Myth-busting Nature-related financial disclosures (TNFD): separating hype from reality

More than 320 companies across 46 countries have committed to adopting the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations since their launch in September 2023, yet a 2025 analysis by the TNFD Secretariat found that only 18% of early adopters produced disclosures that met more than half of the recommended indicators. As nature-related reporting gains momentum across the EU through the Corporate Sustainability Reporting Directive (CSRD) and proposed nature-specific regulations, persistent myths about what TNFD actually requires, costs, and delivers are shaping corporate strategies and investment decisions in ways that often diverge from reality.

Why It Matters

Nature loss poses material financial risks that the financial sector is only beginning to quantify. The World Economic Forum estimates that $44 trillion of global economic value generation, more than half of global GDP, is moderately or highly dependent on nature and its services (WEF, 2024). The European Central Bank's 2025 nature risk pilot found that 72% of EU corporate loan portfolios have material exposure to at least one nature-related dependency, from water availability in manufacturing to pollination services in food supply chains (ECB, 2025).

For EU-based founders and companies subject to CSRD, nature-related disclosures are no longer optional. The European Sustainability Reporting Standards (ESRS) include biodiversity and ecosystems as a mandatory disclosure topic under ESRS E4, with reporting obligations beginning for large companies in fiscal year 2025 and cascading to smaller entities by 2028. Companies that misunderstand TNFD requirements risk investing in disclosure processes that do not satisfy regulatory mandates, or worse, avoiding engagement entirely based on inflated perceptions of complexity and cost.

The stakes extend beyond compliance. Investors managing more than $24 trillion in assets have signed on to the Finance for Biodiversity Pledge, committing to integrate nature-related risk into investment decisions by 2025 (Finance for Biodiversity Foundation, 2025). Companies that cannot demonstrate credible nature-related risk management face growing capital allocation disadvantages.

Key Concepts

The TNFD framework provides a risk management and disclosure framework for organizations to report and act on evolving nature-related risks and opportunities. Its core analytical tool is the LEAP approach: Locate the interface with nature, Evaluate dependencies and impacts, Assess material risks and opportunities, and Prepare to respond and report. Unlike TCFD's climate-specific scope, TNFD addresses a broader set of environmental domains including land, ocean, freshwater, and atmosphere across entire value chains.

TNFD aligns with the Kunming-Montreal Global Biodiversity Framework (GBF), which established 23 targets for 2030 including Target 15 requiring large businesses and financial institutions to regularly monitor, assess, and transparently disclose their risks, dependencies, and impacts on biodiversity. In the EU, the CSRD and its associated ESRS standards operationalize many of TNFD's disclosure recommendations, creating a direct regulatory pathway from voluntary framework to compliance obligation.

Myth 1: TNFD Is Just TCFD for Nature and Uses the Same Approach

A common misconception treats TNFD as a simple extension of TCFD, implying that organizations already reporting on climate can add nature with minimal additional effort. While TNFD intentionally mirrors TCFD's four-pillar structure (governance, strategy, risk management, metrics and targets), the underlying analytical requirements differ substantially. Climate risk assessment centers on a single variable (greenhouse gas emissions) with established measurement methodologies and scenario pathways. Nature risk is multi-dimensional, encompassing biodiversity loss, water scarcity, soil degradation, ocean acidification, and ecosystem service disruption simultaneously.

The LEAP approach requires location-specific analysis, a fundamental departure from TCFD's approach. A company's nature-related risk profile depends on where its operations, suppliers, and customers physically interact with specific ecosystems, not just aggregate emissions. PwC's 2025 TNFD readiness survey of 200 EU companies found that 67% of respondents who assumed climate disclosure processes could be directly adapted for nature underestimated the required effort by a factor of 2 to 3 (PwC, 2025). The reality: TNFD requires new data infrastructure, geospatial analysis capabilities, and ecological expertise that climate disclosure processes do not provide.

Myth 2: TNFD Reporting Requires Comprehensive Biodiversity Measurement

Many companies delay TNFD engagement because they believe the framework demands detailed species-level biodiversity inventories across their entire value chain before they can begin reporting. This misconception confuses scientific completeness with materiality-driven disclosure. TNFD explicitly adopts a phased approach: organizations should start by identifying their most material nature-related dependencies and impacts, then progressively expand scope and depth over successive reporting cycles.

The TNFD's own guidance recommends beginning with sector-specific priority metrics. For a food company, this might focus on land use change and water consumption in key sourcing regions rather than cataloguing every species affected. Nestlé's 2025 TNFD-aligned disclosure, one of the most comprehensive to date, focused on 12 priority commodities and their impacts across 6 ecosystem services, not a comprehensive biodiversity census (Nestlé, 2025). The Capitals Coalition's 2024 analysis of 45 early TNFD adopters found that companies starting with 3 to 5 material nature-related issues and expanding over time produced higher-quality disclosures than those attempting comprehensive coverage from the outset (Capitals Coalition, 2024).

Myth 3: The Cost of TNFD Compliance Is Prohibitively High for Mid-Sized Companies

Industry discussions frequently cite six-figure costs as the minimum for TNFD-aligned reporting, creating a perception that only the largest multinationals can afford compliance. The evidence suggests a more nuanced picture. The TNFD Secretariat's 2025 cost survey across 85 organizations found that first-year implementation costs ranged from EUR 30,000 to EUR 150,000 for mid-sized companies (500 to 5,000 employees), with costs dropping 40 to 60% in subsequent years as data systems and processes matured (TNFD, 2025). For context, this is comparable to the cost of initial TCFD implementation, which most EU companies have already absorbed.

Free and open-source tools significantly reduce the technical barrier. The ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) tool developed by the Natural Capital Finance Alliance provides free sector-level dependency and impact screening. The Integrated Biodiversity Assessment Tool (IBAT) offers affordable access to biodiversity data for site-level analysis. The EU's ESRS implementation guidance includes detailed sector-specific materiality screening templates that reduce the need for bespoke consulting. Companies that approach TNFD as a multi-year capability-building process rather than a one-time project consistently report lower costs and better outcomes.

Myth 4: TNFD Disclosures Are Too Subjective to Be Useful for Investment Decisions

Skeptics argue that the inherent complexity of nature systems makes TNFD disclosures so qualitative and context-dependent that investors cannot meaningfully compare them across companies or sectors. While the concern about comparability has some validity in the framework's early stages, the trajectory points toward increasing standardization. The Science Based Targets Network (SBTN) released sector-specific guidance for freshwater and land targets in 2025, providing quantitative benchmarks against which corporate nature performance can be measured.

Robeco's 2025 analysis of 120 TNFD-aligned disclosures from EU companies found that disclosures including quantitative metrics on water intensity, land use change area, and dependency scores were correlated with a 15 to 20 basis point reduction in credit spreads compared to non-disclosing peers in the same sectors (Robeco, 2025). BNP Paribas Asset Management reported that integrating TNFD-aligned nature risk data into portfolio screening identified previously unpriced risks in 23% of agricultural and extractive sector holdings, leading to active engagement with 34 portfolio companies.

What's Working

The LEAP approach is proving effective as a structured entry point. Companies that rigorously implement the Locate step, mapping physical asset and supply chain locations against biodiversity-sensitive areas using tools like IBAT and Global Forest Watch, consistently identify material nature risks that traditional enterprise risk management misses. Holcim's TNFD pilot across 14 European cement operations identified water stress exposure at 6 facilities that had not been flagged by conventional risk assessment processes.

Financial sector adoption is accelerating faster than corporate adoption. ASN Bank in the Netherlands has integrated TNFD-aligned biodiversity impact measurement across its entire EUR 13 billion loan and investment portfolio, using the Partnership for Biodiversity Accounting Financials (PBAF) methodology. Banque de France published a nature risk stress test in 2025 covering the entire French banking sector, making nature risk assessment a de facto supervisory expectation.

Cross-framework alignment between TNFD, CSRD/ESRS, and the GBF is reducing the reporting burden. Companies preparing for ESRS E4 compliance find that 70 to 80% of required disclosures overlap with TNFD recommendations, enabling a single data collection and analysis process to serve both voluntary and mandatory reporting.

What's Not Working

Supply chain nature risk data remains a critical gap. While companies can assess nature-related risks at their own operational sites with reasonable accuracy, extending the analysis upstream through multi-tier supply chains is hampered by lack of supplier-level geospatial data. A 2025 CDP survey found that only 12% of suppliers in nature-dependent sectors could provide location-specific data on water use, land management practices, or proximity to protected areas (CDP, 2025).

Scenario analysis for nature risks lags far behind climate scenarios. Unlike climate change, where Shared Socioeconomic Pathways and Representative Concentration Pathways provide standardized scenarios, nature risk scenarios remain underdeveloped. The Network for Greening the Financial System (NGFS) published initial nature risk scenarios in late 2025, but they cover only a subset of ecosystem services and geographies. Companies attempting nature-related scenario analysis are largely improvising, producing results that are difficult to benchmark or compare.

Metrics standardization is incomplete. The TNFD recommends core global metrics and additional sector-specific metrics, but key indicators such as biodiversity intactness, ecosystem service valuation, and nature-positive contributions lack universally accepted measurement methodologies. This creates legitimate challenges for assurance providers attempting to verify nature-related disclosures at the same rigor level as financial or emissions data.

Key Players

Established: Holcim (TNFD pilot implementation across European operations), Nestlé (comprehensive TNFD-aligned disclosure across commodity supply chains), BNP Paribas Asset Management (nature risk integration in portfolio management), ASN Bank (full-portfolio biodiversity impact measurement), Kering (biodiversity strategy aligned with TNFD and SBTN)

Startups: NatureMetrics (eDNA-based biodiversity monitoring for corporate disclosures), Iceberg Data Lab (Corporate Biodiversity Footprint analytics), OS Climate (open-source nature risk data platform), South Pole (nature-based solutions advisory and TNFD implementation support)

Investors: Mirova (nature-focused investment strategies exceeding EUR 2 billion), Norges Bank Investment Management (biodiversity expectations for 9,000 portfolio companies), AXA Investment Managers (nature risk integration across EUR 800 billion in assets)

Action Checklist

• Conduct a materiality screening using the ENCORE tool to identify your company's most significant nature dependencies and impacts before engaging consultants
• Map operational sites and tier-one supplier locations against biodiversity-sensitive areas using IBAT or Global Forest Watch to complete the LEAP Locate step
• Align your nature disclosure process with ESRS E4 requirements to avoid duplicating effort across TNFD voluntary adoption and CSRD compliance
• Begin with 3 to 5 material nature topics rather than attempting comprehensive coverage in your first disclosure cycle
• Engage procurement teams to request location-specific environmental data from key suppliers in nature-dependent categories
• Budget EUR 30,000 to EUR 80,000 for first-year TNFD implementation for a mid-sized company, with expected cost reductions of 40 to 60% in year two
• Participate in sector-specific TNFD working groups to contribute to metrics standardization and benefit from peer learning

FAQ

Q: Is TNFD adoption mandatory in the EU? A: TNFD itself remains a voluntary framework. However, CSRD and its ESRS E4 standard on biodiversity and ecosystems make nature-related disclosures mandatory for in-scope companies. Because ESRS E4 and TNFD recommendations overlap by 70 to 80%, companies preparing for CSRD compliance are effectively implementing most TNFD recommendations. The practical distinction between voluntary TNFD adoption and mandatory CSRD compliance is narrowing rapidly for EU companies.

Q: How does TNFD interact with the Kunming-Montreal Global Biodiversity Framework? A: The GBF's Target 15 specifically calls on large businesses and financial institutions to disclose their nature-related risks, dependencies, and impacts. TNFD was designed to provide the reporting framework through which this target can be operationalized at the corporate level. Companies aligned with TNFD can demonstrate compliance with Target 15 expectations, which is increasingly relevant as national governments transpose GBF targets into domestic regulation.

Q: What data and tools are available for companies starting their TNFD journey? A: Several free and low-cost tools support TNFD implementation. ENCORE provides sector-level dependency and impact screening. IBAT offers access to IUCN Red List, World Heritage Site, and Key Biodiversity Area data for site-level analysis. Global Forest Watch tracks deforestation and land use change. The PBAF standard provides methodologies for financial institutions to measure portfolio biodiversity impact. For companies needing more granular data, NatureMetrics offers eDNA sampling services and Iceberg Data Lab provides corporate biodiversity footprint analytics.

Q: How should founders prioritize TNFD alongside other ESG reporting requirements? A: Start with a gap analysis comparing your current ESG reporting against ESRS E4 requirements. For most companies, climate disclosures (ESRS E1) and social standards (ESRS S1-S4) will consume the majority of initial CSRD compliance effort. Nature disclosures under ESRS E4 should be treated as a parallel workstream that leverages the same governance structures, risk management processes, and reporting infrastructure established for climate. The LEAP approach can be initiated with existing data and progressively deepened as tools and methodologies mature.

Q: Can early TNFD adoption provide competitive advantage? A: Evidence from early adopters suggests yes. Companies with credible nature-related disclosures report improved access to sustainability-linked financing (Robeco found a 15 to 20 basis point credit spread advantage), stronger positioning in procurement processes where buyers are screening for nature-related risk management, and better preparedness for tightening regulatory requirements. For founders seeking institutional investment, demonstrating awareness of nature-related risks through TNFD-aligned disclosure signals operational maturity that investors increasingly expect.

Sources

• World Economic Forum. (2024). Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy. Geneva: WEF.
• European Central Bank. (2025). Nature-Related Risk Pilot: Assessment of EU Banking Sector Exposure to Nature Dependencies. Frankfurt: ECB.
• Finance for Biodiversity Foundation. (2025). Finance for Biodiversity Pledge: Progress Report 2025. The Hague: FfB Foundation.
• PwC. (2025). TNFD Readiness Survey: State of Nature-Related Disclosure Preparedness Among EU Companies. London: PricewaterhouseCoopers.
• Capitals Coalition. (2024). Early Adopters of TNFD: Lessons from 45 Organizations. The Hague: Capitals Coalition.
• TNFD Secretariat. (2025). Implementation Cost Survey: Nature-Related Disclosure Costs Across Company Sizes. Geneva: TNFD.
• Robeco. (2025). Nature Risk and Credit Spreads: Evidence from TNFD-Aligned Disclosures. Rotterdam: Robeco Institutional Asset Management.
• CDP. (2025). Supply Chain Nature Risk Data Availability: Global Assessment. London: CDP Worldwide.
• Nestlé. (2025). Nature and Biodiversity Report 2025: TNFD-Aligned Disclosure. Vevey: Nestlé S.A.