State of Nature-Related Disclosures: Assessing TNFD alignment of nature-related disclosures by firms in high-risk sectors

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Background

Publication of the State of Nature-related Disclosures report continues the nature and biodiversity research series, which was initiated in December 2023 with the ‘Why Nature’ video highlighting the dependency of industry and the economy on natural capital. 

This report builds on the themes of the ‘Why Nature’ video to explore what is presently being disclosed, measured and assessed by companies, highlighting good practices and identifying gaps and challenges in order to provide investors with useful information that can be used in company engagement. The report analyses disclosure of 16 companies, two from each of the TNFD priority sectors, selected based on high environmental performance and/or ratings according to existing benchmarks or providers and geographic location by head office.

Key takeaways

  • Our assessment of the state of nature-related disclosures reveals that firms assessed from most sectors are well on the way to aligning their disclosure with the TNFD framework, with over half of the firms in our sample disclosing information relevant to all 14 Core Recommendations, and all 16 firms having set relevant nature-related targets. 
  • There are gaps between material drivers of nature loss and indicators disclosed: the most pressing nature-related issues faced by the assessed firms include land use change, exploitation of raw materials, and water scarcity; however the best covered TNFD disclosure indicator was climate change, followed by exploitation of resources, pollution, and land. Water & Sea Use Change.
  • Reporting on material nature impact drivers is inconsistent across sectors: assessed firms from Extractives & Minerals Processing, Infrastructure, Renewable Resources, Resource Transformation report on 60-70% of the TNFD metrics, while assessed firms from Health Care & Transportation are collectively reporting on less than 50% of the TNFD metrics.

Examples of disclosure practices

  • The Board has ultimate responsibility for nature for firms in all eight sectors assessed.
  • Executive remuneration has been linked to nature-related metrics for five out of eight sectors.
  • 60% of assessed firms are already disclosing current and anticipated financial effects of nature-related issues.
  • A total of 10 firms from six sectors apply a double materiality lens. Only firms from Resource Transformation, and Food & Beverage did not state that they applied a double materiality lens.
  • Firms from five out of eight sectors assessed are integrating the mitigation hierarchy into their management of nature-related issues.