Explainer: Nature-related financial disclosures (TNFD) — what it is, why it matters, and how to evaluate options

More than half of the world's GDP, roughly $44 trillion, depends on nature and the ecosystem services it provides. Yet until recently, financial markets had no standardised way to assess, disclose, or manage nature-related risks and opportunities. The Taskforce on Nature-related Financial Disclosures (TNFD) was created to fill that gap, and as of early 2026, over 1,000 organisations across 50 countries have committed to adopting its recommendations. For sustainability professionals, understanding TNFD is no longer optional: it is becoming a baseline requirement for credible environmental reporting and investor relations.

Why It Matters

Nature loss poses material financial risks that most organisations have never measured. Pollination services alone are worth an estimated $235-577 billion annually in crop output, while coastal ecosystems provide $11 trillion in flood protection. When these services degrade, the costs cascade through supply chains, insurance markets, and asset valuations.

TNFD gives organisations a structured framework to identify where they depend on and impact nature, assess the financial implications, and disclose findings to stakeholders. It does for nature what TCFD did for climate: it translates environmental risks into the language of financial materiality.

Three forces are accelerating adoption. First, regulatory convergence: the EU's Corporate Sustainability Reporting Standards (ESRS) embed nature and biodiversity requirements that align closely with TNFD. Second, investor pressure: asset managers controlling over $25 trillion in assets have signed the Finance for Biodiversity Pledge, committing to assess and disclose nature risks. Third, physical reality: extreme weather, water stress, and ecosystem degradation are already affecting agricultural yields, property values, and operational continuity worldwide.

Key Concepts

The TNFD Recommendations

TNFD released its final recommendations in September 2023, structured around four pillars that mirror the TCFD framework:

Governance: Board and management oversight of nature-related dependencies, impacts, risks, and opportunities.

Strategy: How nature-related issues affect the organisation's business model, strategy, and financial planning across short, medium, and long-term horizons.

Risk and Impact Management: Processes for identifying, assessing, prioritising, and managing nature-related dependencies, impacts, risks, and opportunities, including integration into enterprise risk management.

Metrics and Targets: Metrics and targets used to assess and manage material nature-related issues, covering dependencies, impacts, risks, and opportunities.

The LEAP Approach

TNFD's integrated assessment process, called LEAP, provides a step-by-step methodology:

Locate: Identify the interface with nature by mapping business activities, assets, and supply chain touchpoints to specific locations and biomes. This involves spatial analysis using tools like the TNFD's own location data tool and IBAT (Integrated Biodiversity Assessment Tool).

Evaluate: Assess dependencies and impacts on nature at priority locations. Dependencies are the ecosystem services a business relies on (clean water, soil fertility, pollination). Impacts are the effects the business has on nature (pollution, habitat conversion, resource extraction).

Assess: Translate nature-related dependencies and impacts into organisational risks and opportunities. Physical risks (supply disruption from ecosystem collapse), transition risks (new regulations on deforestation-linked commodities), and systemic risks (regional water table depletion affecting multiple operations) all factor in.

Prepare: Develop response strategies, set targets, and prepare disclosure. This includes determining materiality, selecting metrics, and building internal processes for ongoing assessment.

Core Metrics

TNFD recommends a set of core global disclosure metrics and additional sector-specific metrics. Core metrics cover:

• Land and sea use change (hectares affected)
• Extent of operations in or near sensitive locations (priority biodiversity areas, water-stressed regions)
• Pollutants released to soil, water, and air (volumes by type)
• Resource use and replenishment (water withdrawal, consumption, and discharge)
• Invasive alien species introduction
• GHG emissions (cross-referencing TCFD and GHG Protocol)

Sector-specific guidance adds targeted metrics for agriculture, mining, aquaculture, infrastructure, and financial services.

Nature-Related Risks: A Taxonomy

TNFD categorises nature-related risks into three types:

Physical risks: Direct operational impacts from nature degradation. Examples include water scarcity disrupting manufacturing, pollinator decline reducing crop yields, and coral reef loss reducing coastal property resilience.

Transition risks: Policy, legal, technology, market, and reputational shifts driven by the move toward a nature-positive economy. The EU Deforestation Regulation, for instance, requires companies to prove supply chains are deforestation-free.

Systemic risks: Risks that affect entire financial systems or economies, such as Amazon rainforest dieback triggering cascading effects across agricultural commodity markets globally.

What's Working

Early adopter momentum is strong. Over 1,000 organisations have signed up as TNFD early adopters, including financial institutions managing over $20 trillion in assets. Major banks like BNP Paribas, Rabobank, and HSBC have begun publishing TNFD-aligned reports, setting precedents for their sectors.

Alignment with existing frameworks reduces reporting burden. TNFD was designed to interoperate with TCFD, ISSB (IFRS S1 and S2), GRI, and the EU's ESRS. Organisations already reporting under these frameworks can layer nature disclosures onto existing structures rather than starting from scratch. The TNFD-ISSB alignment guide published in 2024 clarified how to meet multiple requirements simultaneously.

Spatial data tools are maturing. The TNFD Locate phase relies on geospatial analysis, and the tooling has improved significantly. IBAT provides access to IUCN Red List data, Key Biodiversity Areas, and protected area boundaries. ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure) maps sector-level dependencies on ecosystem services. Companies like NatureMetrics offer eDNA sampling that produces rapid biodiversity baselines for specific sites.

Financial sector leadership creates cascading effects. When large banks and asset managers adopt TNFD, they embed nature-risk questions into lending criteria, investment screening, and portfolio construction. This cascades disclosure expectations down to borrowers and investee companies, amplifying reach far beyond voluntary adoption.

What's Not Working

Location-specific data is resource-intensive. The LEAP approach requires site-level analysis across potentially thousands of supply chain locations. For companies with complex global supply chains, this spatial mapping exercise is expensive and time-consuming. A multinational food company may need to assess thousands of sourcing locations across dozens of countries, each with different ecosystem contexts.

Biodiversity metrics remain fragmented. Unlike carbon (measured in tonnes of CO2 equivalent), there is no single unit for biodiversity. Mean Species Abundance, Species Threat Abatement and Restoration, and other indicators each capture different dimensions. This makes target-setting and progress tracking less intuitive than climate metrics.

Supply chain visibility gaps persist. Most companies lack direct visibility beyond tier-one suppliers. Assessing nature dependencies and impacts deep in the supply chain requires data sharing infrastructure that does not yet exist at scale.

Assurance frameworks are underdeveloped. While climate data assurance has matured, nature data verification is still in its early stages. Auditors are building capacity, but standardised assurance methodologies for biodiversity metrics are 2-3 years behind climate equivalents.

Key Players

Established Leaders

• TNFD Secretariat: The taskforce itself, backed by UNDP, UNEP FI, Global Canopy, and WWF. Published the final recommendations in 2023 and continues to release sector guidance.
• ISSB (International Sustainability Standards Board): Working on nature-related disclosure standards that will build on TNFD foundations. Expected to issue research project findings by 2027.
• BNP Paribas: Among the first major banks to publish a full TNFD report, covering over EUR 800 billion in assessed exposures.
• Rabobank: Published one of the most detailed TNFD-aligned assessments in the agriculture finance sector, covering 40,000+ agricultural clients.
• HSBC: Integrated nature-risk screening into project finance decisions and published TNFD-aligned disclosure in its 2024 annual report.
• Holcim: One of the first building materials companies to publish a TNFD pilot report, including site-level biodiversity baselines for cement operations.

Emerging Startups

• NatureMetrics: eDNA biodiversity monitoring platform providing rapid site-level species assessments. Used by over 100 companies for TNFD Locate phase analysis.
• Iceberg Data Lab: Biodiversity footprinting platform for financial institutions. Calculates Corporate Biodiversity Footprint scores across portfolios.
• NatureAlpha: AI-powered nature-risk analytics translating satellite imagery and ecological data into financial risk scores for investors.
• Pivotal: Nature intelligence platform providing spatial risk assessments for real assets, combining satellite data with ecological modelling.

Key Investors and Funders

• Finance for Biodiversity Foundation: Coalition of 170+ financial institutions committing to biodiversity integration. Provides guidance on TNFD implementation for asset managers.
• Robeco: Active in biodiversity-focused engagement strategies, integrating TNFD-aligned screening into EUR 170+ billion portfolio.
• Mirova (Natixis): Natural capital investment specialist managing the Land Degradation Neutrality Fund and biodiversity impact strategies.

Action Checklist

1. Map your organisation's direct operations and key supply chain locations against priority biodiversity areas using IBAT and ENCORE databases
2. Conduct a preliminary LEAP assessment focusing on your five highest-impact locations or commodity sourcing regions
3. Identify which TNFD core global metrics you can already report using existing environmental data systems
4. Cross-reference TNFD requirements with your current CSRD, TCFD, or GRI reporting to identify overlaps and gaps
5. Engage procurement and supply chain teams to begin gathering nature-dependency data from tier-one suppliers
6. Review peer disclosures from TNFD early adopters in your sector for benchmarking
7. Brief board members and senior leadership on nature-related risk categories and their financial materiality
8. Allocate budget for spatial data tools and, if needed, site-level biodiversity baseline surveys

FAQ

How does TNFD differ from TCFD? TCFD focuses on climate-related risks and opportunities (primarily greenhouse gas emissions and physical climate impacts). TNFD extends the same governance, strategy, risk management, and metrics framework to all of nature: biodiversity, water, soil, oceans, and ecosystem services. TNFD explicitly includes the LEAP approach for location-specific assessment, which is unique because nature risks are inherently place-based.

Is TNFD reporting mandatory? As of 2026, TNFD reporting is voluntary. However, several regulatory frameworks incorporate TNFD-aligned requirements. The EU's ESRS includes biodiversity and ecosystems disclosure standards (ESRS E4) that align closely with TNFD. France's Article 29 requires financial institutions to disclose biodiversity impacts. Many jurisdictions are expected to move toward mandatory nature disclosure by 2028-2030.

How long does it take to implement TNFD? Most organisations report 12-18 months for a first TNFD-aligned disclosure, starting from the LEAP assessment. Companies already reporting under TCFD or CSRD can accelerate by leveraging existing governance structures and data systems. The TNFD Secretariat recommends a phased approach: start with priority locations and sectors, then expand coverage over 2-3 reporting cycles.

What tools do I need to get started? Three foundational tools cover most initial needs: IBAT for biodiversity area screening (subscription-based), ENCORE for sector-level dependency mapping (free), and the TNFD's own guidance documents and sector pathways (free). For deeper analysis, consider NatureMetrics for site-level eDNA surveys and Iceberg Data Lab or NatureAlpha for portfolio-level biodiversity footprinting.

How does TNFD handle materiality? TNFD uses a double materiality approach: organisations should assess both how nature affects their financial performance (financial materiality) and how their activities affect nature (impact materiality). This is consistent with the EU's CSRD approach and differs from the ISSB's current focus on financial materiality alone. TNFD recommends starting with dependencies and impacts before translating them into financial risks and opportunities.

Sources

1. Taskforce on Nature-related Financial Disclosures. "TNFD Recommendations v1.0." TNFD, September 2023.
2. World Economic Forum. "Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy." WEF, 2024.
3. Finance for Biodiversity Foundation. "Guide to the TNFD Recommendations for Financial Institutions." FfB, 2024.
4. BNP Paribas. "Nature-Related Financial Disclosures Report 2024." BNP Paribas, 2024.
5. European Financial Reporting Advisory Group. "ESRS E4: Biodiversity and Ecosystems." EFRAG, 2024.
6. TNFD Secretariat. "Early Adopter Progress Report: 2025 Update." TNFD, 2025.
7. NatureMetrics. "State of Corporate Biodiversity Monitoring." NatureMetrics, 2025.