TNFD, ESRS release joint guidelines on corporate reporting

Published 13:11 on June 20, 2024  /  Last updated at 13:11 on June 20, 2024  / Sergio Colombo /  Biodiversity, EMEA, International

The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Sustainability Reporting Standards (ESRS) released Thursday joint guidelines to support companies in their nature-related disclosures, highlighting the alignment between the two frameworks.

The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Sustainability Reporting Standards (ESRS) released Thursday joint guidelines to support companies in their nature-related disclosures, highlighting the alignment between the two frameworks.

TNFD and the European Financial Reporting Advisory Group (EFRAG), the independent advisory body that oversees ESRS, assessed disclosures and core metrics under both standards.

The analysis showed that all 14 disclosures recommended by the TNFD are reflected in the ESRS, according to the report.

“Today’s release of the correspondence mapping between the ESRS and the TNFD recommendations marks a significant milestone in advancing nature-related transparency in corporate reporting,” said Patrick de Cambourg, chair of EFRAG.

“The high level of commonality achieved between the ESRS and TNFD’s disclosures underscores our shared commitment to fostering sustainable development and providing robust data for stakeholders.”

The initiative aims to help understand the commonalities between the two frameworks, as pressure has mounted on companies in recent months to assess and disclose their risks and dependencies on nature.

FOUR PILLARS

Besides aligning on disclosures and core metrics, the standards have a strong focus on “double materiality”, whereby firms must make an assessment to identify both how its operations impact people and the environment, and how sustainability-related developments impact the organisation, the report said.

Furthermore, the report said both the TNFD recommended disclosures and the ESRS reporting areas are organised around the four disclosure pillars of the Task Force on Climate-related Financial Disclosures (TCFD) – governance, strategy, risk management, and metrics and targets.

The ESRS, which will be used by companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD), also suggests adopting the TNFD’s LEAP approach, which provides structured guidance on how to identify, manage, and disclose nature-related issues across four phases – locate, evaluate, assess, and prepare.

“As market participants from over 45 countries have started to assess and report on their nature-related issues aligned with our recommendations, many have asked us for further guidance to ensure their reporting complies with their mandatory CSRD requirements,” said Tony Goldner, executive director of TNFD.

“The assessment released today provides that additional clarity to market participants.”

Alignment of biodiversity disclosures is becoming increasingly important as it affects comparability of biodiversity data, with actors saying more alignment means greater transparency.

A report published by the EU Business & Biodiversity (B&B) Platform recently flagged the differences between the most prominent biodiversity disclosure initiatives, including TNFD and ESRS.

In April, TNFD and the Global Reporting Initiative (GRI) announced they would publish a document mapping out their interoperability with details on their alignment.

By Sergio Colombo – sergio@carbon-pulse.com

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