You may never have heard of TNFD, but it risks being the next frontier in corporate greenwashing on nature. Though it was only launched in 2021, and remains little known in most circles, the Taskforce on Nature-related Financial Disclosures (TNFD), has become an influential global entity, whose processes are becoming a source of concern for many climate and environmental advocates.
The TNFD is headed by a taskforce of 34 senior executives from global corporations including several with problematic environmental records – such as BlackRock, Bank of America and HSBC. While the TNFD is led by business, it is endorsed by various actors on the international stage, including U.N. agencies and the G7. A new analysis and resource webpage by the Forests & Finance coalition takes a deep dive into what TNFD is and why NGOs are raising serious concerns about its work. Coalition members include Rainforest Action Network, TuK Indonesia, Profundo, Reporter Brasil, Amazon Watch, BankTrack, Sahabat Alam Malaysia – Friends of the earth Malaysia and Friends of the Earth US.
TNFD is developing a framework that outlines what information a company or financial institution should self-report regarding how its relationship with nature and biodiversity has, or will, impact its business. TNFD’s proposed framework will only require businesses to self-report on financial risks and opportunities for the business itself – in this case, those that may arise from its relationship with nature in the short, medium or long-term. Counter-intuitively, it does not require a business to also report on its actual or potential adverse risks and impacts on nature unless it affects profitability. It has no requirement to report risks or harms to environmental defenders or other human rights abuses. This raises the question – if businesses aren’t even required to disclose the environmental harms their operations cause, why would they do anything to stop them?
The 23rd of September is the last day for feedback on TNFD’s second draft, which is likely to see many groups once again raising concerns that its current approach will simply open up a new frontier in corporate greenwashing and businesses linked to environmental harms endorsing its approach. How TNFD responds will be critical as it will release its next draft just ahead of international talks for a global biodiversity framework in Montreal at the end of 2022.
TNFD is a voluntary initiative but it will likely serve as a blueprint from which governments will draw in writing future business regulations. Global corporations writing the rules of future business regulations is an extremely concerning precedent and NGOs have raised serious concerns that UN agencies are backing this process.
If TNFD enables greenwashing, an increasingly voiced concern in civil society, this will detract from the real solutions needed to curb the trillions of dollars in financing that are driving the nature and biodiversity crisis and the human rights abuses that often underpin it. It will also make it virtually impossible for the world to halt and reverse biodiversity loss by 2030. TNFD launched the first draft of its framework in March 2022 and the second in June 2022. Two more drafts will come out in November 2022 and February 2023, before the final version in September 2023. The next six months will be a critical time in determining the direction of TNFD. It also comes at a critical time in international talks to try to secure an international agreement on biodiversity action (the global biodiversity framework is often described as the biodiversity equivalent to the Paris Climate Agreement).
Basics for understanding the TNFD:
- Launched in June 2021, the Taskforce on Nature-related Financial Disclosures (TNFD) is headed by 34 senior corporate executives from global corporations.
- The TNFD is a voluntary initiative led by business but endorsed by various actors on the international stage. It was set up to develop a framework that outlines what information a company or financial institution should self-report regarding how its relationship with nature has, or will, impact its business. This may include how it is preparing for changes in the short, medium, or long term.
- TNFD emerges at a point in time when the global community is increasingly aware of the trillions of dollars that are underpinning companies or projects that are driving the nature crisis.
- TNFD launched the first draft of its framework in March 2022, the second in June 2022. Feedback on draft 2 is due by 23 September. The third and fourth drafts are anticipated in November 2022 and February 2023, and the final version is expected in September 2023.
- The core decisions of TNFD are made up of its taskforce of staff who work for global corporations. However, it was set up by World Wildlife Fund (WWF), Global Canopy, the UN Development Programme (UNDP) and the UN Environment Programme Finance Initiative (UNEP-FI).
- TNFD borrows its name from a similar initiative on climate – the Task Force on Climate-related Financial Disclosures. This was launched over half a decade ago by the Financial Stability Board soon after the Paris Agreement. Various countries are working to make TCFD-style disclosures mandatory. However, evidence already shows that the TCFD model that only focuses on financial risk to businesses has largely failed to redirect finance away from harmful practices, and certainly not at sufficient scale or speed to address the climate crisis. TNFD has failed to learn many of these lessons.
- TNFD is a reporting initiative. It is therefore not a mechanism that looks at accountability for business harms to nature, legal violations or redress.
- Currently, international negotiations are underway as part of the Convention for Biological Diversity to set the path for global action on biodiversity. The draft Post-2020 Global Biodiversity Framework aims to halt and reverse biodiversity loss by 2030 and restore ecosystems by 2050. The Post-2020 Global Biodiversity Framework is often described as the equivalent on biodiversity, as the Paris Agreement is for climate. A key point in negotiations will be the December 2022 CBD meeting in Montreal, Canada. TNFD is being written largely before this framework is agreed.
Key concerns by CSOs:
Many of the key concerns raised by several civil society groups relate to TNFD’s failure to be evidence-led and adopt lessons learned about what can change corporate behavior.
- Corporations are writing their own rules – they must not write public policy
Those involved with TNFD are already calling for it to be made mandatory in future. Putting global corporations in charge of writing their own rules is a dangerous precedent for public policy.
- Undermines international human rights laws
TNFD, a UN-backed initiative, ignores international human rights law. This undermines the very legal frameworks which have the capacity to make harms to nature and people legal risks, and then potentially financial risks to business. Rights-based approaches are critical to protect and empower Indigenous Peoples, local communities, women, youth and others working to protect nature.
- Fails to consider the businesses’ impacts to nature or people
TNFD only focuses on financial risk or opportunities that arise from business’ relationship to nature – meaning that unless harming nature affects a company’s profitability it is not relevant, and goes unreported. It is clear that in many cases harming nature presents no real financial risk to businesses meaning that TNFD will simply reiterate the status quo. This is a major red flag for greenwashing – giving the impression that its work aims to stem businesses’ role in the nature crisis when its mandate is only to focus on threats to business profitability, not to nature or the people who protect it.
- Flies in the face of evidence for changing business-as-usual
TNFD claims to be ‘science-based’ in how it considers metrics for measuring biodiversity. But it is not ‘evidence led’ – in that it has failed to heed many lessons learned over what types of requirements encourage change to business practices, and which don’t. For example, TNFD currently doesn’t require a business to report if it has received complaints about its environmental and human rights practices.
- TNFD’s processes are untransparent
Submissions and survey responses to TNFD are not made public, nor are summaries of TNFD taskforce meetings. TNFD has set up a range of consultation groups but the individual members taking part in these groups are not disclosed. This means there is no capacity to independently review who is involved, what concerns are being raised and if TNFD is ignoring or acting on them.
- Hijacks the conversation about justice & corporate accountability
TNFD is far removed from the solutions that the victims of corporate-led nature harms and others on the frontlines of the nature crisis have been calling for. This emphasizes the importance of justice, accountability and redress for communities – as well as ensuring communities themselves decide the future they want for their local area. One concern about TNFD is that it is hijacking a broader conversation about how to shift corporate practices. Delays meaningful action to address the climate & nature crises.
- September 23, 2022 – Last day for feedback to TNFD draft 2
- November 2022 – Next TNFD draft due out
- December 5 – 17, 2022 – Convention on Biological Diversity COP discussions
- January 24, 2023 – Last day for feedback on TNFD draft 3.
- February 2023 – TNFD draft 4 due out.
- June 2023 – Feedback due on TNFD draft 4
- September 2023 – Final TNFD due