and Opportunities

The TNFD framework requires assessment across four interconnected dimensions:

Nature-related dependencies identify where business operations rely on ecosystem services, creating vulnerability to nature loss that directly affects revenue.

Nature-related impacts measure how organisational activities affect natural capital, generating both nature negative outcomes (habitat destruction, pollution) and nature positive outcomes (conservation, regenerative practices).

Nature-related risks manifest through physical risks (ecosystem degradation affecting operations), transition risks (policy changes) and systemic risks (widespread environmental change). Understanding these evolving nature-related risks requires scenario analysis across time horizons.

Nature-related opportunities emerge from shifting financial flows towards sustainable development, innovation in nature-positive technologies and competitive advantages from early adoption of nature-related reporting standards.

Is TNFD Reporting Mandatory?

The regulatory landscape for nature-related financial disclosures is evolving rapidly. The United Kingdom and Switzerland have incorporated TNFD-aligned requirements into financial sector regulations, with the UK developing an enhanced sustainability disclosures regime building on existing nature-related disclosure requirements.

ISSB Integration and Global Standard Setting

In late 2025, TNFD announced it will pause further technical guidance work and transition oversight for nature-related standard-setting to the International Sustainability Standards Board (ISSB). The ISSB is expected to incorporate TNFD guidance into a formal nature-related sustainability standard, creating global alignment and reducing reporting burden from overlapping frameworks. This mirrors how climate-related financial disclosures evolved from voluntary TCFD recommendations to embedded regulatory requirements.

European Union Alignment

Within the European Union, TNFD recommendations are being aligned with Corporate Sustainability Reporting Directive (CSRD) requirements. In July 2025, TNFD submitted recommendations to the European Financial Reporting Advisory Group (EFRAG) as part of the ESRS "omnibus" consultation. For organisations implementing CSRD compliance, this enables efficient integration of nature-related disclosures.

The Kunming-Montreal Global Biodiversity Framework explicitly calls for large companies and financial institutions to "regularly monitor, assess and transparently disclose" nature-related risks, dependencies and impacts—establishing international commitments many jurisdictions are translating into domestic regulations.

Market-Led Momentum

The 2025 TNFD Status Report documents impressive market momentum—over 500 organisations have published TNFD-aligned reports, with thousands more using its metrics for water, waste and biodiversity indicators. This demonstrates that nature-related reporting has transitioned from sustainability add-on to core financial expectation. Institutional investors now require nature-related assessments during due diligence, whilst banks incorporate nature-related data into credit risk models.

Strategic Value of TNFD Reporting

Risk Management and Financial Resilience

Implementing the TNFD framework enables organisations to identify nature-related financial risks that traditional frameworks overlook. Companies exposed to biodiversity loss through supply chains can experience operational disruptions when ecosystem services collapse—risks rarely captured in conventional enterprise risk registers.

Organisations conducting comprehensive nature-related assessments typically identify 3-7 material nature-related issues previously unrecognised by management, enabling mitigation strategies before risks materialise into financial losses. Sectors like agriculture, pharmaceuticals, textiles and infrastructure depend heavily on specific ecosystem services, but virtually all organisations maintain nature-related dependencies through value chains.

Investor Relations and Capital Access

Financial institutions increasingly integrate nature-related criteria into capital allocation decisions. Companies demonstrating robust nature-related disclosures signal sophisticated risk management—reducing perceived investment risk and potentially improving valuations. Conversely, organisations lacking credible nature-related reporting may face higher capital costs.

Venture capital investors can leverage TNFD assessments to identify companies positioned to benefit from the transition towards nature-positive economics, particularly valuable when assessing climate tech investments where nature-based solutions represent significant market opportunities.

Nature Transition Planning

Recent TNFD guidance emphasises developing and disclosing nature transition plans detailing how organisations will meet nature-related commitments aligned with the Kunming-Montreal Global Biodiversity Framework and demonstrating pathways to nature positive outcomes.

Effective transition plans include:

• Science-based targets aligned with SBTN covering biodiversity, freshwater, land, ocean and climate
• Implementation roadmaps with resource allocation and governance structures
• Scenario analysis assessing different nature-related futures affecting business viability
• Dependencies on natural capital and plans to reduce vulnerability
• Stakeholder engagement incorporating Indigenous Peoples, local communities and affected stakeholders

Scenario analysis for nature can initially remain narrative-based, evolving towards quantitative sophistication over time.

Reputation and Stakeholder Engagement

Transparent disclosure demonstrates accountability to other stakeholders including local communities and consumers demanding authentic sustainability commitments. However, disclosure must be substantiated—the Green Claims Directive will require verifiable evidence, making robust nature-related data essential for avoiding greenwashing.

Recent TNFD general requirements elevate engagement with Indigenous Peoples, local communities and affected stakeholders. Organisations must describe engagement practices, oversight mechanisms and how human rights considerations inform LEAP assessments and decisions regarding nature-related risks and opportunities. Financial institutions assessing nature-related financial risks should evaluate whether portfolio companies maintain credible stakeholder engagement, as poor community relations frequently materialise into operational disruptions or reputational damage.

Preparing a TNFD Report: The LEAP Approach

The Taskforce on Nature-Related Financial Disclosures recommends the LEAP approach—Locate, Evaluate, Assess and Prepare—to structure nature-related assessments and develop comprehensive nature-related disclosures.

Locate: Identifying Nature Interactions

Identify where operations interface with nature across direct operations, upstream supply chains and downstream value chains. Map activities against priority locations where nature-related risks and opportunities concentrate—areas with high biodiversity value, water stress or ecosystem degradation.

For financial institutions, screen investment portfolios and lending exposures against geographic databases identifying sensitive environmental areas. Develop a working hypothesis about which business processes have significant nature-related dependencies impacts, focusing on material nature-related issues.

Evaluate: Understanding Dependencies and Impacts

Analyse how operations depend on ecosystem services and resulting impacts on nature. This requires qualitative understanding and quantitative measurement of material nature-related dependencies impacts across value chains.

Companies piloting the LEAP approach identify data availability as the primary challenge—particularly for Scope 3 activities where suppliers lack baseline nature-related data. Organisations with existing supply chain due diligence processes find significant overlap with TNFD data needs.

Assess: Translating to Risks and Opportunities

Convert nature-related dependencies and impacts into material nature-related risks and opportunities affecting business strategy and financial planning. Financial institutions must consider physical risks, transition risks, systemic risks and reputational risks.

Assessment should integrate with existing enterprise risk frameworks. For organisations familiar with climate scenario analysis, nature-related scenario development follows similar methodologies adapted for ecosystem dynamics.

Prepare: Developing Strategy and Disclosure

Prepare nature-related disclosures aligned with TNFD recommendations, develop response strategies and allocate resources. The disclosure framework requires reporting across four pillars:

1. Governance: Board oversight and management responsibilities
2. Strategy: How nature-related dependencies impacts risks and opportunities affect business model
3. Risk Management: Processes for identifying and managing nature-related risks
4. Metrics and Targets: Measures used to assess material nature-related issues

Leveraging Sector-Specific Guidance

As of early 2025, TNFD published final guidance for four priority sectors with draft guidance for three additional sectors (consultation through April 2025). This sector guidance covers approximately 50% of SASB SICS® sectors, including agriculture, food and beverage, fishing, pharmaceuticals, forestry, metals and mining, infrastructure and textiles.

Sector-specific documents provide tailored recommendations, industry-relevant metrics and practical LEAP applications. Organisations should consult relevant sector guidance early, as these substantially reduce complexity in identifying material nature-related issues.

Capacity-Building Resources

TNFD launched two capacity-building tools in February 2025 specifically designed to bridge knowledge gaps in nature assessment and reporting. These freely available resources provide practical templates, data collection frameworks and assessment methodologies reducing implementation barriers.

TNFD Implementation for Different Organisational Types

Startups and Growth Companies

For startups, particularly ClimateTech or sustainable sectors, early TNFD adoption provides competitive differentiation during fundraising. Venture capital investors increasingly screen for nature-related risks in due diligence.

Resource-constrained startups should focus on qualitative assessments of material nature-related issues specific to sector guidance, deferring comprehensive quantification until capacity expands. Priority lies in demonstrating awareness of nature-related dependencies impacts and establishing governance frameworks.

Mid-Market Companies and SMEs

Mid-market companies and SMEs typically face TNFD requirements through customer demands, bank covenants or supply chain mandates before direct regulatory obligations. Organisations should prioritise nature-related assessments within operations and Tier 1 suppliers.

The TNFD framework recognises challenges faced by SMEs, particularly value chain disclosure complexity. Guidance allows proportional application—organisations may define scope boundaries and materiality approaches appropriate to capacity, maintaining transparency about limitations and data constraints.

Integration with existing ESG reporting frameworks proves most efficient. Additional SME-focused support and simplified frameworks are in development. The February 2025 capacity-building tools specifically address knowledge gaps common in smaller organisations.

Corporations and Financial Institutions

Large companies and financial institutions require comprehensive TNFD implementation aligned with global reporting standards. Organisations should establish dedicated teams combining sustainability expertise with business unit knowledge, supported by technology platforms for nature-related data collection.

Financial institutions face particular complexity assessing nature-related financial risks across diverse investment portfolios and lending books. Portfolio-level assessments require screening tools identifying exposure concentrations in priority locations and high-risk sectors.

Venture Capital and Private Equity

For VC and PE funds, the TNFD framework provides structure for integrating nature-related criteria into investment processes. Pre-investment screening should identify material nature-related risks and opportunities, whilst post-investment portfolio management tracks nature-related performance alongside financial metrics.

Funds marketing themselves as sustainable must demonstrate credible nature-related assessments to satisfy investor due diligence and regulatory expectations around sustainable finance classifications. The TNFD framework's alignment with climate-related disclosures enables integrated ESG assessment frameworks.

Frequently Asked Questions

What does TNFD mean?

TNFD stands for the Taskforce on Nature-Related Financial Disclosures—a global initiative providing recommendations for companies and financial institutions to report on nature-related dependencies, impacts, risks and opportunities. The TNFD framework aims to shift global financial flows towards nature positive outcomes and reverse biodiversity loss.

What is the difference between TCFD and TNFD?

The Task Force on Climate-Related Financial Disclosures (TCFD) focuses on climate-related risks and opportunities, whilst TNFD addresses broader nature-related issues including biodiversity, ecosystem services and natural capital. Both frameworks share similar structures with four reporting pillars (governance, strategy, risk management, metrics and targets). TNFD was deliberately designed to complement climate-related financial disclosures for integrated environmental risk management.

What are the four pillars of TNFD?

The TNFD framework comprises: (1) Governance—board oversight and management's role regarding nature-related dependencies impacts risks and opportunities; (2) Strategy—how nature-related issues affect business model and financial planning; (3) Risk Management—processes for identifying and managing nature-related risks; and (4) Metrics and Targets—measures used to assess material nature-related issues. These pillars mirror climate-related disclosures structure to facilitate integrated reporting.

Will TNFD become mandatory?

Whilst TNFD currently operates as voluntary reporting, regulatory momentum towards mandatory nature-related financial disclosures is building rapidly. The UK and Switzerland have mandated elements of nature-related reporting for financial institutions. The EU is incorporating TNFD principles into CSRD. The Kunming-Montreal Global Biodiversity Framework established international commitments many jurisdictions are translating into domestic regulations. Market-led adoption by financial institutions is accelerating independently, making TNFD implementation strategically prudent regardless of legal requirements.

How do I assess nature-related dependencies in my supply chain?

Assess nature-related dependencies by mapping value chains against priority locations where ecosystem services are critical or vulnerable. Identify sectors within your supply base relying on provisioning services (raw materials, water, crops), regulation services (pollination, water regulation) or operations in biodiversity-sensitive locations. Engage suppliers to collect facility-level data, recognising initial data limitations. Many organisations find overlap with existing due diligence processes for supply chain sustainability, enabling efficient integration.

What metrics should I track for TNFD reporting?

Material nature-related metrics vary by sector but typically include ecosystem health measures in operational locations, water consumption and discharge quality, land use changes, impacts on threatened species and dependency on specific ecosystem services. The TNFD framework recommends alignment with Science Based Targets for Nature (SBTN) metrics covering biodiversity, freshwater, land, ocean and climate. Financial institutions should track portfolio-level exposures across sectors and geographies. Many organisations begin with qualitative indicators before developing quantitative metrics as capabilities mature.

How does TNFD relate to double materiality?

The TNFD framework incorporates double materiality perspectives, assessing both how nature-related issues affect organisations (financial materiality) and how organisations affect nature (impact materiality). This aligns with the European Union's CSRD requirements. Understanding both materiality dimensions proves essential—financial impacts often arise from ecosystem degradation that organisations contributed to creating. For guidance on materiality assessments, organisations can leverage CSRD frameworks adapted for nature considerations.

What sectors face the highest nature-related risks?

Sectors with direct dependencies on ecosystem services or significant impacts on natural capital face the most material nature-related risks: agriculture, food and beverage, pharmaceuticals, forestry and paper, textiles, metals and mining, chemicals, energy and infrastructure. However, virtually all organisations maintain indirect nature-related dependencies through supply chains. Financial institutions face concentrated exposures through lending and investment portfolios allocated to high-risk sectors or priority locations with ecosystem vulnerability.

How long does TNFD implementation take?

TNFD implementation timelines vary by organisational size, data availability and existing sustainability infrastructure. Startups conducting initial qualitative assessments complete baseline nature-related risk identification within 2-3 months. Mid-market companies developing comprehensive LEAP assessments require 6-12 months from initiation to first disclosure. Large corporations and financial institutions implementing enterprise-wide TNFD-aligned reporting should anticipate 18-24 months for initial implementation, followed by continuous improvement. Organisations with mature climate reporting can leverage existing processes to accelerate development.

What is the relationship between TNFD and ISSB?

In late 2025, the Taskforce on Nature-Related Financial Disclosures announced it will pause technical guidance work and transition oversight for nature-related standard-setting to the International Sustainability Standards Board (ISSB). The ISSB is expected to incorporate TNFD guidance into formal nature-related sustainability standards, creating global alignment and reducing reporting burden. This evolution mirrors how climate-related financial disclosures moved from voluntary TCFD recommendations towards standardised requirements. TNFD implementation efforts will align directly with emerging ISSB standards, providing regulatory certainty.

How do I access sector-specific TNFD guidance?

As of early 2025, TNFD published final sector guidance for four priority sectors, with draft guidance for three additional sectors open for consultation through April 2025. Sector guidance covers approximately 50% of SASB SICS® sectors, including agriculture, food and beverage, fishing, pharmaceuticals, forestry, metals and mining, infrastructure and textiles. Documents provide tailored recommendations, industry-relevant metrics and practical LEAP applications. Organisations should consult relevant sector guidance early in implementation—freely available through the TNFD website with recommended metrics, assessment methodologies and disclosure examples.

What are nature transition plans?

Nature transition plans detail how organisations will meet nature-related commitments and targets, aligning with the Kunming-Montreal Global Biodiversity Framework and demonstrating pathways to nature positive outcomes. Recent TNFD guidance emphasises transition plan development and disclosure as best practice, though requirements vary by jurisdiction. Effective transition plans include science-based targets aligned with SBTN, implementation roadmaps with resource allocation, scenario analysis assessing nature-related futures, articulation of natural capital dependencies and stakeholder engagement processes. Plans may initially be narrative-based, evolving towards quantitative sophistication as methodologies mature.

How Fiegenbaum Solutions Can Support Your TNFD Journey

Integrating the TNFD framework requires combining regulatory expertise with practical implementation experience. Based on 15+ years consulting experience and 300+ completed projects, I provide strategic advisory moving beyond compliance towards genuine business integration of nature intelligence.

My approach includes:

Materiality Assessment: Systematic evaluation of nature-related dependencies impacts risks and opportunities specific to your business model, sector and geographic footprint, identifying where nature-related issues materially affect financial performance.

LEAP Process Facilitation: Guiding teams through complete Locate, Evaluate, Assess and Prepare methodology, including priority location screening, data collection protocols and translating assessments into actionable risk management strategies.

Integration with Existing Frameworks: Ensuring TNFD implementation complements existing sustainability reporting—particularly for organisations addressing CSRD compliance, climate-related disclosures or EU Taxonomy alignment.

Sector-Specific Guidance: Applying industry expertise to address unique challenges, ensuring assessments reflect material issues rather than generic nature-related checklists.

Stakeholder Engagement Support: Developing communication strategies explaining nature-related risks and opportunities to boards, investors, customers and other stakeholders in financially-relevant terms.

Investment Perspective: For venture capital and private equity clients, providing frameworks integrating nature-related assessments into investment processes—from pre-investment screening through portfolio monitoring and LP reporting.

Contact me today to discuss developing your organisation's approach to the TNFD framework—transforming nature-related disclosure requirements into strategic opportunities for business resilience and value creation.

Sources

Task Force on Nature-related Financial Disclosures. (2023). Recommendations of the Taskforce on Nature-related Financial Disclosures. TNFD. https://tnfd.global/publication/recommendations-of-the-taskforce-on-nature-related-financial-disclosures/

Task Force on Nature-related Financial Disclosures. (2023). Additional Guidance on Assessment of Nature-related Issues: The LEAP Approach. TNFD. https://tnfd.global/publication/additional-guidance-on-assessment-of-nature-related-issues-the-leap-approach/

Task Force on Nature-related Financial Disclosures. (2025). TNFD 2025 Status Report. TNFD. https://tnfd.global/publication/tnfd-2025-status-report/

Task Force on Nature-related Financial Disclosures. (2025). Additional Sector Guidance. TNFD. https://tnfd.global/new-set-of-sector-guidance-published/

Task Force on Nature-related Financial Disclosures. (2025). ISSB Decision on Nature-Related Standard-Setting Drawing on TNFD Framework. TNFD. https://tnfd.global/issb-decision-on-nature-related-standard-setting-drawing-on-tnfd-framework/

United Nations Environment Programme. (2022). Kunming-Montreal Global Biodiversity Framework. Convention on Biological Diversity.

Science Based Targets Network. (2023). Science-Based Targets for Nature: Initial Guidance for Business. SBTN.

UK Government. (2025). Developing an Oversight Regime for Assurance of Sustainability-Related Financial Disclosures. https://www.gov.uk/government/consultations/assurance-of-sustainability-reporting/