Taskforce on Nature-related Financial Disclosures publishes draft sector-specific guidance

The LEAP approach

The TNFD’s LEAP approach is designed to be used by a reporting entity’s internal project team and involves:

• Locating the entity’s interface with nature;
• Evaluating its dependencies and impacts on nature;
• Assessing its nature-related risks and opportunities; and
• Preparing to address and disclose the material nature-related issues as set out in the Recommendations.

Whilst this integrated assessment approach remains consistent across industry sectors, the TNFD recognises that individual applications will differ. It has therefore produced the additional draft guidance in an effort to support market adoption across several high-impact areas.

High-impact areas

Specific draft guidance has been produced for a number of sectors with significant environmental impact which will play a key role in the global push for more nature-positive outcomes:

• Oil and Gas: the guidance covers the Sustainability Accounting Standards Board’s (SASB) standards within the Oil and gas sub-sector (EM.4).
• Chemicals: the guidance covers the SASB standards within the Chemicals sub-sector (RT.2).
• Biotechnology and pharmaceuticals: the guidance covers the SASB standards within the Biotechnology and pharmaceuticals sub-sector (HC.1).
• Food and agriculture: the guidance covers the SASB industry standards for Agricultural products (FB-AG); Meat, poultry and dairy (FB-MP); Processed foods (FB-PF); Food retailers and distributors (FB-FR); and Restaurants (FB-RN).
• Metals and mining: the guidance covers the SASB standards within the Metals and mining sub-sector (EM.3).
• Forestry and paper: the guidance covers the SASB standards within the Forestry and paper sub-sector (RR.2) and applies to organisations in the forestry management sector, as well as those involved in producing pulp and paper products.
• Electric utilities and power generators: the guidance covers the SASB industry standard for Electric utilities and power generators (IF-EU).
• Aquaculture: the aquaculture sector sits within the SASB Meat, poultry and dairy standard (FB-MP) and the guidance is taken to cover the relevant sector activities.

Each draft guidance document also includes recommended sector disclosure metrics, comprising both guidance on the application of the TNFD core global disclosure metrics, as well as core and additional sector disclosure indicators and metrics.

Additional funding

The publication of the draft guidance is a key step in the TNFD’s push for market uptake of the Recommendations and reflects the increased focus on nature-related dependencies and impacts. This impetus towards adoption of the Recommendations has been further strengthened by the UK Government’s announcement of an additional £2 million funding to support capacity building of the TNFD initiative.

The Legal, Technology and Risk Consulting teams at NRF have significant experience of supporting businesses with both change programmes and sustainable finance initiatives and requirements and are on hand to assist entities in navigating the evolving nature-related disclosure landscape. If you would like any further information about the Recommendations and how your business can utilise the Guidance in incorporating the Recommendations into its decision-making processes and reporting, please contact us.

With thanks to Rebecca Bell (trainee solicitor) for her contributions.