The Taskforce on Nature-related Financial Disclosures

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Introduction

Launched in June 2021, the Taskforce on Nature-related Financial Disclosures (TNFD) is headed by 34 senior staff from global companies. The TNFD is a voluntary initiative led by business but endorsed by various actors on the international stage. It was set up to develop a framework that outlines what information a company or financial institution should self-report regarding how its relationship with nature has, or will, impact its business. This may include how it is preparing for changes in the short, medium, or long term. It emerges at a point in time when the global community is increasingly aware of the trillions of dollars that are underpinning companies or projects that are driving the nature crisis. TNFD launched the first draft of its framework in March 2022, the second in June 2022, the third and fourth are anticipated in November 2022 and February 2023, and the final version is expected in September 2023. 

Many people working at the frontline of the nature crisis – including those highly active in trying to halt harmful company and financial institution behaviors – are either unaware of TNFD, find it difficult to understand or feel that their views or expertise are not sought out.

TNFD’s Principle 3 on ‘nature-related risks’ outlines that it will “embrace nature-related risks that include immediate, material financial risks as well as nature dependencies and impacts and related organizational and societal risks”. To date, its proposed framework does not require businesses to report on their adverse impacts to nature nor on related human rights abuses. The taskforce is composed only of global corporations, completely sidelining the voices of people who are on the frontlines of the nature crisis. This is particularly alarming as from very early in its process there has been a stated desire to inform public policy and for TNFD’s work to set the template for future regulations. While the core decision-making structures of TNFD is by business, for business, it was set up by World Wildlife Fund (WWF), Global Canopy, the UN Development Programme (UNDP) and the UN Environment Programme Finance Initiative (UNEP-FI). That UN agencies are backing this approach is deeply concerning.

This briefing page provides an introduction to core aspects of the TNFD, including how it works and why it is likely to influence future regulation. In doing so, this plain language resource aims to reduce confusion or misconceptions about the TNFD from a civil society perspective. TNFD itself has an official website and Twitter.

This briefing outlines key concerns and recommendations raised by rights holders, civil society organizations (CSOs) or non-government organizations (NGOs) regarding the processes and proposed draft TNFD framework. Here the term rights holders refers to Indigenous Peoples, Afro-descendant communities, local communities, land and environmental defenders and affected workers, including women and youth within these groups.

The May 2022 Joint NGO Open Letter to TNFD is a good introduction to concerns and analysis of TNFD’s processes and its first draft framework. More broadly, some NGOs have outlined a checklist of seven questions to distinguish between real change and false solutions to halt the finance driving environmental and human rights harms in forest-risk industries – which TNFD’s current proposed approach does not meet.

This briefing page is divided into sections that can be read independently:

   Comparing the role of business vs. the role of rights holders, CSOs + NGOs

About this page

This page will be updated over time. We welcome feedback and additional information from rights holders, civil society groups or others wishing to share their experiences, recommendations, questions or concerns regarding TNFD. You can contact Shona Hawkes at shona@ran.org or on WhatsApp/Signal/Telegram: +61 413 100 864. We also welcome media inquiries. Rainforest Action Network has also prepared a press briefer about TNFD.

It is also hoped that this information is useful for those working in, or with, the TNFD process. While much of TNFD’s structure is already in place, there are clear steps that can be taken to mitigate some of its more serious flaws and ensure that it does not undermine existing headway made in other initiatives. We also invite those involved with TNFD to publicly disclose their policy positions on key issues raised on this page. 

Where documents are available in multiple languages, we have linked to the English version and added an endnote with links to translations. For quick explainers, the Global Forest Coalition has an excellent short blog explaining TNFD. 

What is the Taskforce on Nature-related Financial Disclosures?

The Taskforce on Nature-related Financial Disclosures (TNFD) was launched in June 2021, drawing on the findings and work of an Informal Working Group that was co-chaired by three bankers, and included business, governments and think tanks. In March 2022, TNFD issued its first draft of its framework (Beta v0.1), as the first step in an 18-month process. The TNFD framework will outline the type of information a business should self-report regarding how its relationship with nature has, or will, impact its business. This can include how it is preparing for changes in the short, medium or long term, if necessary. The premise of TNFD is that investors will use this reporting to inform their choices – using their market power to reward companies with good practices and penalize those with bad ones. TNFD released its second draft of the framework (Beta v0.2) in late June 2022. TNFD will produce two additional drafts – in November 2022 and February 2023 – before releasing its final version in September 2023. 

The TNFD is a voluntary initiative and the 34-person taskforce is solely made up of senior staff from financial institutions and corporations. While TNFD is a voluntary initiative, it is expected that TNFD will set the international benchmark for nature-related business reporting. From very early on, those working on TNFD have hoped to influence governments to adopt its measures as regulation in future and factored this into its project design. The TNFD is endorsed by the G20 and G7, funded by multiple governments and its co-founders include two UN agencies, UNDP and UNEP-FI, as well as NGOs WWF and Global Canopy. In 2021, it was proposed that TNFD’s 2-year budget should be approximately USD$15 million. TNFD is modeled off an earlier voluntary initiative: the 2017 Task Force on Climate-related Financial Disclosures (TCFD). TCFD-aligned reporting requirements or similar provisions are now being adopted by governments in Brazil, the European Union, Hong Kong, Japan, New Zealand, Singapore, Switzerland, the United Kingdom and the United States. TCFD claims to be backed by 120 regulators and government entities. Examples of business reports using the TCFD framework can be found here.

The international Network for Greening of the Financial System (NGFS) of central banks and financial supervisors has also prioritized nature-related risks in its 2022-2024 workplan. Central banks and supervisors are key decision-makers in how our economies, including the financial sector, are regulated. A recent NGFS-INSPIRE study paper on biodiversity and nature risks report refers to several finance-led initiatives, including TNFD, and notes that “close collaboration between these initiatives and others is expected to leverage resources and avoid duplication of efforts”. While TNFD is a voluntary initiative, the Co-Chair of TNFD has already called for governments to make TNFD mandatory in future.

While TNFD is focused on reporting it’s important to note that this is not the sort of transparency and traceability that would allow Indigenous Peoples, local communities or others to identify if a company or a bank is sourcing from, or financing, companies or activities in their local area. An additional challenge is that TNFD claims to be aligned with a landmark international agreement on the future of biodiversity – called the post-2020 global biodiversity framework – that is being negotiated through the Convention on Biological Diversity (CBD) process. However, the bulk of TNFD’s work will be done before the new global biodiversity framework is even completed, which is expected in December 2022 at the earliest. By contrast, the TCFD on climate was launched after the landmark 2015 Paris Climate Agreement. The timing of TNFD has important implications. For example, the centrality of human rights is still being negotiated and navigated in the global biodiversity framework talks. Yet TNFD has decided not to integrate human rights into its scoping, knowledge partnerships, reference datasets, governance structures or its first two drafts.

What is the problem that TNFD perceives and is trying to solve?

International scientists have sounded the alarm that global biodiversity loss is occurring at a pace unseen in human history, with land and sea use change as the primary direct cause. There are a diverse array of views and opinions from rights holders, civil society, government, scientists and others as to why businesses – particularly large corporations and financial institutions – continue to harm nature and people, and what actions are needed to stop this.

To better understand TNFD, it’s important to understand the specific problem that it perceives and is trying to solve. This also provides insight into the assumptions behind its approach. In simple terms, the assumption behind TNFD is that without action the nature and biodiversity crises will create uncertainty and instability for businesses and the economy. This is because business and economies rely on nature – from agribusinesses that rely on bees to pollinate their crops to factories that rely on water for processing. Businesses can, in turn, adversely harm nature. In the future this may become costly if social expectations on caring for nature shift. TNFD seeks to protect business, and the economy at large, from detrimental financial impacts that will arise from a diminishing global biodiversity and other nature-related harms. In turn, it’s hoped that business reporting using TNFD’s framework will have a positive impact on halting biodiversity loss and harms to nature.

TNFD focuses on what it believes are two key solutions needed to address this problem:

      a) Growing the awareness of the business sector of how ignoring nature is a financial risk to their business. This includes the need for companies and financial institutions to identify potential future risks to their business but also new opportunities that may arise from the global shift in markets becoming more aware of the economic role of nature.

      b) Investors, banks and other financiers want to make better choices – but they lack access to reliable and standardized information about companies’ relationships with nature.

What are the major shortcomings in TNFD’s proposed framework?

This section highlights some of the most serious shortcomings in TNFD’s proposed reporting framework. More detail and information can be found in the May 2022 Joint NGO Letter to the TNFD. The following section then highlights shortcomings in TNFD’s structure and approach, which help to understand why certain decisions are being made about the proposed framework.

o TNFD’s proposed framework doesn’t require business to report their negative risks and impacts on nature (double materiality)

o TNFD doesn’t require business to report on human rights abuses, including abuses against people trying to protect nature and their rights

o TNFD does not require a business to report complaints against it and overlooks other measures to ensure reporting is reliable and accurate

o TNFD’s timeframe for sector and other guidance is too short to allow for meaningful input

TNFD’s proposed framework doesn’t require business to report their negative risks and impacts on nature (also known as ‘double materiality’)

TNFD’s Principle 3 on ‘nature-related risks’ outlines that it will “embrace nature-related risks that include immediate, material financial risks as well as nature dependencies and impacts and related organizational and societal risks”. However, its proposed framework does not require a business to report on its adverse impacts on nature or related human-rights issues. Under TNFD’s draft framework, a company or financial institution is only required to report on significant risks and opportunities to its business that may arise as a result of its relationship to nature. This should cover risks or opportunities in the short, medium or long term. While TNFD outlines that a business should know if it is having, or likely to have, a negative impact on nature it isn’t required to report on these impacts – unless it believes they will significantly affect its financial health. This is likely highly subjective. A more ethical firm may view any negative environmental risks or impacts as bad for business, while a company that is causing environmental harm is unlikely to do so.

This results in the puzzling stance that while TNFD describes itself as a ‘disclosure’ or ‘reporting’ framework it doesn’t require a business to report its known risks and harms to nature or people. This is particularly problematic given that environmental abuses are most rampant where legal and financial risks for nature destruction are few. It is also a circular argument – where TNFD is described as using market forces to change the status quo where harms to nature aren’t seen as a significant risk to business, but only requires a company or financial institution to report its harms to nature if it is a significant risk to its business. In practice, this also denies investors the ability to question a company’s view that its role in environmental harms isn’t financially significant because these harms don’t need to be disclosed under TNFD. 

TNFD’s proposed approach does not align with measures already agreed in international talks on a future global biodiversity framework. The talks have already agreed on the need to ‘halt and reverse biodiversity loss’ by 2030. Target 15 outlines that business and financial institutions should ‘regularly monitor, assess, and fully and transparently disclose their impacts on biodiversity’ [emphasis added]. TNFD’s proposed approach is also out of step with initiatives such as the Global Reporting Initiative (GRI) which began in 2000, is adopted by most of the world’s largest companies and has had a biodiversity standard for well over a decade. The GRI adopts ‘double materiality’ and interprets the term to mean reporting on both the factors that affect the financial health of a business (‘financial materiality’) and a business’ impacts on the environment and society (‘impact materiality’). The EU’s incoming Corporate Sustainable Reporting Directive takes a similar approach. TNFD’s limited approach only considers how nature is already significantly affecting the financial health of a business today and how it may affect future financial health in the medium or long term. The NGFS-INSPIRE study group has emphasized the importance of better understanding how at a macroeconomic level biodiversity risk may translate to financial risk but has also pointed out what it terms the ‘endogeneity of risk’. That is, a business that harms nature or biodiversity may not itself be harmed by that risk – it may instead pass the risk onto others in complex ways. This highlights the importance of continuing to consider the question of how business impacts on nature.

In its June 2022 second draft, TNFD noted that it received feedback that it should require businesses to report on their dependencies and impacts on nature – irrespective of whether this affects the financial health of their business or not. However, to date it has chosen not to emphasize this approach, further entrenching the approach of excluding reporting on impacts on nature. However, the 2021 TCFD status report – looking at the work of the TCFD on climate – found that only 20% of consultation respondents report on how their climate-related risks or opportunities affect their current financial performance. This drops to 14% for reporting on potential financial risks in future. At minimum, this signals that understanding actual and potential impacts on the environment – not just financial risks – is the likely cornerstone of how investors and others are making decisions. 

TNFD doesn’t require business to report on human rights abuses, including abuses against people trying to protect nature and their rights

The May 2022 Joint NGO Letter to TNFD outlines in greater detail why TNFD excluding human rights reporting is highly problematic. It highlights that outcomes for nature and people are intertwined, and notes “it is difficult to identify a case of serious business-led adverse risks or impacts to nature that does not have a human rights dimension”. It notes that there are already over a dozen major corporate and multi-stakeholder initiatives for high-risk industries that require human rights reporting. Adding: “These are as diverse as the Aluminium Stewardship Initiative, the Accountability Framework initiative, the IFC Performance Standards, The Equator Principles, the Roundtable on Sustainable Palm Oil, the Universal Standards of the Global Reporting Initiative and many others. This recognition required a great deal of awareness raising, time and energy to achieve. While these initiatives are far from perfect, TNFD will undermine the headway made on human rights and lessons learned over many years if it ignores them.” In July 2022, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) – the leading global research body on biodiversity – particularly stressed the role of justice in outcomes for nature and people.

Those on the frontlines of the nature crisis have been extremely vocal in emphasizing that human rights are critical. For example, this can be seen in collectively developed statements such as the The Land Rights Standard, The Geneva Declaration, the Global Pact to Protect 80% of the Amazon by 2025, the Global Alliance of Territorial Communities five key asks, A Call to Action from the Global Women’s Assembly for Climate Justice and recommendations for how to integrate Indigenous rights reporting into TCFD-style frameworks. Threats, criminalization and killings of land and environmental defenders – often everyday people trying to save nature and protect their land rights – are harrowingly routine. Four people are killed each week.

Officially, TNFD  is delaying a decision on human rights until its partner IUCN consults with Indigenous Peoples and local communities. This is problematic for two reasons. Firstly, TNFD is already pushing forward with multiple company pilots, testing and socializing drafts that normalize expectations of a no human rights approach, which with each step will be harder to reverse. Secondly, it is concerning that TNFD is using its delay in consulting with Indigenous Peoples and local communities to justify this position. In excluding human rights at this stage, TNFD is in effect presuming that Indigenous Peoples and local communities won’t want their human rights respected, rather than presuming they will. This is particularly disturbing given the role of UN agencies in backing and funding TNFD.

Also salient is that WWF, one of the co-founders of TNFD, has been embroiled in an international human rights scandal. Allegations against it are under investigation by UNDP’s own audit and investigation office. Many groups have critiqued WWF’s response to the scandal, saying it is indicative of a broader issue that WWF operates under the false assumption that environmental issues can be addressed without ensuring rights holders have a central role in decision-making or seeing their rights as core. A similar critique has been outlined regarding TNFD. 

TNFD does not require a business to report complaints against it, and overlooks other measures to ensure reporting is reliable and accurate

The premise of TNFD is that investors are failing to do more to protect nature from adverse impacts for lack of sufficient information. Yet it is virtually silent on what measures and safeguards are needed to ensure that the information reported by business is credible and reliable. Otherwise TNFD risks being a greenwashing tool.

Here, as NGOs have pointed out, TNFD could draw from tools already in use by business. Of particular importance is publishing a grievance list of complaints against it. Knowing if a company faces complaints over its environmental or human rights record, and the nature of those complaints, is highly salient for its investors, buyers and the broader public to know. Businesses can also publish an exit or exclusion list of companies that it won’t do business with due to environmental or social concerns. First People’s Worldwide and others have also championed the importance of naming the Indigenous Peoples and territories in the areas where a business operates, sources from or finances. Many initiatives have championed the need for fully public traceable and transparent supply chains, and more broadly the right of local communities to know which businesses are operating, sourcing from or financing activities in their local area. Sourcemap estimates that 15-20% of raw commodity transactions are fraudulent, which speaks to the importance of having independently verifiable data. Knowing if a business is lobbying against stronger environmental laws is also pertinent to assess how their plans line up with their practices. TNFD taskforce members themselves do not disclose their public positions on what TNFD should include. 

Too often, greater stock is put into a business’ policies, plans and promises about what it will do in future than how it is responding, in concrete ways, to concerns put before it today. This can present a misleading picture of a business’ real-world actions and priorities.

TNFD plans to rush-out sector guidance and other guidance

In its June 2022 version 2 report, TNFD has outlined how it aims to publish a series of guidance, based on sector, ‘realm’ (i.e. land, freshwater, ocean and atmosphere) and potentially location. This sector or realm specific guidance will provide additional advice to the core TNFD reporting. TNFD will also provide guidance for banks, asset owners, asset managers, insurers and development finance institutions. These will be published by November 2022 (draft 3) or February 2023 (draft 4) before being finalized in September 2023. For those with any experience in developing sector-based guidance through multi-stakeholder discussions this timeline is alarmingly abrupt. In responding to its first draft in March 2022, certain NGOs had signaled that TNFD working to develop biome-level guidance could, if done well, open an important door to create meaningful and enduring relationships that were driven by rights holders and others active at local level. However, they cautioned that genuine consultation takes time, and urged TNFD to extend the timeline for their development and seek appropriate funding to do this. Unfortunately, the timeline remains the same.

It is hard to envisage how TNFD plans to prepare so many guidances in such a short timeline, which suggests that it may just copy from existing guidance. To date, TNFD has relied more on sector guidance based on the narrow prism of financial risk – including some still in development such as the International Sustainability Standards Board – rather than those refined over many years with inputs from diverse groups. For example, TNFD has defined sector categories based on the Sustainability Accounting Standards Board (SASB) – yet if SASB is to inform the content of its future sector guidance, this is highly problematic as SASB is focused only on financial risk to business, not impacts, and fails to incorporate many human rights measures standardized in other industry guidance. Concern has already been raised by TNFD’s decision to so far exclude human rights in its initial drafts, despite their prominence in so many of the most prominent multi-stakeholder initiatives. TNFD appears destined to repeat the same mistakes as TCFD – whose Agriculture, Food and Forest Products Annex appears largely  ignored, as it fails to align with basic lessons learned and practices adopted over many years as outlined here (p.4). This risks lowering the bar of sector expectations, undermining headway already made.

What are the major shortcomings in TNFD’s structure and approach?

The shortcomings with TNFD’s proposal are symptomatic of broader issues in its structure and approach.

Case Study: What could JBS reporting look like under TNFD?

Corporate capture: TNFD is being written – by corporations themselves – cognisant of the possibility it may be adopted into national regulation in future

TNFD is not simply a voluntary initiative. Its ambition to influence future government policies was expressed very early in its process, was factored into its project design and has been articulated by TNFD’s own co-chair. TNFD has explicitly and deliberately cultivated relationships with governments, regulatory agencies, international science organizations, NGOs like WWF and Global Canopy, UN agencies and other reporting initiatives. It is publicly backed by the G7 and G20. Its messaging and even choice of name echo that of the Task Force on Climate-related Financial Disclosures, which is already forming the basis of new regulations in several countries. Taken together, TNFD seeks to elevate itself through these relationships and connections to give greater weight to its legitimacy and prominence. At the same time, its very mission statement as a ‘market led’ voluntary initiative is explicit that it is controlled, led, and accountable to large businesses. It is also open in trying to recruit business support to its platform.

TNFD is being presented as a critical part of the international solution to ending the trillions of dollars in financing that is driving the nature crisis. This overlooks that all the decision-making power resides with business interests – from the 34-member TNFD taskforce, to the business piloting programs and finance-led consultation groups. The plethora of activities and discussions of complex datasets can make it hard to see that business controls the core precedents and assumptions of TNFD. Our page “What are TNFD’s governance, decision-making and feedback processes?” highlights the disparity between business voices, and the voices of rights holders, CSOs or NGOs in TNFD’s processes.

The second draft of the TNFD framework does not require business to report their harms to nature and people, their links to abuses against the human rights of people who defend or rely on nature, or even report if a company has complaints against it. Implicit in its model as a reporting framework is that important discussions such as the role of accountability in shifting finance or a business’ rights to keep profits linked to environmental harms, human rights abuse or even illegal practices is beyond its remit. In its July 2022 report, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) stressed the importance of transparency, accountability and inclusivity in decision-making as critical to outcomes for nature.

Especially concerning is the role of UN agencies UNEP and UNDP as major backers of TNFD. It is incredibly alarming that UN agencies would back a process that explicitly hopes to influence future government policy but where all decisions are controlled by businesses themselves.  At launch in June 2021, TNFD failed to even identify rights holders as stakeholders in TNFD at all. A May 2021 funding document reveals that a gender action plan failed to make any requirements for TNFD to apply a gender analysis to its proposals or to even involve women’s organizations at all. This is despite gender being a prominent theme in the CBD’s global biodiversity framework discussions. TNFD has recently announced a partnership with IUCN to consult with global Indigenous leaders – but who this will involve and how it will work is not yet known. UN agencies are lending their name to the initiative, but their involvement does not appear to have been contingent on any threshold requirement for TNFD to equally involve rights holders or grassroots CSOs, to align with international human rights law or even potentially the targets of the global biodiversity framework.

Rainforest Action Network (RAN) has articulated concerns about TNFD as a case study of undue corporate influence on regulatory and political processes – limiting even our imagination of what we believe accountable business would look like. Those most affected by the nature crisis fuelled by global corporations have little say in this process or even if they think it will work. Concerns are articulated in more detail in RAN’s May 2022 submission to the UN.

TNFD sidelines those on the frontlines of the nature crisis – such as rights holders, Indigenous Peoples and environmental defenders

In its work, TNFD has particularly focused on working with global business, and working with data experts – an approach it describes as ‘science based’. Businesses are experts on markets and scientists and data experts are knowledgeable about measuring nature. However, understanding markets and measuring environmental metrics alone is insufficient to design effective outcomes. Ineffective measures can delay real action or create confusion by allowing greenwashing – giving the appearance of helping nature while continuing to harm it. People on the frontlines of the nature crisis – including those with intergenerational expertise in safeguarding forests or protecting land and waters – often have the best insights into what types of measures affect social change and which don’t. There is a long history of Indigenous Peoples, local communities, environmental defenders and grassroots organizations (including women, youth and workers within these groups) contributing analysis or ideas on company, government or corporate initiatives – pressing for effective measures and pushing against greenwashing and other loopholes. It is their work which has driven global awareness of the centrality of nature to our lives, economies and livelihoods, and yet they are seen as peripheral to TNFD at best.

TNFD has received millions of dollars in financing, with a proposed budget of USD $15 million over two years and forged 16 ‘Knowledge Partnerships’.  However, despite these efforts, it has failed to ask very basic questions to identify what types of industry action are most effective, which are not and adopt the lessons learned.

This includes questions such as:

o   What are the existing collective statements and recommendations that rights holders and others have put forward on nature-related issues – and how can these recommendations be incorporated into TNFD’s work?

o   If the TNFD draft proposals were in place, what would this mean in terms of concrete cases or corporate-led nature harms that Indigenous Peoples and other rights holders are working on?

o   Why has TCFD failed to impact on deforestation and human rights abuses, and what lessons must TNFD learn from this approach?

o   Based on its current draft, do rights holders think that TNFD will work to effect change? If so, why? If not, why not?

o   What measures are working well to increase pressure on business to shift its relationship with nature and people?

While TNFD says it wishes to engage with rights holders and this sentiment may be genuine, in concrete terms it is clearly communicating that it does not prioritize their expertise. TNFD has initiated a consultation with Indigenous Peoples via IUCN. However, more broadly the lack of plain language information, open events, a dedicated staff member for working with rights holders or testing its recommendations against real-world examples will not help build trust in its process. Many groups will also be naturally skeptical about their capacity to influence change, in a process which embues so much power over decision-making to companies and financial institutions. [Table: Comparing the role of business vs. the role of rights holders, CSOs + NGO].

It is not clear how TNFD would influence decisions in concrete cases – i.e. ‘will this work?’

A key concern regarding TNFD’s process is it is failing to ask, and be driven by, the very basic question of ‘will this work?’. The number of companies, banks and government supporters it can generate means little if it is ineffective. An evidence-led approach should include testing TNFD’s proposed approach against diverse current cases involving corporate harms to nature – starting with the most severe and urgent. For example, it should test whether nature-related harms would be picked up in TNFD reports, that the framework would not allow or encourage misinformation and that the type of information aligns with that most likely to compel investors and others to act. This should also openly communicate whether TNFD is likely, or unlikely, to actually empower those seeking more accountability for corporations on nature-related harms. Already, several groups have worked with Rainforest Action Network to privately provide TNFD with a series of case studies. This analysis has led NGOs tracking TNFD to particularly prioritize certain issues which TNFD hasn’t so far acted on. Nor has TNFD appeared to ask any of its 16 Knowledge Partners to undertake a systematic casework analysis. (See also JBS Case Study).

TNFD has also overlooked requests to explore the potential positive or negative implications of its proposal on inequity and inequality. Third World Network has raised concerns that TNFD, in considering nature-related risk a financial risk, may increase the payment costs of countries in debt crisis by impacting its credit rating. This may, perversely, encourage them to seek short-term financing by approving projects that harm nature.

The lack of a credible and equitable multi-stakeholder process is also failing to challenge and probe more deeply into some basic assumptions driving TNFD’s current proposal. TNFD appears to have a near singular focus on data discussions, but simpler questions are often overlooked.

If a company is not required to publish its impacts on nature or report current complaints against it:

·  How reliable will its public reporting be?

·  Will TNFD require a company operating in high-risk industries in high-risk areas to even know its own supply chain?

·  If TCFD has failed so far to significantly end harms to forests, and TNFD is based on TCFD, does it risk repeating the same harms, especially given that forests hold 80% of land-based biodiversity?

Example Case Study: What could JBS reporting look like under TNFD?

JBS is the world’s largest meat packer. In 2020 various NGOs, media agencies, investors and even its own auditor raised concerns about JBS’ environmental claims or brought forward allegations that it was sourcing cattle from tens of thousands of hectares of deforested land in the Brazilian Amazon. These concerns were put forward by Greenpeace Brasil, the Bureau of Investigative Journalism, Chain Reaction Research, DNV-GL, Amnesty International, Global Witness and Nordea. JBS has disputed many, if not most, of these claims. Credit ratings agencies also signaled that they do not believe deforestation to present a significant financial impact on JBS’ business.

In JBS’ most recent 2021 self-report on cattle products to the CDP Forest criteria JBS fails to mention these reports and received a favorable ‘B’ rating. Under the current TNFD proposal, its TNFD report would likely be in a similar vein.

By contrast, if TNFD required JBS to publish a grievance list of complaints and to report on nature-related impacts (not just financial risks to business) this information would likely be captured.

TNFD does not have any mechanisms for holding businesses accountable  – there are no consequences for businesses who harm nature and people

As a reporting initiative, the process that TNFD has designed does not incorporate accountability, only reporting. Under TNFD, a business does not face consequences for failing to self-report accurately or for any harms to nature (or people) it may cause, contribute or be directly linked to, even if illegal. A business is still able to keep any profits it makes from engaging in or financing activities that harm nature or people. In its current draft, a business is not even required to report where grievances have been filed, or allegations made, regarding its due diligence or harms to nature and people. This means that other communities, companies or banks that deal with this business cannot easily identify where others may be critiquing the reliability of its reporting of its risks or impacts to nature and human rights.

In July 2022, the world’s leading group of scientists on biodiversity IPBES released a report that recommended, among other measures, that justice is a critical part of addressing harms to nature.

TNFD fails the ‘false solutions’ checklist

In November 2021, a group of NGOs put out a media statement on how to differentiate between real change and false solutions when it comes to halting the financing linked to deforestation. This outlined a checklist of basic questions. While this statement cannot claim to speak for all rights holder and civil society organizations, or other nature-related issues, it illustrates the importance of asking basic, key questions of initiatives such as TNFD.

Checklist to identify real change from false solutionsFrom: Joint NGO statement on voluntary initiatives on
deforestation, for and by financial institutions (November 2021) 
QuestionTNFD  approach
Have Indigenous Peoples or other forest communities – the true experts on saving forests –
been at the heart of designing this so-called solution and do they think it will work? 
No. 
Is respecting the human rights of forest communities and other rights-holders viewed
as essential to tackling deforestation? 
No.
Do communities know who is financing activities in their area and are financiers
transparent on what and who they finance in forest-risk sectors? 
No.
Are financial institutions prevented from keeping profits linked to deforestation? No.
Are financial institutions required to provide redress to communities and forests harmed –
including those raising concerns with them today? 
No.
Are financial institutions required to end their complicity in deforestation now? (which
means no loopholes that delay action until 2025, 2030 or 2050)  
No.
Are financial institutions accountable for their actions and do they face repercussions
for bad practices?
No.

TNFD’s lack of clear communication makes it confusing and easily misunderstood

Ultimately, anyone who cares for or depends on nature should be able to understand and engage with TNFD. Discussions about how best to shift the trillions of dollars in finance that are driving the nature crisis is not just of interest to bankers or global corporations – it is one of the critical public policy challenges of our time. No one has a greater stake in the success or failure of TNFD than frontline land and environmental defenders and the local organizations that support them. Yet TNFD is unnecessarily inaccessible to those outside the finance world. Anecdotally, NGOs have encountered fundamental misunderstandings of TNFD by academics, government officials or civil society organizations.

TNFD’s communications are confusing on two fronts. Firstly, it does not provide plain language resources that would ensure that its analysis and proposals can be understood by anyone. Initiatives such as the Follow the Money resource provide excellent examples of how financial concepts can be explained in simple terms.

Secondly, TNFD’s technical documents are unnecessarily confusing. So far, TNFD has failed to provide any concrete examples of what a TNFD report would look like. This is one of the simplest ways to present and test its recommendations. Another gap is on terminology. Key terms such as ‘materiality’ or ‘corporate group’ are not defined in its glossary. For example, TNFD lists as the third of its seven principles that it examines ‘nature-related risks’ highlighting that it will “embrace nature-related risks that include immediate, material financial risks as well as nature dependencies and impacts and related organizational and societal risks”. Reading this, some people are assuming that TNFD will require a business to report on its impacts on nature, and potentially related human rights issues. It is only by undertaking a deep analysis of TNFD’s technical analysis that it becomes apparent that this is not the case in current drafts. 

TNFD documents also frequently switch between discussing TNFD reporting requirements and a process called LEAP. TNFD documents discuss at length the various steps and assessment a business should use to identify and assess its dependencies and impacts on nature. This is leading some to think that this will appear in TNFD reporting. As outlined in the second TNFD framework, it will not. A TNFD report covers what a business believes to be a financially significant risk or opportunity to its business that may arise from its relationship with nature. Behind the scenes, in order to prepare this report a business must first privately identify its dependencies or impacts on nature, but is not required to disclose this in public reports. If a business is unsure how to do this, TNFD has developed a tool called LEAP to guide its approach. Discussing LEAP and TNFD together, or even at times referring to LEAP as TNFD LEAP creates confusion.

Timeline and Resources

Below is a summary of some key documents and events, starting with the most recent. As well as key TNFD documents it also includes documents relevant to issues put forth by NGOs and networks, particularly in the May 2022 Open Letter to TNFD.

August 2022: Thirteen civil society organizations issue a joint press release stating that the UN-backed TNFD risks being the “new frontier for corporate greenwashing on nature”[x]. It outlines deep concerns with TNFD’s June 2022 draft (Beta v0.2), which fails to incorporate recommendations raised by 28 NGOs and networks in May 2022.   

July 2022: The Co-Chair of TNFD states that in future TNFD should be made mandatory

Note: The international negotiations for a new landmark agreement on biodiversity – the global diversity framework – have already agreed language under Target 15 that outlines that business and financial institutions should “regularly monitor, assess, and fully and transparently disclose their impacts on biodiversity”. TNFD’s proposals to date do not require impact reporting. 

July 2022: A new report by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) – the leading global research body on biodiversity – stresses the role of justice in outcomes for nature and people. It also highlights the importance of diversity and accountability in decision-making. 

June 2022: The UK government publishes its Global Resource Initiative taskforce Finance Report. The multi-stakeholder taskforce was first set up in July 2019. The taskforce and supporting working groups involved individuals from finance, corporations and NGOs – including groups who set up TNFD. The report strongly recommends that the UK government pass legislation to stop UK financing linked to deforestation. It outlines why voluntary initiatives and reporting-only approaches alone are insufficient to halt the financing behind deforestation.

June 2022: TNFD publishes the second draft of its framework (Beta v0.2). It also publishes a TNFD data discussion paper and a TNFD piloting guide for businesses that are piloting its framework.

June 2022: Piloting the TNFD framework with business begins. TNFD has five separate pilot programs, each involving multiple companies testing and providing feedback on its proposal.

June 2022: Rainforest Action Network publishes an Op Ed in Euroactiv raising concerns with TNFD.

May 2022: The international Network for Greening of the Financial System of central banks and supervisors announces its 2022-2024 workplan. This will include prioritizing a task force on nature-related risks chaired by staff at Banque de France and De Nederlandsche Bank.

Analysis of national economies’ exposure to, or impacts on, nature have also been undertaken by central banks in France, the Netherlands and Malaysia

May 2022: Rainforest Action Network writes a submission to the UN Business and Human Rights working group looking at Corporate Influence in the Political and Regulatory Sphere. This presented TNFD as a case study of systemic issues regarding the undue influence of the private sector in financial sector initiatives endorsed by governments and/or in political and regulatory discussions.

May 2022: A Joint NGO Open Letter to TNFD signed by 28 NGOs and organizations raises key concerns and recommendations on the March 2022 draft. This included concerns regarding exclusion of rights holders and Global South CSOs from TNFD’s consultation process, the exclusion of human rights, the need for TNFD to explicitly require business to report on actual and potential adverse risks and impacts to nature and people, and concerns that it is setting a lower standard than existing corporate initiatives in high-risk industries. Rainforest Action Network also provides a 98-page technical submission.

May 2022: TNFD announces a partnership with IUCN to engage Indigenous Peoples and local communities.

As of early August 2022, there are no substantive details on this process and it appears a consultant has only just been recruited. Unlike the numerous formal programs to engage business, this appears to be the sole formal process targeting rights holder and civil society engagement.

May 2022: The Task Force on Inequality-related Disclosures (TIFD) launches information materials aimed at both experts and lay people. It’s FAQ explains its aims and relevance to different stakeholders, including CSOs, its twitter feed helps to explain key concepts and it is seeking help to create a genuine co-design process. By contrast, TNFD’s materials are almost impossible for non-financial experts to understand.

April 2022: The need for TNFD to focus more on outcomes for nature, not just business ‘dependencies’, is also raised by Cardano and its investor subsidiary Actiam

March 2022: A Third World Network briefing paper on the Convention on Biological Diversity (CBD) talks also references concerns (p.4) that TNFD could make finance more expensive for certain countries (later elaborated further). 

March 2022: A Network for Greening of the Financial System and INSPIRE study group final report is released. This references what it calls the ‘endogeneity of risk’– that businesses who contribute to environmental harms, may not be the most impacted from those harms. Therefore it is important to ensure analysis and research into nature and biodiversity-related risks and the financial system considers impacts not just financial materiality.

March 2022: TNFD launches the first draft of its framework, Beta v0.1. It will be further refined through three more drafts before being finalized in September 2023.

November 2021: A Joint NGO statement on voluntary initiatives on deforestation for or by financial institutions outlined 7 basic questions to help distinguish false solutions from real change. (Also Bahasa Indonesia and Portuguese).

As of July 2022, TNFD appears to meet none of these measures.

October 2021: The Kunming Declaration includes commitments to “to respect, protect and promote human rights obligations when taking actions to protect biodiversity”. This comes as part of ongoing talks on a Post-2020 global biodiversity framework.

Note: Expectations on human rights in business and/or environmental efforts are also referenced in other international commitments such as the Glasgow Leaders Declaration on Forests and Land Use, the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

October 2021: The Global Reporting Initiative publishes its revised Universal Standard that will take effect on 1 January 2023. The GRI first began in 2000, and now is a voluntary set of standards that most of the world’s largest businesses already report against. The GRI requires all businesses’ reporting under GRI (including on biodiversity) to include human rights reporting.

June 2021: The Informal Working Group to the TNFD publishes its Nature in Scope report which includes a summary of the proposed scope, governance, work plan, communication and resourcing plan of TNFD. Notably its list of who beneficiaries from TNFD’s work does not include those who most depend on nature or face the greatest risk of defending it.

May 2021: The Global Environmental Facility approves USD$1.7 million in 42-month funding to WWF-US to set up TNFD. Notably the Stakeholder Engagement Plan has little inclusion of NGOs and CSOs. In its risk assessment and mitigation it omits mention of important risks. This includes the risk of writing TNFD before a landmark new international global biodiversity framework is agreed (i.e. linked to the Convention on Biological Diversity, this aims to be the biodiversity equivalent to the Paris Agreement on climate); that TNFD may undermine existing corporate norms and expectations; or co-optation risks of a business-controlled decision making process. The documents also state that concerns regarding TNFD can be made via a WWF grievance mechanism but no mention has been made privately or publicly by TNFD to this mechanism. The gender action plan covers staffing and appointments, but has no plan for engaging women land defenders or organizations working on gender and nature issues.

Co-financing mentioned in project documents include a $400,000 grant by UNDP, as well as $100,000 in-kind. In early 2020, the European Forest Institution had also awarded a EUR 250,000 24-month tender to Global Canopy to work on TNFD. Other funders have also contributed to TNFD. They are listed here. It is not clear if this funding is contingent on any requirements of fair and equal inclusion of diverse stakeholders.

February 2021: The Dasgupta Review on the Economics of Biodiversity is published. It identifies the key role that the financial system plays in driving the biodiversity crisis. 

January 2021: A Global Witness blog, Why climate risk reporting will not stop the finance industry bankrolling deforestation, outlines key reasons why climate-risk reporting (particularly under the TCFD, finalized in 2017) has failed on deforestation. It notes that the proposed TNFD approach is replicating these mistakes.

December 2020: BankTrack issues a report examining key lessons learned of why the Banking Environment Initiative Soft Commodities Compact failed to meet ‘zero net deforestation’ over its six-year lifespan. This was one of the first joint finance and nature initiatives and several of the non-business groups involved in setting up the Compact are now involved in TNFD.

July 2020: Efforts to bring together a Taskforce on Nature-related Financial Disclosures is announced. The Informal Working Group that will set up TNFD does not include rights holders or Global South civil society organizations beyond a narrow band of environmental data experts from NGOs and UN agencies. It also involves senior staff from several companies who face serious concerns related to their own environmental and human rights outcomes. It does not develop a due process protocol (unlike EFRAG or GSSB) or co-design process (see TIFD).[viii]

January 2020: The world’s first Covid-19 lockdown begins in Wuhan, China. The global pandemic contributes to raising the alarm about the links between nature loss and the spread of zoonotic diseases. Some scientists estimate the economic costs of inaction to be 100 times greater than the costs of prevention. 

As of January 2022, the International Monetary Fund estimates that Covid-19 will cost the world economy $13.8 trillion by 2024.

What are TNFD’s governance, decision-making and feedback processes?

TNFD lists information on its structures here and consultation here. However, it can be difficult to understand the hierarchy of these various parts, which are most important or active, and where core decisions are made.

The table below gives our overview and analysis of TNFD’s governance and decision-making structures. TNFD has invested heavily in gaining business and government support, and engaging data experts to measure environmental outcomes. While TNFD does not outright exclude rights holders or NGOs, the table below details in practical terms the substantial imbalance between how TNFD includes the views of business and the view of rights holders/civil society in its core structures and broader work. This deep bias in favor of business voices explains why TNFD is reaching such different conclusions on what is needed to address harms to nature, compared to other initiatives on high-risk industries that have involved multi stakeholder processes (see here and here for examples).

TNFD’s decision-making structures also fall short of those taken by some peer financial sector initiatives (such as EFRAG, GSSB and TIFD[ix]). From its inception, TNFD was modeled off TCFD, which was set-up over half a decade ago.


TNFD governance and decision-making structures

Comparing the role of business vs. the role of rights holders, CSOs & NGOs

TNFD Beta v0.2 August 2022

 Core structuresBusinessRights holders, CSOs & NGOs
Taskforce membershipYes
All 34-members are senior
staff from financial institutions,
companies or market service providers.  
No
Completed in 2017, TCFD on climate
had a similar structure to TNFD.
However, several other reporting models
have eschewed this business-only approach.
This is outlined in the due process guidance
of EFRAG and GSSB, or TIFD’s co-design process.
Two Co-ChairsYes
One Co-Chair formally led the Refinitiv group.
Yes
One Co-Chair has extensive experience working
on science-related issues with the UN and
currently chairs the CBD negotiations.
SecretariatThe Secretariat are drawn largely from the
private sector, government or similar initiatives
working on the private sector i.e. UN or
NGO programs that work mostly with business.
Most staff are based in Europe, although they
speak diverse languages. 
Some staff have worked for data expert
NGOs, such as Global Canopy, or corporate
initiatives involving NGOs, such as by WWF.
Some staff bios list involvement with organizations
working with Indigenous Peoples and communities.
However, there is no dedicated role within the
Secretariat to ensure participation from rights
holders and CSOs.
National working groupsYes
Six national working groups have been set up
and are all finance-led.In principle, other
groups can choose to be involved.
No
There are no parallel rightsholder or
CSO-led working groups at national
or biome level. 
Stewardship CouncilYes
UNEP-FI is a partnership between UNEP and
financial sector actors and sits on the
stewardship council.
Yes
The Stewardship Council consists of the
founding partners and major funders of TNFD
and meets 3 times a year. It includes NGOs
Global Canopy and WWF, as well as
government, philanthropic, and UN funders.
Activities
ScopingYes
TNFD has scoped a narrow stream of reporting
requirements such as TCFD, GRI, SASB, etc
– including those in draft form. TNFD has
also compiled a selection of mostly
environmental datasets. It has not scoped
long-standing corporate initiatives and
multi-stakeholder initiatives for high-risk
industries (outlined in the NGO Open Letter).
Leading to concerns that it is repeating mistakes
already learned elsewhere.
No
TNFD has not scoped existing statements and
recommendations put forward publicly by rights
holders, local organizations and other civil
society groups working at the frontlines of
defending nature.  
Pilot programsYes
There are five separate pilot programs which
will each work with multiple companies to ‘test’
TNFD’s proposed framework and provide
feedback to influence the next drafts. Some
NGOs and UN agencies are providing a
supporting role in this work i.e. Global Canopy
and UNEP-FI. These started in June 2022.
No
The NGO Open Letter requested that TNFD
test its framework against real-world cases,
or cases based on real-world dynamics involving
corporate-led harms to nature and human rights.
While the TNFD June 2022 data paper includes
one detailed case study, there is no structured
program to road test TNFD using CSO expertise
on cases. 
EngagementYes
The TNFD Forum is a ‘consultation hub’.
However, to join the Forum requires groups to
sign a statement that they endorse TNFD’s
mission and agree to be publicly listed on
TNFD’s website. Groups that do not yet
understand TNFD, or are critical of it but want
to take part in consultations to make
improvements, are likely to see
these requirements as a barrier.
This helps to explain why the
Forum is dominated by business
and government members. It is
also not clear how active the Forum
is, anecdotal reports suggest
it is not highly active.
Yes
TNFD has announced a partnership with IUCN
to engage Indigenous Peoples and local
communities. However, as of early August 2022
there are no public details of what this is or who
it involves. It appears that a consultant wasn’t
even due to start on designing the process until
August 2022.  Like other stakeholders, CSOs that
choose to create a login in order to access the
TNFD documents and feedback questions online
are meant to be informed of upcoming relevant
events or information. Between March 2022 to
now (early August 2022) no information has
been provided.
Knowledge PartnersYes
As well as published documents by Knowledge
Partners on TNFD, TNFD documents themselves
frequently cross-reference the work of groups in
its Knowledge Partners and broader structures.
This includes the work of SASB, SBTN, GRI. 
Yes
Knowledge Partners include academics or NGOs,
and staff at their organization who have worked
with CSOs. However, more broadly, TNFD does
not appear to publish any research agenda, Terms
of Reference or consultation requirements for
Knowledge Partners. It’s not clear if any Knowledge
Partner output has been informed by consultation
with CSOs and rights holders (beyond the narrow
focus of the data expert NGOs closely involved
with TNFD).
Processes
Access to informationYes
TNFD’s Twitter feed, webinars, event talks and
project documents are targeted at the private
sector or those who work closely with them.
Financial sector press and media are targeted.
No
As of early August 2022, it’s not clear if TNFD
has done any public webinars aimed at rights
holders or CSOs. There are no plain language
resources to ensure that the public, lay people,
environmental defenders, government officials
or others who are non-finance experts can
understand what is proposed. TNFD has met
privately on request from some NGOs.
Feedback?
TNFD has emphasized the importance of
getting feedback from diverse geographical
regions. However, it does not list who has provided feedback,
or which stakeholders are
over-represented or
under-represented. TNFD does not have any public disclosure
of taskforce meetings, formal consultations, etc. 
?
TNFD has compiled a summary of feedback on
its first version draft and how it responded.
However, it has not presented a breakdown of
feedback from sectors – making it hard to know
how many CSOs or rights holder groups are
under-represented. The summary does acknowledge
high-level points made in the NGO Open Letter.
TimelinesCore decisions and priorities for business
have been put at the
front end of TNFD’s process. This is
clear in the creation of
core structures like the business-only
TNFD taskforce and pilot programmes.
At best, TNFD has failed to consider
that rights holder and CSO processes
typically take more time – and so
business-centered processes
and feedback have crowded out
other efforts. Or alternately,
it has prioritized pilot programs,
setting up consultation hubs, relationship
building etc – as it sees building legitimacy
with business as more important than
working with CSOs to receive input on
whether they believe that what is proposed
will actually work in the real world.
Core decisions which impact rights holders,
civil society groups and NGOs are delayed or
sidelined until later in the process. When TNFD
was set up it did not recognize those on the
frontlines of trying to save nature as key
beneficiaries. Similarly, TNFD does not state
that it opposes the inclusion of human rights.
But it is: 1) Focusing on finance-led initiatives
that do not include human rights and/or
processes which have no or few rights holders
or CSOs involved in their process; and 2) They
are delaying even having the conversation on
‘social aspects’ of TNFD until later in the process.
In this way TNFD is in fact taking a clear stance –
even if not intended – of building structures that
exclude human rights.
Data providersYes
TNFD works with private sector
companies that work on
data-related issues.
Yes
NGOs that are closely involved in TNFD are
environmental data experts. This includes
Global Canopy, WWF and CDP. However,
they do not have human rights expertise.
UN agencies that are involved do not appear
to be requiring any human rights provisions.
StakeholdersMuch of the language of TNFD
is heavily focused on attracting
business participation, feedback
and endorsement. It speaks
heavily to seeking the
involvement of ‘market
participants’.
TNFD fails to recognize that it is environmental
defenders, at-risk communities, Indigenous Peoples
and rural communities that have most to gain, or
lose, by TNFD’s approach. A funding document
includes a Stakeholder Engagement Plan with little
inclusion of CSO, NGOs or rights holders and a
gender plan which does not have any
requirements to include women’s organizations
or women environmental defenders, or a gender
analysis of TNFD’s proposal.

Upcoming key dates

23 September 2022 Feedback due on TNFD draft 2 (v0.2) 

November 2022 TNFD 3rd draft v0.3 (of 4) to be published

5-17 December 2022 Convention on Biological Diversity talks in Montreal, Canada. Critical to agreeing a new international global diversity framework

24 January 2023 Feedback due on TNFD draft 3 v0.3

February 2023 TNFD 4th draft v0.4 to be published

June 2023 Feedback due on TNFD draft 4 v0.4

September 2023 TNFD final framework to be published


[i] May Joint NGO Open Letter to TNFD: Bahasa Indonesia, Portuguese, French, Japanese, Spanish

[ii] NGO checklist of questions to distinguish between real change and false solutions: Bahasa Indonesia,  Portuguese

[iii]  Nature in Scope report:  Mandarin, French, Japanese, Portuguese, Spanish

[iv] Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) ‘Nature’s dangerous decline ‘unprecedented’ species extinction rates ‘accelerating’: French

[v] TNFD second version v0.2 Beta Framework can be accessed via an online portal, which includes options for translation.

[vi] UN Guiding Principles on Business and Human Rights: Arabic, Chinese, French, Russian, Spanish, German, Japanese, Polish, Serbian and Swahili translations can be accessed here

OECD Guidelines for Multinational Enterprises: French

[vii]  Nature in Scope report:  Mandarin, French, Japanese, Portuguese, Spanish

[viii] TIFD information page: Spanish

[ix] TIFD information page: Spanish

[x] August NGO Press Release: Bahasa Indonesia, Portuguese, French, Japanese, Spanish