Source of article: Regulationasia.com
In summary:
The Taskforce on Nature-related Financial Disclosures (TNFD) has unveiled 14 recommendations for managing and disclosing nature-related risks during UN Climate Week. These recommendations provide a framework for companies worldwide to assess and disclose their nature-related risks in a standardized and comparable manner, even though compliance is currently voluntary. The TNFD will begin monitoring market adoption in 2024, similar to the Task Force on Climate-related Financial Disclosures (TCFD).
The TNFD’s focus is on nature-related risks, opportunities, and an organization’s impact on nature and biodiversity. It’s expected that these recommendations may become mandatory in various jurisdictions or reporting standards, similar to the trajectory of TCFD recommendations.
This development in sustainability reporting aligns with the release of sustainability disclosure standards by the International Sustainability Standards Board and the EU Sustainability Reporting Standards in 2023. Nature-related reporting is lagging behind climate change reporting in maturity, but TNFD aims to bridge this gap.
The recommendations are the result of a two-year consultative process involving input from over 200 companies and financial institutions. They are designed to provide global principles for identifying, assessing, and disclosing nature-related issues, with flexibility for adoption based on individual circumstances.
Robson Lee, a Singapore-based lawyer and sustainability reporting advisor, emphasizes the need for a structured approach to adopting TNFD recommendations. He recommends seeking legal and specialist advice, developing policies and action plans for a transition to climate-friendly business operations, and preparing for rigorous compliance standards, particularly in major markets.
Lee anticipates a shift from voluntary to mandatory compliance as countries legislate similar laws and regulations to mitigate global warming’s effects. He envisions a future where countries worldwide adhere to aligned rules and regulations, reducing room for regulatory arbitrage, similar to international compliance requirements during the COVID-19 pandemic.
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