Spotlight on: nature as a strategic business priority

The Taskforce on Nature-related Financial Disclosures (TNFD) provides a framework for businesses to integrate nature into their business planning, decision-making and risk management processes. In this spotlight on article as part of the Climate Action Programme, Charlie Dixon, Associate Director at the Green Finance Institute (GFI) and UK Market Engagement Lead for TNFD explains what the TNFD is and how businesses of all sizes can use it to understand how they impact nature, depend on nature, and can take positive action.

What is the TNFD?

The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a set of disclosure recommendations and guidance that encourage and enable businesses to assess, report and act on their nature-related dependencies, impacts, risks and opportunities.

The goal is for businesses to better understand how they interact with nature in their own operations and across their supply chain, and shift finance towards nature-positive outcomes. It uses language and metrics that are familiar to businesses and can provide some comparability across organisations in a way that previously only existed for climate and not nature.

The full recommendations are developed for larger organisations interested in disclosure. However, the practical tools and guidance that underpins these are equally as useful for SMEs that are interested in assessing their impact on nature and recognising where changes will have the most positive effect. There is also specific guidance being developed for SMEs to support their strategy development.

Why is it important?

Focussing on climate change alone is not sufficient for creating a stable future for people and planet. The vital ecosystem services on which society and business depend are in decline.

The World Economic Forum’s (WEF) Global Risks Report highlights the top ten most material global risks for business over the next ten years. Several of these are nature-related risks including biodiversity loss and ecosystem collapse, natural resource shortages and pollution. The UK is one the most nature depleted countries in the world.

Broad understanding of how nature-related issues such as water availability, soil quality, flood protection, and deforestation affect business’ financial performance is growing. Policymakers and regulators are also taking action. For example, the EU has introduced mandatory requirements for large companies to report on nature, and many expect that the UK could follow suit in the future.

At COP15, most countries, including the UK, signed up to the Global Biodiversity Framework (the Biodiversity Plan), the nature equivalent of the Paris agreement on climate. In 2024, countries were required to submit their national plans of how to meet the 23 nature-related goals by 2030 and 2050.

In addition, several central banks around the world are now asking financial institutions to consider how nature affects their portfolios, in the same way as they do for climate. They want to know how exposed their investments and loans are to these risks. By 2030, UK GDP could fall as much as 12% due to a variety of chronic and event-driven nature risks such as decreasing water or antimicrobial resistance in livestock. This impact is higher than that of either the 2008 global financial crisis or the covid-19 pandemic.

Shareholders of businesses all around the world want to ensure that action is being taken to address these types of risks. This is one of the main reasons over 60 organisations in the UK have committed to report on nature in line with the TNFD recommendations.

Understanding your interaction with nature

The TNFD puts nature into business terms, helping you get specific about ways in which your business impacts and depends on nature and understanding how that creates a risk or opportunity. There are five key drivers of nature loss that businesses can contribute to in a positive or negative way: climate change, land/freshwater/ocean use change, resource use/replenishment, pollution/pollution removal, and invasive alien species introduction/removal.

Could your business supplies be linked to deforestation? Are the products you’re buying sourced from areas where lots of pesticides are used? Are there alternatives available that have lower impacts on nature? How will this affect your reputation with customers and therefore your revenue? Could more sustainable products help improve your sales? Are you in breach of any regulation? Are you relying on land, water or flood protection and how is this changing? How could investing in nature help improve the resilience of your business? Are there ways to work on this together with other local businesses in your area?

How to get started

The TNFD have outlined a range of ways to get started, including joining the TNFD Forum, its broad stakeholder community. For smaller businesses, first steps are likely to be more qualitative than quantitative. Key questions to consider include:

• How can you use the recommendations and guidance as a menu to think of the three most important things for your business?
• How can you use information you already have to locate where your business currently interacts with nature? Or could you undertake a heatmap exercise to see how your work maps across the five drivers of nature loss and where risks or opportunities might materialise? Check out TNFD LEAP use cases for real life examples.
• Consider how you can begin to make changes to your operations. What actions can you take to reduce your impact on nature where you depend on it? Do you need to do more research to increase your understanding?
• Where relevant, consider bringing nature into conversations with your suppliers. How do they consider nature within their broader business strategy or risk management framework?
• Can you collaborate with other businesses locally to support nature protection and restoration? Check out the Local Nature Recovery Strategy.

Here are some examples of positive actions that businesses can take for nature:

• Sign up for certifications such as FSC trademark for responsible sourcing of forest-derived materials, Rainforest Alliance to indicate responsible production, or Soil Association’s organic certification.
• Review your funding and investments including pensions and banking, to ensure that investment goals are aligned with your values and business mission.
• Consider how to support and protect nature through your staff, for example corporate volunteering days at a nature reserve or community garden.
• Review your physical space and how you can utilise any land you own or rent for the benefit of nature.
• Reduce waste and conserve water, helping to reduce the pressure your business places on natural resources.
• Investigate your supply chain – what products or services are you buying and what impact do they have on nature?

Resources

• Getting started with TNFD
• TNFD training modules
• Resources for UK businesses from the TNFD UK Consultation Group:
  • Taking TNFD to your Board: How are UK businesses making the case for TNFD to their Boards?
  • TNFD First Steps by Sector: How are different sectors across the UK getting started with TNFD?
  • UK Example TNFD Reports: What approaches have we seen across the first set of UK reports?
  • TNFD and CSRD: How can I report against TNFD and CSRD together?
  • UK Policy on TNFD: What is the UK government’s and regulators’ position on TNFD?
• ENCORE tool – to identify material impacts and dependencies
• World Resources Institute water risk atlas
• WWF Biodiversity Risk Filter
• WECA Nature and Business resource kit

Find out more about the Climate Action Programme