Pilot test shows TNFD requires further guidance
April 13, 2023
Taskforce on Nature-related Financial Disclosures (TNFD) requires further guidance, according to results from pilot testing of the beta framework.
The UNEP FI-led pilot found that the current version of the framework lacks sufficient guidance to allow businesses to conduct robust reports on nature-related disclosures.
Amundi, Barclays, and HSBC were among the 130 organisations to participate in the pilot testing of the latest TNFD beta framework, which was released in November.
The framework aims to encourage financial institutions to disclosure their impact on nature and address nature-related risks.
However, the pilot testing found that institutions which lack experience with climate risks assessments require more resource allocation to accurately measure their impact on nature.
The pilot’s report stated: “Further guidance is needed to refine the process and accelerate action, especially for those starting their nature journey.”
Assessments of multi-asset portfolio or specific asset categories, such as non-listed equities require more guidance, according to the pilot.
The report also highlighted data and metrics, nature scenarios, supply chain traceability, and risk valuation as current gaps in the framework.
Additional guidance on how to assess the impact on nature from multiple financial products is needed as well, as previous pilots focused on analysing the impact of a single product.
The report added: “The sheer variety and complexity of financial products offered by banks, asset management firms, and insurance providers requires a need for comparability between financial products.”
Many financial institutions, especially banks, noted that they must improve their internal IT systems to sustain robust-nature related assessments.
In particular, biodiversity assessments will require more processing power due to a need to process maps and location images.
UNEP FI, one of the founding partners of the TFND, noted that feedback is now being integrated into the final set of recommendations.
The final publication of the TFND framework is expected to be released in September 2023.
Last Updated: 13 April 2023