Organizations worldwide face an increasingly uncertain future when it comes to nature-related impacts and risks for their businesses, creating urgency to find the best framework for approaching these risks and identifying opportunities to adapt and thrive.
The most widely accepted framework is the Taskforce on Nature-related Financial Disclosures (TNFD). The TNFD is a science-based, government-supported global initiative that provides recommendations and programs for stakeholders. These resources then help organizations make informed decisions regarding their nature-related impacts, risks and opportunities.
As a member of the TNFD Forum, WSP is assisting clients in navigating the possibilities and challenges that TNFD presents for their organizations.
“Our clients tell us that the TNFD provides a very solid framework to build biodiversity and nature-related considerations into their practices,” said Sidney Chen, climate change consultant with WSP in the U.S. “This is valuable because it gives businesses a foundational starting point for a topic they may not have previously been considering part of their corporate sustainability objectives.”
The Taskforce on Nature-related Financial Disclosures resources help organizations make informed decisions regarding their nature-related impacts, risks and opportunities.
Building Around Four Pillars
The final version of the TNFD recommendations on nature-related risk management and disclosure were published in September 2023.
They are designed to inform better decision making by companies and capital providers and progressively shift global financial flows toward nature-positive outcomes.
TNFD recommendations are based around four pillars: governance, strategy, risk and impact management, and metrics and targets. These pillars are also consistent with the pillars of the Task Force on Climate-related Financial Disclosures (TCFD), the International Sustainability Standards Board and the standards of the Global Reporting Initiative.
“The final guidelines in the governance pillar emphasize the importance of organizations effectively engaging their local stakeholders, including indigenous communities,” Chen said. “They explain with greater clarity how companies should handle their biodiversity-related evaluations and stakeholder engagement, step by step.”
Food for Thought
The TNFD guidance can be applied to circumstances specific to different companies. In February, the TNFD published draft sector-specific guidance for the following sectors: oil and gas, metals and mining, forestry and paper, food and agriculture, electric utilities and power generators, chemicals, biotechnology and pharmaceuticals, aquaculture, and additional guidance for financial institutions.
One of the most important sectors for nature/biodiversity action is food and beverage. This sector is highly dependent on nature and was identified as one of eight priority “real economy sectors” by the TNFD.
“TNFD determined these priority sectors based on their respective levels of impact, as well as the magnitude of these impacts,” Chen said. “Some industries are relatively large land users, for instance, and others are large water consumers, and the TNFD guidance is tailored according to their relative impacts.”
Most of the nature-related impacts and dependencies for food and beverage companies start at the farms where they source their ingredients. Two major factors in these farm-level, nature-related impacts and dependencies are location and farming practices, and addressing these issues requires transparency within a company’s supply chain.
“The better the company’s supply chain transparency, the more accurate and valuable the assessment will be of their impacts and dependencies, which in turn will make their risk reduction actions more effective and transform nature-related risks into opportunities and improve companies’ bottom lines,” Chen said.
Food and beverage is one of the most important sectors for nature/biodiversity action and was identified as one of eight priority “real economy sectors” by the TNFD.
Expertise Against an Uncertain Future
The TNFD Forum is a platform for organizations to stay in the loop on TNFD-related developments, with members optionally contributing to the development of TNFD guidance. Membership is free and open to a broad range of different institutions. Currently, there are more than 1,400 forum members worldwide, representing 70 countries and territories and 86 different business sectors.
As a forum member, WSP can provide clients with access to a full suite of TNFD-related services. This includes gap analysis that determines where companies are in terms of disclosure compliance around nature and biodiversity, as well as conducting biodiversity risk assessments in accordance with the TNFD framework.
“Our experts are able to help companies incorporate nature and biodiversity into their sector-specific environmental, social and governance strategies,” said Sue Kemball-Cook, vice president and corporate climate risk and resilience practice lead at WSP in the U.S.
WSP’s team helps reduce uncertainty that clients may have with the reporting process. But part of this landscape still involves embracing a measure of the unknown.
“The TNFD guidelines are based on the best available science, but there are still uncertainties in our understanding of how businesses interact with nature,” said Emily Wolff, U.S. climate change associate consultant at WSP. “That being said, we can still move companies’ supply chains toward greater alignment with their goals for managing nature-related risks. This will allow these companies to better understand and reduce nature-related risks, as well as capitalize on emerging opportunities.”
For more information about the TNFD, visit the WSP website or the official TNFD global website.
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