About the TNFD
Financial institutions and companies are still missing information needed to understand how nature impacts immediate financial performance or the longer-term financial risks that may arise from the organisation’s interactions with nature. Better information will play a key role in allowing financial institutions and companies to incorporate nature-related risks and opportunities into their strategic planning, risk management and asset allocation decisions.
The Taskforce on Nature-related Financial Disclosures (TNFD) is developing a risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. UNEP FI is a founding partner of the TNFD, the beta-framework of which was released in March 2022, with the final development scheduled for 2023. For more on the TNFD, click here.
Pilot Testing with Financial Institutions
UNEP FI is leading the financial sector pilots, testing the beta-framework with financial institutions across geographies and sectors to ensure it meets the ambitious needs of the market. The pilot will invite financial institutions to participate in the design of the TNFD framework, providing lessons learned, recommendations and insights for future iterations.
The testing of the TNFD Framework started in June 2022, following the ‘open innovation approach’, in which the subsequent beta releases of the TNFD Framework will be piloted by financial and non-financial organisations. Somepilots might also engage central banks, market-makers (e.g exchanges, data providers), government agencies and relevant financial regulators.
GEF project: Establishing the Taskforce on Nature-related Financial Disclosures
The release of the first UN Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) report in April 2019 made clear that the world’s natural capital is in sharp decline – especially in inter-tropical areas – and that without rapid and systemic change, biodiversity loss, deforestation and land degradation will severely disrupt ecosystems, social stability and the world economy. The COVID19 pandemic, which has been linked to illegal wildlife trade, environmental degradation, and poverty, is demonstrating the huge impact of un-recognized biodiversity related risk, to both the economy and humanity. A key driver of that situation is the financing flowing to economic activities that harm natural capital with no market recognition of the costs to ecosystems and decline in global environmental benefits.
This GEF project will support the establishment of a Taskforce on Nature-related Financial Disclosures (TNFD) to develop and disseminate a global framework for corporates and financial institutions to assess, manage and report on their dependencies and impacts on nature. The TNFD will address threats to the health and value of natural capital derived from the conduct of corporate activities that do not adequately consider the financial materiality and impacts of biodiversity loss. Initiatives such as TNFD will enable governments to better integrate knowledge on nature risk of those financial flows within their national policies and make the relevant strategic plans more effective in responding to emerging country priorities. A common, credible, and widely supported TNFD recommendations framework for reporting on nature-related risks and impacts can pave the way for companies and Financial Institutions (FIs) to better identify and address them in their supply chains and portfolios
Environmental and Social Safeguards Documents