With the publication of the TNFD framework in September 2023, natural capital has definitively arrived in the financial sector. What the framework requires, who is applying it — and why it matters for natural capital markets.

“More than half of the world’s GDP is moderately or highly dependent on nature.”

— World Economic Forum, 2020 — zitiert in TNFD Framework v1.0

From climate to nature: the origins of TNFD

The Taskforce on Climate-related Financial Disclosures (TCFD) demonstrated that a voluntary but institutionally supported disclosure framework can fundamentally change how financial actors perceive risk. In 2021, the logical consequence followed: the Taskforce on Nature-related Financial Disclosures (TNFD) was established — with the same core architecture, but a broader subject: all of nature, not just climate.

After four beta versions and extensive consultations with over 1,000 institutions worldwide, TNFD published its final recommendations (v1.0) in September 2023, on the sidelines of Climate Week in New York. At the time of publication, 320 companies and financial institutions had already committed as early adopters — including major banks, asset managers, and global companies in agriculture, commodities, and consumer goods.

What TNFD requires: the four pillars

The TNFD framework adopts the proven four-pillar structure of TCFD:

  • Governance: How does the governing body oversee nature-related dependencies, impacts and risks? What management processes are in place?
  • Strategy: Which nature-related risks and opportunities are material to the business model — in the short, medium and long term? How is strategy aligned accordingly?
  • Risk and impact management: How does the organisation identify, assess and manage its dependencies on nature and its impacts on it?
  • Metrics and targets: Which metrics are used to measure and manage nature-related risks? What targets have been set — ideally science-based?

TNFD recommends 14 disclosures in total. The framework is formally voluntary, like TCFD, but is increasingly becoming mandatory through regulatory developments.

The LEAP approach: how nature risks are actually measured

The methodological centrepiece of the TNFD framework is the LEAP approach — a four-step process for identifying and assessing nature-related risks:

  • L — Locate: Where are the organisation’s interfaces with nature? Where do locations, supply chains and investments sit relative to sensitive ecosystems and biodiversity hotspots?
  • E — Evaluate: What are the organisation’s concrete dependencies on and impacts upon those ecosystems? Which ecosystem services are being drawn upon?
  • A — Assess: What material risks and opportunities arise — physical (ecosystem degradation), transitional (regulation, market) and systemic?
  • P — Prepare: How does the organisation respond? What measures, targets and disclosures are defined?

The LEAP approach requires geographically located data on ecosystem condition and biodiversity. It thereby creates direct demand for nature data infrastructure — mapping, monitoring systems, on-site biodiversity measurements.

Regulatory integration: TNFD becoming mandatory

TNFD is formally voluntary — but in practice it is already being embedded through several regulatory levers. In the European Union, the Corporate Sustainability Reporting Directive (CSRD), through the European Sustainability Reporting Standard ESRS E4 (Biodiversity and Ecosystems), requires substantively similar disclosures for affected companies. TNFD is explicitly recognised as a reference framework. This means several thousand companies in Germany alone will progressively become subject to reporting requirements.

At the global level, G7 Finance Ministers have welcomed the TNFD framework and recommended its voluntary application. The International Sustainability Standards Board (ISSB) has aligned its standards for compatibility with TNFD. Japan integrated TNFD into its national reporting standards as early as 2024.

What TNFD means for natural capital markets

For eco-point markets and nature-based solutions, TNFD has structural significance that goes beyond disclosure requirements:

First, TNFD creates awareness of nature dependencies. Companies going through the LEAP process often identify systematically for the first time how heavily their value chain depends on intact ecosystems. This awareness generates motivation to not merely report nature risks but actively reduce them — through investment in nature-based solutions and biodiversity offsets.

Second, TNFD raises willingness to pay for nature data and quality. TNFD-compliant reporting requires data: ecosystem maps, biodiversity indicators, monitoring evidence. In this environment, land with documented ecological quality and validated measurements becomes a sought-after asset.

Third, TNFD legitimises natural capital as an asset class. When global financial institutions systematically disclose nature-related risks and opportunities, natural capital moves from a niche to mainstream portfolio allocation. From an institutional perspective, eco-point projects become a tool of risk management — no longer merely of compliance.

Lessons from climate: what TCFD tells us about TNFD’s trajectory

TCFD was founded in 2015 and initially dismissed by many as soft law without effect. Today it has been transposed into national regulation in more than 40 countries, including the UK, New Zealand, Japan, and the EU (via CSRD). The journey from voluntary framework to binding standard took less than ten years. There is no reason to assume TNFD will not follow the same path.

For landowners and investors positioning in eco-point markets today, this means: they are entering a market that is still forming regulatorily — but advancing with all the institutional momentum of the last decade.

Source: Taskforce on Nature-related Financial Disclosures (2023). Recommendations of the Taskforce on Nature-related Financial Disclosures. September 2023. Available at: tnfd.global