The Taskforce on Nature-related Financial Disclosures (TNFD) is a voluntary framework enabling organizations to identify, assess, and disclose dependencies and impacts on natural capital. Launched in 2023, TNFD complements climate-focused reporting and addresses biodiversity, water, soil, and ecosystem services material to financial performance.
The Taskforce on Nature-related Financial Disclosures (TNFD) is a voluntary framework for organizations to identify, assess, and disclose their dependencies and impacts on natural capital. Released in September 2023, it provides institutional investors with structured guidance to measure financial exposure to ecosystem degradation, biodiversity loss, water scarcity, and soil depletion. Unlike climate-focused frameworks, TNFD addresses the full spectrum of natural systems material to long-term asset performance.
The initiative emerged from a critical gap in financial risk assessment. While climate disclosure through TCFD has become standard practice, biodiversity and ecosystem risks remained largely unmeasured despite their systemic importance to global supply chains and asset valuations. The United Nations Environment Programme Finance Initiative convened the taskforce in 2021, engaging central banks, asset managers, pension funds, and policy institutions to develop disclosure recommendations aligned with the Kunming-Montreal Global Biodiversity Framework.
What problem does TNFD solve for asset owners?
Institutional investors—pension funds, endowments, sovereign wealth funds—face exposure to nature-related financial risks across their holdings. Agricultural commodities depend on soil health and water availability. Real estate valuations reflect ecosystem services and biodiversity-linked regulatory frameworks. Supply chains across manufacturing and consumer sectors are vulnerable to disruptions from water stress, deforestation, and pollinator decline. Yet most institutional portfolios lacked standardized methods to quantify or mitigate these exposures.
TNFD provides a common language. It enables asset owners to ask: Which portfolio companies depend on freshwater systems? Which have significant land footprints in biodiversity hotspots? Which face regulatory transition risk from emerging nature-positive legislation? CalPERS, the California Public Employees' Retirement System, with $440 billion in assets under management, has signaled alignment with TNFD disclosures as part of its long-term risk management. Norges Bank Investment Management, managing Norway's Government Pension Fund Global at $1.3 trillion, has similarly committed to nature-related disclosure expectations for portfolio companies.
How is TNFD structured?
The framework follows a four-pillar architecture: Governance, Strategy, Risk Management, and Metrics & Targets. Each pillar includes specific disclosure recommendations designed to embed nature considerations into investment governance and decision-making processes.
Governance requires disclosure of board-level and management accountability for nature-related risks. Asset owners must articulate how nature considerations inform fiduciary duties and investment committee oversight. This reflects the principle of fiduciary capitalism, wherein institutional investors recognize that material environmental dependencies are inseparable from financial returns.
Strategy mandates analysis of how business model resilience depends on natural capital. Organizations should conduct scenario analysis examining outcomes under different biodiversity and ecosystem states—analogous to TCFD climate scenarios. A portfolio company in consumer goods, for instance, would assess supply chain vulnerability to agricultural biodiversity loss across different geographies and time horizons.
Risk Management requires identification and quantification of nature dependencies and impacts. This includes mapping exposure to water-stressed regions, assessing land-use footprints, evaluating pollutant release to ecosystems, and quantifying ecosystem service dependencies. Risk assessment should integrate both financial materiality (risks to the organization) and impact materiality (organization's effect on nature).
Metrics & Targets calls for quantitative disclosure of nature-related key performance indicators and science-based targets. Organizations should report progress toward outcomes aligned with conservation science—for instance, halting biodiversity loss or achieving net-positive impact. This may include adoption of standards such as the Science Based Targets Network (SBTN) or the Corporate Biodiversity Footprint framework.
What is the relationship between TNFD and other disclosure standards?
TNFD is designed to be complementary to existing frameworks. It does not replace TCFD or ESG reporting; rather, it addresses the natural capital dimension largely absent from climate-focused disclosure. The framework aligns with the GRI (Global Reporting Initiative) Standards, the Integrated Reporting Framework, and SEC guidance on climate risk, creating a layered ecosystem of disclosure expectations.
Institutionally, TNFD adoption is advancing through active ownership channels. Asset owners use TNFD recommendations in engagement with portfolio companies, requiring disclosure of nature dependencies in annual investor questionnaires and stewardship dialogue. This reflects the broader mandate of stewardship in investing, where long-term capital allocators use their influence to embed material risk management practices.
The Dutch pension fund ABP, with approximately $540 billion in assets, has integrated TNFD expectations into its stewardship framework, requesting that portfolio companies disclose nature-related governance and scenario analysis. Similarly, Canada's Ontario Teachers' Pension Plan has committed to nature-aligned portfolio assessment as part of long-term risk monitoring.
Who should be prepared for TNFD?
TNFD disclosure expectations are cascading through institutional investment chains. Pension funds and endowments are the primary adopters, but asset managers increasingly face investor requests for nature-aligned metrics. Private equity firms, infrastructure investors, and real asset managers will face material pressure to demonstrate nature risk management, particularly in agriculture, forestry, real estate, and resource extraction.
Regulatory momentum is accelerating adoption. The EU's Corporate Sustainability Reporting Directive now includes mandatory nature-related disclosure for large companies and institutional investors. The SEC and other jurisdictions are examining whether nature risk should be integrated into climate disclosure requirements. This suggests TNFD—or a closely aligned standard—will transition from voluntary framework to expected governance practice within a 5-10 year horizon.
Implications for long-term allocators
For institutional investors with fiduciary obligations spanning decades, TNFD addresses a fundamental gap in risk assessment. A fiduciary standard requires that investment decisions account for material factors affecting returns. Biodiversity loss, water scarcity, and ecosystem service degradation are no longer peripheral to portfolio risk—they directly affect credit quality, operational resilience, and asset valuations.
The framework enables CIOs and investment committees to integrate nature risk into asset allocation. Funds can stress-test portfolios against biodiversity scenarios, identify concentration risk in water-stressed geographies, and assess transition costs for holdings dependent on unsustainable land use. This is particularly acute for pension funds with domestic agricultural exposure or real estate allocations in ecologically sensitive regions.
TNFD adoption also positions institutional investors ahead of regulatory and market repricing. Organizations that establish nature-related governance and disclosure practices now will be better positioned when nature-based transition costs accelerate. The framework provides the analytical architecture to move from awareness to quantified, actionable risk management—a prerequisite for long-term capital stewardship.