In September 2023, Brazil’s Taskforce on Nature-related Financial Disclosures (TNFD) released a recommendations report. The aim of the report is to encourage market development relating to nature-related physical and systemic risks present in the cash flows, balance sheets, and capital portfolios of organizations across all sectors and geographies, and especially considering the need for behavioral changes to address global environmental issues. The TNFD is a science-based, market-led initiative supported by national governments, companies, and financial institutions around the world, which develops recommendations and disclosure guidelines for organizations to report and act on nature-related dependencies, impacts, risks and opportunities.
The TNFD’s report presents conceptual foundations related to nature, a set of general requirements, and a set of recommended disclosures structured around four pillars: governance, strategy, risk and impact management, and metrics and targets. It highlights, among several other issues, that climate change is one of the five environmental factors to be addressed, and is intrinsically linked to the other four factors. According to the report, companies and financial institutions need to adopt a unified approach to identify, assess, and respond to ecological dependencies, impacts, risks, and opportunities.
The report also states that there is growing evidence that ecological damage poses risks to companies, capital providers, financial systems and economies, and that these risks are increasing in severity and frequency. For example, central banks and financial supervisors are increasingly recognizing ecological damage as a source of systemic risk for financial systems and their economies. While many governments are taking corrective steps through fiscal policies and actions, most companies and capital providers remain unprepared, despite the risks and opportunities. As a result, protecting the environment is no longer a corporate social responsibility issue, but a central and strategic risk management issue, along with climate change. In a recent TNFD Forum survey, more than 86% of the 239 respondents—across 36 countries and 11 sectors—indicated that they thought they could start reporting disclosures as recommended by the TNFD by calendar year 2026, based on their 2025 financial results.
The TNFD's approach is anchored in the principle that metrics should be science-based, relevant to the business model and value chain of report preparers, proportionate, useful for decision-making, subject to limited independent assurance, and aligned with global and domestic policy goals and objectives. Organizations are encouraged to start their ecological assessments and reporting by combining process-oriented qualitative disclosures. Organizations that consider the availability and quality of data to be a challenge could start by improving their governance and risk management processes, signaling these improvements to the main users of their sustainability reports and other stakeholders.