What is TNFD? The importance of natural capital and nature-positive in corporate management

What is the Task Force on Nature-Related Financial Disclosures ( TNFD)?

The Taskforce on Nature-related Financial Disclosures (TNFD) is a framework for companies and Financial Institution to appropriately disclose risks and opportunities related to natural capital and biodiversity and incorporate them into investment decisions and business strategies. Like the Taskforce on Climate-related Financial Disclosures (TCFD), this is an initiative to clarify the impact of environmental factors on corporate management and ensure long-term sustainability.

While companies receive benefits from nature through their business activity, their impacts can also cause biodiversity loss. As this Issue becomes more apparent worldwide, the TNFD provides companies with a framework for evaluating natural capital and managing risks, promoting more sustainable management.

Why is TNFD important for businesses?

(1) Risk management and reputation improvement

The impact of corporate activity on the natural environment manifests itself as regulatory risk, physical risk, and reputational risk. For example, deforestation and excessive use of water resources can lead to criticism from environmental groups and damage to brand value. By utilizing the TNFD framework and appropriately disclosing environmental risks, companies can maintain and increase the trust of investors and consumers.

(2) Regulatory response and investor demands

As the EU and national governments strengthen regulations that emphasize biodiversity conservation, information disclosure in line with the TNFD is important for companies to comply with the regulations. In addition, as ESG (environmental, social, and governance) investment expands, investors are evaluating companies' environmental risks more strictly. Complying with the TNFD can enhance competitiveness in the capital market.

(3) Improving supply chain transparency

Many companies are being forced to consider not only their own direct environmental impacts, but also the impacts across their entire supply chains. In particular, the agricultural, Manufacturing and Energy industries are being forced to strengthen collaboration with suppliers to ensure sustainable procurement, as the raw materials procurement process has a significant impact on biodiversity and natural capital.

What is Nature Positive?

"Nature Positive" is attracting worldwide attention as an important concept alongside the TNFD. This is a concept that aims to prevent the loss of biodiversity and restore and strengthen the natural environment. The Kunming-Montreal Biodiversity Framework (GBF), adopted at Biodiversity COP15 in 2022, aims to achieve nature positive by 2030.
For companies, nature-positive initiatives are not just a social responsibility, but also contribute to improving their long-term competitiveness. Specific measures that can be considered include the following:

Regenerative Agriculture
Improve soil health, sequestrate carbon and restore biodiversity.

Utilizing biodiversity credits
Invest in forest conservation activity to offset environmental impacts.

Corporate Strategy for TNFD
Integrating financial information and natural capital data to develop sustainable growth strategies.

How should companies use and conserve natural capital?

(1) Introduce natural capital accounting

By incorporating the value of forests, water resources, and ecosystem Service into financial indicators, companies can easily grasp their environmental impact quantitatively. By utilizing the TNFD framework, companies can incorporate natural capital elements into their management decisions.

(2) Combine with GHG emission amount calculations

Accounting for GHG emission amount is important for companies to accurately grasp their GHG emission amount and Settings reduction targets. By using indicators that correspond to the TNFD, companies can develop sustainability strategies that take into account both natural capital and climate change measures.

(3) Visualize the environmental impacts of the entire supply chain

Evaluating the environmental impact of your suppliers and building a sustainable supply chain can help increase your company's long-term value. For example, promoting the use of sustainable wood and renewable resources can reduce environmental risks.

summary

The TNFD is an important framework for companies to manage natural capital risks and opportunities and achieve sustainable management. As biodiversity loss becomes more serious, adopting a nature-positive approach is key to strengthening a company's competitiveness and facilitating regulatory compliance.

Zeroboard utilizes its expertise in calculating GHG emission amount to provide solutions that support the environmental management of companies in accordance with the TNFD.We will continue to contribute as a partner to accelerating corporate efforts towards a sustainable future.
Zeroboard Research Institute, a think tank for Zeroboard , has established the Natural Capital Study Group as a platform for learning, researching, and acting together with the aim of conserving and sustainable use of natural capital..
We are continuing activity together with participating companies, such as considering TNFD disclosure methods that are appropriate for each company.
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<Source>

Ministry of Foreign Affairs of Japan - overview of the results of the second part of the 15 Conference of the Parties to the Convention on Biological Diversity

https://www.mofa.go.jp/mofaj/ic/ge/page22_003988.html