The Taskforce on Nature-related Financial Disclosures (TNFD) has unveiled its latest set of sector guidance designed to help companies globally assess, manage, and disclose nature-related risks and opportunities. Released on 23 January 2025 in London, this new tranche of guidance builds on previous initiatives and now covers 13 sectors.
In addition, the TNFD has published draft guidance for three more sectors, which are open for consultation until 4 April 2025. This article explores what the new guidance means for companies, investors, and the broader sustainability reporting landscape.
The TNFD’s work reflects a growing understanding that a broad spectrum of nature-related risks—from biodiversity loss to ecosystem degradation—can significantly impact a company’s financial performance. With over 1,600 organizations supporting its efforts and more than 500 organizations already integrating its recommendations, the TNFD is at the forefront of shifting global capital away from nature-negative outcomes toward nature-positive investments.
This latest release is a major milestone in that journey. It follows the draft guidance issued in June 2024, which incorporated extensive feedback and consultation with market participants. The refined, final guidance now covers key sectors including Apparel, Textiles & Footwear; Beverages; Construction Materials; and Engineering, Construction & Real Estate. By tailoring recommendations to the unique challenges and opportunities within each sector, the TNFD is helping companies produce robust, actionable disclosures that enhance transparency and accountability.
One of the defining features of the new TNFD guidance is its sector-specific approach. Recognizing that each industry faces its own set of environmental challenges, the TNFD has developed targeted recommendations that address the nuances of different sectors. For example:
Apparel, Textiles & Footwear: Companies in this sector often deal with complex supply chains, high resource consumption, and significant waste management challenges. The guidance offers metrics to help assess water usage, chemical management, and overall environmental impact across the supply chain.
Beverages: Given the sector’s reliance on water resources and its potential impact on local ecosystems, the guidance focuses on sustainable water management practices and resource efficiency measures that are essential for long-term viability.
Construction Materials: This sector’s activities often involve raw material extraction and processing, which can disrupt natural habitats. The guidance provides a framework for evaluating sourcing practices, implementing mitigation measures, and ensuring that companies minimize their environmental footprint.
Engineering, Construction & Real Estate: As key players in shaping the built environment, companies in this sector face significant challenges regarding land use and ecosystem disruption. The TNFD guidance offers insights into integrating nature-related risk assessments into project planning and strategic decision-making.
In addition to these final guidance documents, the TNFD has published draft guidance for three additional sectors - Fishing; Marine Transportation & Cruise Lines; and Water Utilities & Services. Feedback on these drafts will be collected until 4 April 2025, with final guidance expected in June 2025. This consultative process ensures that the guidance remains responsive to industry needs and practical for a wide range of companies.
At the heart of the TNFD’s framework is the LEAP assessment approach, an innovative methodology designed to guide companies through the complex process of identifying and managing nature-related risks. LEAP stands for Look, Evaluate, Assess, and Prepare, and it offers a structured roadmap for companies to follow:
Locate: Companies begin by examining their operations and supply chains to identify potential nature-related risks. This initial step is about understanding where environmental impacts occur, whether directly through resource extraction or indirectly via supply chain processes.
Evaluate: Once potential risks are identified, companies evaluate their significance. This involves a detailed analysis of how these risks affect ecosystems, biodiversity, and, ultimately, financial performance.
Assess: Companies then assess their current practices against the TNFD’s recommendations. This step is crucial for pinpointing gaps in reporting and risk management and for identifying opportunities for improvement.
Prepare: Finally, companies prepare detailed, decision-useful information that aligns with the TNFD framework. This phase includes defining materiality, setting reliable metrics and targets, and ensuring that disclosures are both comprehensive and accessible to investors.
By following the LEAP approach, organizations can integrate nature-related considerations into their strategic planning and risk management processes. This structured methodology not only improves the quality of sustainability reporting but also enhances a company’s overall resilience and competitiveness.
The release of this new guidance brings several tangible benefits:
Enhanced Risk Management: Tailored metrics and sector-specific insights help companies identify and mitigate environmental risks effectively. This leads to improved operational practices and a reduced environmental footprint.
Improved Transparency: Clear reporting frameworks enable companies to communicate their nature-related risks and opportunities in a way that is understandable to investors and regulators, bolstering trust and credibility.
Competitive Advantage: Organizations that proactively adopt robust sustainability reporting practices can distinguish themselves in the market. Enhanced transparency and accountability are increasingly becoming key criteria for attracting investment and fostering long-term growth.
Reliable Data: Standardized, comparable disclosures provide investors with the data they need to assess a company’s exposure to nature-related risks accurately.
Informed Decision Making: With detailed, sector-specific disclosures, investors can make better-informed decisions about the long-term sustainability of their portfolios.
Alignment with Global Trends: As the world moves toward a nature-positive future, investors increasingly favor companies that demonstrate strong environmental stewardship. The TNFD’s guidance helps ensure that companies are prepared to meet these evolving expectations.
Implementing comprehensive nature-related disclosures is not without its challenges. Companies may encounter data gaps, limited internal expertise, or difficulties integrating new reporting frameworks into existing systems. However, these challenges also present significant opportunities for internal improvements, innovation, and operational efficiency.
Investing in robust data collection and risk assessment processes enhances the quality of disclosures but also contributes to better overall decision-making. Moreover, as companies adopt these practices, they position themselves to reap long-term benefits such as improved stakeholder trust, enhanced market reputation, and greater resilience in the face of environmental uncertainties.
The TNFD’s guidance is a strategic asset. By turning environmental challenges into opportunities for growth and innovation, companies can drive meaningful change within their industries and contribute to a more sustainable global economy.
To review the full sector guidance and participate in the consultation process for the draft sectors (Fishing; Marine Transportation & Cruise Lines; and Water Utilities & Services), please visit the TNFD website at: Access TNFD Guidance
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