By Harvey Spencer

We have previously covered the Taskforce on Nature-Related Financial Disclosures (TNFD’s) disclosure recommendations and guidance, which aimed to increase focus by businesses and investors on biodiversity issues and transparency around exposure to key risks and opportunities.

As a reminder, TNFD is a market-led, science-based and government-backed initiative providing organisations with the tools to act on evolving nature-related issues. The recommendations centred around four pillars, consistent with the four pillars of the Taskforce on Climate-Related Financial Disclosures.

Increase in adoption of TNFD reporting recommendations

The TNFD initiative has recently revealed that the number of organisations who are adopting TNCD’s reporting recommendations has risen by 30% since the start of 2024 with new participants including Legal & General Investment Management and MUFG Asset Management. With the addition of these 96 new organisations who are adopting the recommendations, that means there are now an impressive 416 companies committed to disclosing on the TNFD recommended basis. 114 financial institutions are registered as adopters of TNFD representing USD 15.9trn in assets under management. 

David Craig, Co-Chair of the TNFD, said:

“The ongoing uptake of the TNFD’s recommendations is further evidence that the mindset in business and finance is quickly shifting to a recognition that accelerating nature loss is imposing costs and risks on society as a whole as well as to individual business models and capital portfolios.”

Additional guidance published by TNFD

In a timely move amongst the impressive update in adopters, TNFD took the opportunity to publish its first set of Additional Sector Guidance and Additional Guidance for Financial Institutions, following an “18-month process of iterative development”.

The Additional Sector Guidance includes recommended sector-specific metrics for disclosure in line with the previously published TNFD disclosure recommendations. Additional Guidance on consideration of nature-related issues across value chains was also released.

You can read more about the TNFD on their website: The Taskforce on Nature-related Financial Disclosures (tnfd.global).

Comments

It is hugely encouraging to see this significant increase in the number of organisations adopting TNFD’s reporting recommendations, in what is a relatively short period of time. Particularly given the size and assets under management of some of the organisations that have now adopted the requirements (the PLCs that have signed up represent more than 6trillion US dollars in market capitalisation).

The new government had said in its manifesto that the pensions industry, financial institutions and select FTSE 100 companies would be key players in improving “security in retirement” and facilitating the government mobilising large sums of money to address climate change. It also suggested that pension funds and other UK regulated financial institutions would be required to develop and implement “credible transition plans” to help prevent global temperatures rising above the 1.5 degrees Celsius limit noted within the Paris Agreement (see our blog on that here).

So this positive TNFD adoption development dovetails in with what is likely to be a focus for the new government (although its manifesto commitments are yet to be specifically addressed by the new Labour Government).

If this article is of interest to you, then please do get in touch with your usual Burges Salmon pensions contact, or Kate Granville Smith, Director in our pensions team who leads our ESG offering. We are well placed to advise on all aspects of ESG in relation to pension schemes. Indeed, in order to ensure Trustees and sponsoring employers have a full understanding of Environmental, Social and Governance (“ESG”) requirements for pension schemes, we have launched the Pension Schemes ESG Tool, which can be accessed here.