After TCFD, could TNFD compliance be next?

The Taskforce on Nature-related Financial Disclosures (TNFD) has released a prototype of its risk management and disclosure framework for nature-related risks. The TNFD wants trustees to start taking action now.

The framework is designed to assist companies, investors and lenders in accounting for nature-related risks and opportunities in their decision-making. In effect, the TNFD aims to do for nature what the TCFD is doing for climate. It envisages governance and reporting frameworks which are consistent with, and complementary to, the TCFD framework.

Although the framework remains at a very early stage of development and there is presently no indication that it will be mandatory for pension schemes to comply, there is already an industry push for trustees to voluntarily consider the merits of nature-related disclosures.

The development of the TNFD framework is supported by various NGOs, corporates and financial institutions as well as by the G7 Finance Ministers.

The Taskforce is seeking feedback on the current iteration of the framework through its online portal. The final version is planned for September 2023.

Speaking at the PLSA 2022 ESG Conference, TNFD Co-Chair David Craig urged pension schemes not to wait for the finalised TNFD framework but to take action now by beginning to have conversations with investment managers and starting to consider climate and nature-related risks and opportunities in parallel. Trustees should therefore keep an eye on how this framework develops and the Government response.