For too long, global finance operated under a disastrous form of climate myopia, obsessively focused on carbon accounting while treating the collapse of biodiversity and natural capital as a mere external inconvenience, a tragedy for future generations, not a risk for today’s balance sheets.
This blinkered approach ignored a devastating systemic threat, one proven by sobering analysis, which suggests unchecked emissions could slash Gross Domestic Product (GDP) by 17% in regions like Asia-Pacific by 2070. The financial stability of the entire system, not just the planet, is clearly at stake when nature dies.
We are finally forced to acknowledge a painful truth. We cannot possibly achieve net-zero climate targets unless we address nature as the most crucial supply chain and value creation partner. The Taskforce on Nature-related Financial Disclosures (TNFD) emerged as the market’s hurried, defensive response, an initiative designed to integrate nature into core decision-making and, in theory, shift global financial flows away from outcomes that are negative for nature.
The Taskforce is effectively using the structure established by climate governance, specifically the Task Force on Climate-related Financial Disclosures (TCFD), to manage the systemic financial instability that nature loss creates.
However, unlike carbon, which can be standardised globally, biodiversity loss is hyper-local and infinitely complex, meaning that copying the TCFD model risks inheriting that framework’s weaknesses and compounding them exponentially when applied to sensitive ecological systems.
TNFD’s Market Momentum And TCFD’s Shadow
The initial adoption rate of the TNFD framework is undeniably rapid, demonstrating that the financial world recognises the coming regulatory wave. Within two years of the recommendations being released in September 2023, 620 organisations across 50 countries, collectively managing over USD 20 trillion in assets, had publicly committed to starting TNFD-aligned reporting.
Evidence suggests that nature-related disclosure aligned to the intent of TNFD is already moving ahead of early comparable TCFD climate-related reporting. This speed is no accident; it is the direct result of the TNFD deliberately mirroring TCFD’s language and structure, allowing corporations to simply leverage their existing internal climate reporting teams and assessment capabilities, ensuring tactical efficiency over deeper philosophical change.
This tactical efficiency is further confirmed by the practice of early adopters, where 78% of companies and financial institutions reported that they had already integrated the presentation of their climate and nature reporting.
While this suggests risks are being viewed holistically, it also suggests a potential dilution of focus, where the complex, location-specific requirements of nature disclosure may be deprioritised in favour of the more standardised, existing metrics inherited from climate reporting. The market’s readiness for mandatory action is evident, with 77% of investors indicating a desire for specific, dedicated nature-related standards based on the TNFD framework.
This strong demand confirms that financial institutions see TNFD adoption not merely as voluntary guidance, but as a pre-emptive compliance strategy, a way to influence the regulatory shape that everyone expects will eventually become binding law.
Nature’s Materiality And Business Case For Biodiversity
The framework requires businesses to formalise their risk management and disclosure based on four core pillars: governance, strategy, risk management, and metrics, ensuring that capital providers receive decision-useful information about the nature.
The shift in corporate mindset is remarkable, where 63% of surveyed organisations now believe their nature-related issues are as significant, or even more significant, than climate-related issues to their prospects.
This acknowledgement is driven not by philanthropy, but by the cold financial reality that businesses rely heavily on ecosystem services like water availability, pollination, and fertile soils, making ecosystem instability a direct threat to financial resilience.
The mechanism for assessment is the LEAP approach, which stands for Locate, Evaluate, Assess, and Prepare, providing a structured pathway for companies to identify their dependencies and impacts across their entire value chain, including upstream, downstream, and direct operations.
For large financial institutions, the framework allows for the assessment of complex financial portfolios, such as the case of a large British bank using LEAP to assess mining and power portfolios. However, this assessment structure immediately exposes the critical weakness in the global supply chain, the massive data gap concerning small and medium-sized enterprises (SMEs).
SMEs represent 90% of global businesses and form the backbone of these supply chains. When smaller firms lack the knowledge, resources, or capacity to evaluate their environmental impacts, the data provided by larger corporations that depend on them becomes incomplete or based on broad assumptions. This situation often requires expensive technological solutions, such as those offered by the Nature Intelligence for Business Grand Challenge.
The Trap And Accountability Vacuum
The deepest concern surrounding the TNFD framework is its very foundation, an initiative authored primarily by the corporate and financial sectors it aims to regulate. Critics argue that this structural makeup renders it uniquely unqualified to enforce meaningful market shifts on biodiversity and creates ample opportunity for rewarding bad behaviour through greenwashing.
The materiality loophole is the most profound failure of accountability. The final framework allows corporations to decide for themselves whether their destruction of nature is financially “material” enough to warrant reporting, rather than requiring the disclosure of actual ecological impacts.
This voluntary screening ensures that corporations can manage their image and investor risk profile while potentially skirting responsibility for severe environmental harm that does not immediately threaten their profitability.
Furthermore, the TNFD framework crucially omits recommendations for fundamental accountability measures, such as requiring companies to disclose and list complaints received about their biodiversity and human rights practices, or demanding public, independently verified data on actual biodiversity impacts. By prioritising investor risk mitigation over public and stakeholder accountability, the framework risks becoming a complex system for corporate deflection rather than a catalyst for ecological integrity.
Persistent technical challenges compound these structural flaws. Market concerns persist regarding the consistency of metrics, the complexity of measurement methods, and the scarcity of available, high-quality data for nature reporting.
While the TNFD is working on solving this through pilot testing and recommendations for upgrading nature data access, this measurement difficulty provides a convenient excuse for weak disclosure, allowing companies to cite a “lack of data” when failing to assess risks, even though the guidance stipulates that such risks must still be identified as a precautionary measure.
The global commitment to Target 15 of the Global Biodiversity Framework demands that financial flows shift away from nature-negative outcomes. This shift cannot be achieved through guidance that allows corporations to self-select what is material and to hide community complaints and actual ecological impacts.
Since 77% of investors are explicitly demanding dedicated, mandatory nature-related standards, the market is signalling its readiness for binding regulation. Until global regulators heed this call and mandate public scrutiny of actual, verified data on ecological impact, the TNFD risks remaining a sophisticated, costly accounting exercise that fails the planet, a temporary mechanism that prioritises reporting compliance over true business model transformation.