15 Sep 2023 5 min read

What TNFD means for investors and the planet

By Alexander Burr , Toby MacKean

Ahead of the launch of the Taskforce for Nature-Related Financial Disclosures (TNFD), we explore the framework’s potential to galvanise action on nature-related risks.


Nature is our most precious asset. As well as being vital for all aspects of our day-to-day lives, it’s essential for sustainable economic development. Research from PwC suggests 55%1 of global GDP is highly or moderately dependent on nature.

Our belief in the critical importance of nature is the reason we support endurance swimmer Lewis Pugh, whose latest challenge aims to raise awareness of rivers as the arterial lifeblood of nature.

Yet nature is undervalued and overlooked in our economic and social system. It should therefore come as no surprise that the market is exposed to numerous nature-related risks.  

Identifying and quantifying nature-related risks is challenging. You could say we’re at the stage we were at before the Taskforce for Climate-Related Financial Disclosures (TCFD) was released: we lack standardised, consistent, location-specific and reliable reporting of nature-related risks and opportunities, hampering tangible action. 

But this is starting to change.

Following the agreement of the Kunming-Montreal Global Biodiversity Framework (GBF) at COP15 last year, on 18 September 2023 the final version of the Taskforce for Nature-related Financial Disclosures (TNFD) will be released. Below we explain what it is and why it deserves your attention. 

What is TNFD?

TNFD aims to address the complex and pressing need to incorporate nature into financial and business decision-making. It was launched in October 2021, and has since been refined five times. It was developed collaboratively with input from academia, civil society, government and over 1,000 market participants, including LGIM. It’s been formally endorsed by the G7 and G20.

It aims to be the primary risk-management and disclosure framework that organisations will use to better understand, assess and act on their nature-related dependencies, impacts, risks and opportunities.

The TNFD aims to support a shift in global financial flows away from nature-negative and toward nature-positive outcomes by increasing transparency. It has three core elements:

  1. A homogenising system of core concepts and definitions that relate to nature-related risks and opportunities, impacts and dependencies, as well as biome2 and sector-specific concepts
  2. Recommended disclosures aligned to TCFD pillars, with 14 different elements and six general requirements
  3. An integrated risk and opportunity assessment approach, referred to as LEAP

These are complemented by guidance on data, metrics and target setting, the use of scenarios, and additional biome and sector materials.

Indicators, metrics and targets

To address the difficulty of measuring nature-related impacts and dependencies, the TNFD outlines indicators and metrics that should be used to assess and manage these components, and how they map to the ambitions of the GBF:

  • Indicators summarise impact drivers within the ecosystems with which organisations interact. For example: ‘Total extent of land/freshwater/ocean use change’
  • Metrics are the quantitative measurement attached to these indicators: ‘Extent of land/freshwater/ocean use change (km2), by type of ecosystem and business activity’

The TNFD outlines core global metrics relevant to any organisation – regardless of sector – for assessing dependencies and impacts, risks and opportunities. These are supported by additional metrics, a set of response metrics, as well as sector- and biome-specific considerations.

The expectation is that organisations should include disclosures against all the core global indicators of relevance to their business model, sector(s), biome(s) and priority locations. This is an important step in standardising the measurement of corporate interactions with nature.

Also worth noting is that the TNFD has recently launched a scoping study to explore a nature-related public data facility.

What now?

Policymakers must make it mandatory

Target 15 is a transformative part of the GBF. It commits signatories to implement legal, policy and regulatory measures to strengthen how all businesses monitor, manage and disclosure nature-related risk, impacts and dependencies.

Unfortunately, parties could not agree on making this mandatory; something we – and several others – believe is key to changing our relationship with nature and meeting the GBF commitments.

We are calling on policymakers to rapidly adopt TNFD – perhaps through the IFRS ISSB standards – and introduce regulation that would mandate disclosure against the TNFD framework.  

Get going now. Complexity is no excuse

The complexity of natural systems across different locations and measuring impacts and dependencies is often cited as a barrier to progress.

The reality is that much can be done without reaching definitive answers to these questions. There is no time to lose, and there is no excuse for further delay.

Leveraging the TNFD, and building on progress made already, we expect companies to:

  • Evaluate location-specific nature interfaces and priority risks and opportunities across direct operations and value chains
  • Develop and implement comprehensive strategies, policies and mitigation actions that address these impacts and dependencies
  • Establish robust accountability and governance mechanisms
  • Report on progress, evaluate performance and develop internal nature and biodiversity expertise

Given the rising expectations of governments, institutional investors and wider stakeholders, we believe the TNFD will become a market-leading framework for nature-related disclosures.

With the growing convergence in global reporting standards and an increasing understanding that nature-positive is integral to our net-zero ambitions, regulation will inevitably follow.

The TCFD undoubtedly changed the way market participants engaged with climate change. Despite its success, regulatory progress was slow and unclear. It took many years to become established and there is still a long way to go before information is consistently decision useful.

We must learn from this and support a clear pathway of TNFD implementation that has a fast and world-changing impact.



1. https://www.pwc.com/gx/en/news-room/press-releases/2023/pwcboosts-global-nature-and-biodiversity-capabilities.html

2. Biomes are global-scale zones, generally defined by the type of plant life that they support in response to average rainfall and temperature patterns e.g., tundra, coral reefs or savannas: https://www.ipbes.net/global-assessment 

Alexander Burr

ESG Policy Lead

Alexander joined in 2019 and leads LGIM's ESG policy engagement across markets. Prior to this, he helped establish an impact fund that uses blended finance to invest in emerging markets. Before that, Alexander negotiated blended finance investments at the European Bank for Reconstruction and Development (EBRD) to support sustainable economic growth across Eastern Europe, Central Asia, and North Africa. He has held roles advising governments on alternative finance and established a nuclear safeguards organisation. Alexander holds a BSc in Politics and International Relations from the University of Southampton, and further education at LSE, ICSA, CISL, and Birkbeck.

Alexander Burr

Toby MacKean

Global ESG Analyst

Toby is responsible for LGIM stewardship activities across a range of ESG topics with a specific focus on both climate and nature-related topics, whilst leading on the teams Natural Capital Management theme. He works closely with the Investment team to integrate Stewardship and ESG into investment processes. Toby joined LGIM in February 2022 from Ernst & Young (EY) where he was a Manager in their Climate Change and Sustainability Services team. Whilst there, he worked with a range of clients on various decarbonisation strategy, TCFD and climate target setting projects, provided non-financial assurance and corporate reporting services, as well as led the integration of climate risks into EY’s audit methodologies. Prior to that, he trained as an ICAEW (ACA) chartered accountant working in EY’s products and services department. Toby graduated from Durham University and holds a BSc (Hons) in Geography where his studies focused on climate change and environmental processes. 

Toby MacKean