Claire Smith says there is still no taxonomy to describe the key elements of the Taskforce on Nature-related Financial Disclosures that will drive the framework and reporting

It was a big day last Monday when the Taskforce on Nature-related Financial Disclosures (TNFD) finally unveiled its innovative framework on how to value nature at the widely hailed New York Climate Week.

The framework aims to harmonise corporate disclosures on nature-related risks and impacts and reveal the intricate bonds between businesses and their dependence on nature. Which, if you poke hard enough, encompasses pretty much most businesses and organisations on the planet.

Claire Smith, national practice group leader for Clayton Utz’s environment sustainable development team and a former environmental consultant specialising in ecology sees the TNFD as a crucial mechanism to ascribe value to nature.

“It’s very exciting, seeing the TNFD being launched, because it’s actually trying to place a value on nature,” [as distinct from a placing a price on nature] Smith told The Fifth Estate on Monday.

“TNFD adopts the same framework [as the Taskforce on Climate-Related Financial Disclosures or TCFD], but it applies it to nature rather than carbon,” She explains.

The framework has been designed to allow companies of any size to integrate their climate and nature-related reporting. It’s about “actual positive nature repair and nature restoration.”

Both are voluntary frameworks – for now.

What’s involved

This ambitious initiative is a result of two years of rigorous design, development, and testing, culminating in 14 recommended disclosures, accompanied by a series of additional implementation guides that, to date, even the experts are struggling to fully absorb.

One thing is clear, though. The TNFD is poised to become one of the most important issues that Australia’s biggest corporates need to deal with. That’s pretty much all the nation’s listed property companies and all businesses listed on the Australian Stock Exchange.

But despite the projected impact, just a small number of Australian companies have taken part in the beta testing of the framework – including residential developer Stockland and Forico, a forestry company based in Tasmania.

Beyond these two, said Smith, there’s not a lot of understanding of the framework or what’s coming down the pipe. She noted there was scant coverage in industry media and none in the mainstream.

Probably because the thing is so complex. There is still no taxonomy to describe the key elements that will drive the framework and reporting – let alone any real idea of how to measure the impact on nature.

What is certain is that the impact on reporting is set to grow. Some insiders say it’s already taking three months each year (and tempting some people to “tear their hair out”).

A big ask, it might be. But it’s also clear that after the northern summer, we’ve just witnessed – comfortably, from afar – the state of nature is crucial to the planet’s survival as a life source and starting to worry more than the people in the choir.

Smith said the TNFD recommendations aim to ensure that the relationship between nature, business, and financial capital is marked by transparency and sustainability.

“The recommendations and guidance will enable business and finance to integrate nature into decision making, and ultimately support a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.”

How the TNFD works

A cornerstone of TNFD is the LEAP (Locate, Evaluate, Assess, Prepare) approach, an integrated, comprehensive strategy for evaluating nature-related matters designed to be versatile across organisations of all scales and sectors.

It propels those organisations to identify where and how their business interacts with nature, to analyse their reliance and impact on nature, to understand any related risks and opportunities, and finally, to respond and report in alignment with the TNFD’s recommended disclosures.

The emergence of nature credit markets

Smith said the initiation of the TNFD framework is vital for the creation of nature-based credit markets, which aim to stimulate a flow of finance to nature-based solutions. “There needs to be a lot more private sector investment in nature, nature-related solutions and nature positive outcomes.”

She stresses this is not to be confused with nature offsets, where damage to one part of the natural system is purported to be compensated by protection for nature in another part.

The active involvement of companies such as Stockland, Forico and pharmaceutical giant GSK, which has committed to producing an initial report in alignment with TNFD guidelines in 2026, based on its 2025 data indicates positive shift towards environmental disclosure.

In signalling their intention to adopt TNFD’s recommendations, these companies are setting the scene for a future of interaction between businesses and nature.

The benefits for companies with positive contributions

The TNFD will also serve to highlight companies that excel in nature restoration and positive contributions to the environment.

According to Smith, the framework has the potential to influence consumer and investor decisions, directing capital towards companies committed to environmentally positive initiatives.

“You will have certain companies that will be kicking the lights out when it comes to nature restoration and nature-positive things,” she comments.

“If they’re publicly listed, that might encourage you or me to invest in that company over another company.”

Collaborating with First Nations peoples

Another significant element is TNFD recommendations to engage with Indigenous people and local communities. As Smith notes, such engagements are essential, especially considering that Indigenous peoples are custodians of the land, holding traditional knowledge vital for nature restoration.

“They are the stewards of 80 per cent of the world’s remaining biodiversity and a source of traditional knowledge about the planet’s ecosystems,” she says.

Such an approach ensures that environmental stewardship and traditional ecological knowledge are integrated into modern sustainability practices, fostering inclusive and diverse environmental solutions.

Merging economic growth with environmental responsibility

The recommendations also introduce innovative disclosure elements like priority locations and a full set of nature-related dependencies, impacts, risks, and opportunities, including climate, across their value chain.

These require organisations to report the locations of assets or activities that meet the criteria for priority locations and describe the organisation’s processes for identifying, assessing, and giving precedence to nature-related dependencies, impacts, risks, and opportunities in a company’s value chain.

This nuanced approach recognises that nature’s interactions are location-specific and that understanding and accounting for impacts and dependencies in specific ecosystems are integral to fostering sustainability.

Smith said the need for global taxonomy and common definitions for terms would bring much-needed clarity and certainty, allowing for more accurate assessments and reporting.

Redirecting the corporate paradigm

What the TNFD proposes is more than just a set of guidelines; it is a harbinger of change, signalling a transformation in perceptions and methodologies. It ushers in an era where economic growth and environmental preservation are intertwined.

Nature risk, financial risk

Taskforce co-chair Elizabeth Mrema stressed in the TNFD recommendations that we too, reimagine and reshape our interaction with nature. “Nature risk is financial risk,” she said.

We need to urgently address the collapse of ecosystems, the extinction of species, and the more frequent extreme weather events as they present substantial physical risks to businesses, she said.

“Business-as-usual is no longer an option. Business and finance can no longer consider nature and biodiversity as just a corporate social responsibility issue. It is now squarely a central and strategic risk management issue.”

It’s the dawn of a new paradigm, one we urgently need.

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