What does TNFD mean for investors? 

Nature and biodiversity are increasingly recognised as a prominent investment theme and underpinning this is the work that The Taskforce on Nature-related Financial Disclosures (TNFD) are doing, with TNFD’s much anticipated final guidance published in September 2023. This briefing note provides an overview of the TNFD guidance and the initial priority steps investors might take in working towards nature disclosures.

Whilst the recommended disclosures put forward by the TNFD are new and market consensus on how to effectively report on nature both from a corporate and investor perspective are still emerging, investor experiences with climate disclosures could lead to rapid progress with nature disclosure frameworks. The nature-reporting architecture has been designed to fit into existing sustainability frameworks, for example alongside the TCFD and ISSB and certain G20 governments such as the UK have expressed in interest in bringing TNFD reporting into statutory financial disclosures, which are all likely to be strong tailwinds for nature reporting.

Companies and investors have been highly engaged with the TNFD, and membership on the TNFD Forum has grown to over 1,300 since its inception just over two years ago. Appetite for adoption of the TNFD’s disclosures also has been high and in a recent survey of TNFD Forum members, 86% of respondents were planning to produce TNFD-aligned nature disclosures by 2026 or earlier.

Mercer is actively involved in researching the investment implications of nature and biodiversity and our Nature Alert paper sets out some of our latest thinking on the topic. Mercer also sits on the TNFD forum and has inputted into TNFD’s guidance having submitted a pilot test, where we conducted a nature-focused risk assessment on an investment portfolio, earlier this year.  

Knowing where to prioritise in this fast-moving space is important, so if you would like to discuss with a Mercer consultant for a training session on nature and to help you develop a roadmap for nature, please get in touch.