KPMG welcomes Taskforce on Nature-related Financial Disclosures Beta Framework release

The Taskforce on Nature-related Financial Disclosures (TNFD) overnight released its first beta version of a nature-related risk management and disclosure framework. Significantly the framework aims to accelerate the conversation on the relationship between business and nature.

KPMG Australia welcomed the beta framework and the critical role the TNFD is expected to play in shaping a 'nature positive' future. Carolin Leeshaa, the Australian-based Natural Capital & Biodiversity Global Lead at KPMG is one of 34 global Taskforce Members, and also one of only three Australian members. Ms Leeshaa is representing KPMG on the taskforce.

"The release of the TNFD beta framework overnight is a significant milestone in the global ESG reporting agenda," said Ms Leeshaa. "It kicks off an 18-month dialogue and market consultations with a range of key stakeholders including business, investors, financial institutions, asset managers, and regulators. The hope is now for business and finance to trial and test the beta framework, provide feedback, contribute to its development, and help it flourish."

Ms Leeshaa emphasised that in the context of climate change risk it was vital to accelerate the conversation on how nature can be factored into business and investment decision and disclosed effectively.

"We tend to think of nature as free - but it's not," she said. "There are significant financial risk implications amongst others if we don't invest in protecting nature. If the world is to meet net zero targets, a step-change is needed to embed nature into business and financial decision-making, not least because nature loss and climate change are two sides of the same coin."

The TNFD materials released are designed to help market participants identify how they are exposed and get ready to start reporting on their exposure to nature-related risks in their value chains and lending, investment, and underwriting portfolios.

Ms Leeshaa noted: "KPMG is committed to helping accelerate the transformation of capital markets to a sustainable future and has been on the journey of the TNFD from very beginning. The TNFD is an important global initiative to harness the role of finance more effectively. It aims to meaningfully incorporate the value of nature into a systemic, market-led framework to support a nature-positive economy. We look forward to continuing our support for the journey ahead."

Marking the global release, the TNFD itself highlighted this important step by the market to tackle the risk of nature-loss to the global economy and reduce the impact on nature.

It noted that with half of the world's GDP moderately or highly dependent on nature and its services, financial institutions and businesses can no longer afford to overlook nature in strategy, risk management and capital allocation decision making. Dependencies and impacts on nature are posing risks to businesses, investors, and lenders, but are also opening new business opportunities to contribute to nature-positive outcomes.

The beta release is the first integrated approach to incorporating nature-related risk and opportunity analysis into the heart of corporate and financial decision making. The prototype framework marks the beginning of an 18-month process of consultation and development together with a broad range of market players and stakeholders. By following an open innovation approach, TNFD hopes to accelerate the framework's development and steadily improve its relevance, usability, and effectiveness before releasing its recommendations in the 3rd quarter of 2023.

This first beta version of the TNFD framework comprises three components:

• Foundational guidance, including key science-based concepts and definitions, to help a wide range of market participants understand nature, and nature-related risks and opportunities;
• Disclosure recommendations aligned with the approach and language of the climate-related guidance developed by The Task Force on Climate-related Financial Disclosures (TCFD); and
• Practical guidance on nature-related risk and opportunity analysis for companies and financial institutions to consider incorporating into their enterprise risk and portfolio management processes.

According to the TNFD, a further three iterations of the beta versions are planned for release in June 2022 (v0.2), October 2022 (v0.3) and February 2023 (v0.4). This will culminate in the final release of the TNFD's recommendations (v1.0) planned for September 2023.

Visit the interactive online platform for the first beta version of the TNFD framework.

The Taskforce on Nature-related Financial Disclosures (TNFD) has been established to develop and deliver an integrated risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim to support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.

34 Taskforce Members with assets of over US$18.3 trillion are working with the TNFD Co-Chairs to develop the TNFD framework. 13 core knowledge partners from leading science, standards, and data bodies feed into the work of the Taskforce. A group of over 300 institutions support the work of the Taskforce as part of the TNFD Forum.

The TNFD will deliver its framework in 2023, enabling organisations to report and act on evolving nature-related risks. Better information will allow financial institutions and companies to incorporate nature-related risks and opportunities into their decision-making processes.

The TNFD initiative was brought together by four founding partners, Global Canopy, UNDP, UNEP FI, and WWF in September2020. After a preparatory phase of nine months, it officially launched in June 2021. The TNFD is funded through the support of the UK, Australian, Swiss and Dutch Government, the UNDP, Global Environment Facility (GEF) and the Children's Investment Foundation Fund (CIFF).