Transforming nature-related risks into financial resilience and sustainability with the TNFD framework.

In the first part of this series, we discussed the legal and strategic imperatives for businesses to account for their impact on nature. The TNFD framework provides the tools needed for companies to embed nature-related considerations into their decision-making processes. In Part 2, we explore the practical steps businesses can take to implement this framework and the advantages of doing so.

The TNFD's Beta Framework offers a structured approach for businesses to prepare for a nature-positive future, with distinct actions that can be incorporated into their strategic planning:

• Engage with the key concepts of natural capital, along with the dependencies, risks, and opportunities related to nature.
• Evaluate the impact of organisational activities on the natural environment.
• Identify and take action to mitigate any adverse effects on natural capital.
• Analyse the exposure of business strategies and value chains to nature-related risks.
• Consider the broader implications of a shift towards a nature-positive economy.
• Begin internal dialogues on the importance of natural capital.
• Assess the potential for adopting the TNFD beta framework to secure a competitive edge.
• Determine the most suitable piloting options for the organisation, which could range from desktop testing to comprehensive piloting of the full framework.
• Collaborate with knowledge partners to support the journey towards sustainability.
• Participate in the TNFD forum for ongoing support and dialogue with peers.
• Provide constructive feedback on the pilot testing of the beta framework to contribute to its evolution.

The LEAP approach, an integral part of the TNFD framework, is a methodical process involving four assessment phases:

1. Locate the points of interaction with nature across various geographies, sectors, and value chains.
2. Evaluate the dependencies and impacts on nature stemming from organisational operations.
3. Assess the risks and opportunities related to nature that the organisation faces.
4. Prepare a response to these risks and opportunities, which includes reporting on significant nature-related issues to financial report users and other stakeholders in line with the TNFD's recommended disclosures.

Integrating the TNFD framework into strategic planning offers businesses a balanced approach to address legal requirements and achieve long-term sustainability. By adopting the TNFD's recommendations, companies can proactively manage the challenges posed by environmental changes and identify opportunities for growth in a nature-positive economy.

The TNFD framework provides a comprehensive tool for businesses to responsibly manage their environmental impact, aligning with legal mandates and strategic objectives outlined in the first part of this series. Early engagement with the TNFD, starting with manageable steps and progressively expanding, positions organisations to effectively navigate the evolving landscape of environmental governance and corporate responsibility. This strategic approach not only meets legal obligations but also fosters a sustainable, competitive advantage in a rapidly changing world.

Resources

• Global Risks Report 2023, Blog Series (Part One)
• MinterEllison webinar information
• Nature's Role in Business Law (TNFD blog part one)
• Recommendations of the Taskforce on Nature-related Financial Disclosures September 2023
• World Economic Forum’s The Global Risks Report 2023

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A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the Sustainable Development Goals and the principles of the Global Compact with business and government organisations in Victoria.

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IMAGE: Used under licence from shutterstock.com

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