Understanding TNFD: Integrating Nature Risks and Opportunities in Financial Decisions

The Taskforce on Nature-related Financial Disclosures (TNFD) is a market-led framework that sets out how an organisation should identify, assess, manage and disclose its nature-related dependencies, impacts, risks and opportunities. It is voluntary. No jurisdiction requires TNFD reporting as such, although the UK and Switzerland have written TNFD-aligned expectations into financial sector rules and the ISSB is now converting the framework into a formal standard. The recommendations were published in September 2023 and cover four realms: land, freshwater, ocean and atmosphere.

What the TNFD Framework Is: Four Pillars and 14 Disclosure Recommendations

Three layers sit inside what people call "the TNFD framework", and the difference matters once someone hands you the document stack:

• The four pillars: Governance, Strategy, Risk and Impact Management, and Metrics and Targets.
• The 14 TNFD recommendations, the recommended disclosures distributed across those four pillars. This is the part you report against.
• The recommendations and guidance package: general requirements, the LEAP approach, and additional guidance for individual sectors and biomes, plus a separate volume for financial institutions.

All of it is published by the taskforce at tnfd.global.

Is TNFD Mandatory, and Where the ISSB Transition Leaves It

Formally, no. TNFD is voluntary at the global level and each government decides whether to convert the recommendations into binding disclosure law. In practice the distinction is thinning, for three reasons.

First, adoption. By November 2025, 733 organisations representing around USD 22.4 trillion in assets under management had committed to TNFD-aligned reporting, and more than 500 TNFD-aligned reports have been published. Adopter status is a public commitment to disclose, not a pledge signature, so peers and counterparties read it as an expectation.

Second, the ISSB handover. TNFD signed a Memorandum of Understanding with the IFRS Foundation in April 2025, and in April 2026 the ISSB decided to build its nature-related requirements on the TNFD recommendations, as an IFRS Practice Statement with an exposure draft due in October 2026. The ISSB is targeting an Exposure Draft of nature-related disclosure requirements for CBD COP17 in October 2026, with a final standard expected in 2026 or 2027. This is the same path TCFD took into ISSB S2 and from there into regulation.

My position on the transition is straightforward: TNFD is not being retired, it is being institutionalised. Work built on the LEAP approach and the four pillars now is work built toward the ISSB standard, not toward a framework about to be replaced.

Third, capital. Nature questions arrive through investor due diligence and lending conversations before they arrive through law. Market indicators such as green bond volumes and CSRD benchmarks are tracked live in the Fiegenbaum Atlas.

The LEAP Approach: Locate, Evaluate, Assess, Prepare

LEAP is the assessment process behind the disclosures. Each phase produces a specific output.

• Locate your interfaces with nature: which sites, which sourcing regions, which value chain steps sit in or near ecologically sensitive areas. Output is a spatially explicit list of priority locations. Organisations working through EUDR compliance already build most of this geography.
• Evaluate dependencies and impacts at those locations. Output is a screened list of ecosystem services you rely on and pressures you exert. Life cycle assessment data on land use and water feeds straight into this phase.
• Assess which of those become material nature-related and biodiversity risks and opportunities: physical, transition and systemic. Output is a risk register entry with an owner, not a biodiversity report.
• Prepare the response: targets, management actions, and the disclosure itself.

The inputs LEAP scoping actually needs are short: a site list with coordinates, supplier geographies at least to sub-national level, a dependency screening source, and a named owner for the result. In the screenings I run, scoping stalls at three predictable points. Site-level location data exists but sits in facility management, not in the ESG function, and nobody has ever joined the two lists. Supplier geography stops at the tier-1 head office address, which is useless when the pressure sits in tier 3. And nature has no owner: climate belongs to someone, water usually belongs to operations, biodiversity belongs to nobody, so the assessment has no one to accept its output.

The workaround for the first two is the same. Start with the sites and commodities you can locate today, screen those, and record the coverage gap as a disclosed limitation. Most TNFD recommended disclosures describe process rather than demand a quantified metric, so a partial but honest screening is reportable.

TNFD and CSRD/ESRS E4: What Overlaps and What Does Not

For an EU reporter the practical question is not whether to do TNFD or ESRS, but how much of one produces the other. The overlap is large and asymmetric.

The direction that pays is ESRS first, TNFD second: an E4 materiality screening delivers most of what LEAP Locate and Evaluate need, while a TNFD assessment on its own leaves the ESRS datapoint structure to be rebuilt. Having built ESG reporting software, I would add one warning. Nature data breaks tooling designed for emissions, because an emissions system aggregates one figure per site while nature needs the site to keep its coordinates, its biome and its sensitivity flag all the way through. Spreadsheets survive that. Many carbon platforms do not.

Where to Start: Sector Priorities and Limited Data

Three steps, in order. Map what already exists: TCFD governance, an ESRS double materiality assessment or a completed water risk assessment each carry TNFD-relevant capability, so the honest question is where the gaps are, not what to build from scratch. Then prioritise by dependency rather than by revenue, since additional guidance already exists for roughly half of the SASB SICS sectors, including agriculture, food and beverage, metals and mining, pharmaceuticals, forestry and textiles. Finally, tie the metrics to science-based nature targets through SBTN, the same way SBTi works for climate, and design the ESG metrics architecture for nature and climate together.

The background is in TNFD to ESRS E4: Mapping Nature Disclosure and the Double Materiality Trigger.

Financial institutions have a separate ask. Their exposure sits in portfolios, not operations, so the relevant document is the TNFD additional guidance for financial institutions (v2.0, June 2024), and the analytical parallel is financed emissions: attribution by holding.

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