TNFD Recommendations Practical Guide: LEAP Approach and Disclosure Practices

The Taskforce on Nature-related Financial Disclosures (TNFD) is an international initiative that provides a framework for identifying and disclosing nature- and biodiversity-related risks and opportunities. It published its final recommendations in September 2023, establishing a framework for nature-related financial disclosures. TNFD recommendations are aligned with the international policy goals of the Kunming-Montreal Global Biodiversity Framework (adopted at COP15) and take an approach consistent with TCFD on climate change and the IFRS Sustainability Disclosure Standards of the ISSB. The recommended disclosure documents are available in seven languages: English, French, Japanese, Korean, Chinese, Portuguese, and Spanish.

At Climate Week NYC 2025, the TNFD released a status report on the second anniversary of the publication of its recommendations. Adoption is progressing globally, and regulators, stock exchanges, and major investors are beginning to incorporate TNFD alignment into procurement and investment criteria. Because it adopts the familiar four-pillar structure (Governance, Strategy, Risk Management, and Metrics and Targets) used in TCFD, it is designed to make it easy to leverage existing sustainability disclosure infrastructure.

The LEAP Approach: Evaluation Process for Nature-related Issues

The LEAP approach developed by the TNFD is a practical framework for organizations of all sizes to systematically evaluate nature-related issues. It was developed after four years of research and pilot testing. LEAP consists of the following four steps.

L — Locate: Identify where your business locations and supply chain have touchpoints with nature. This involves mapping geographical overlaps with biodiversity hotspots, water-stressed areas, and critical ecosystems. The use of IBAT, the Global Biodiversity Information Facility (GBIF), and spatial data platforms is recommended in practice.

E — Evaluate: Assess dependencies on and impacts on nature at the identified locations. The TNFD requires companies to grasp both the extent to which they depend on natural capital (biodiversity, water, land, air, and oceans) and the pressures that corporate activities exert on nature.

A — Assess: Financially evaluate the nature-related risks and opportunities arising from dependencies and impacts. Risks are organized into three types: physical risks (increased operating costs due to loss of ecosystem services), transition risks (regulatory tightening and market changes), and reputational risks.

P — Prepare: Develop strategies, targets, and management processes based on the evaluation results, and disclose them using the four-pillar structure.

Value Chain, Transition Plans, and SBTs for Nature

The TNFD requires application across the entire value chain, and its value chain guidance demands assessment of nature-related issues throughout upstream and downstream supply chains. For the manufacturing, food, and agricultural sectors, the connection to ecosystems at raw material procurement sites is particularly important.

The transition planning guidance is built on the best practices of GFANZ (Glasgow Financial Alliance for Net Zero) and TPT (Transition Plan Taskforce), and recommends integrating nature-related transition risks into climate-related transition plans. Guidance for companies on Science-based Targets for Nature (SBTs for Nature), such as 2030 nature net gain and specific biodiversity metrics, is also provided to support alignment with the nature version of the SBTi framework.

Alignment with TCFD and Adoption Status

Because the TNFD's four-pillar structure (Governance, Strategy, Risk Management, and Metrics and Targets) is identical to TCFD's, companies already compliant with TCFD can repurpose much of their data collection, committee structures, and reporting formats. However, the spatial granularity differs between climate and nature. While climate risks can often be assessed at the national or regional level, nature risks require geographical resolution at the site or watershed level, which is the main practical difference.

The European Sustainability Reporting Standards (ESRS) under the CSRD (Corporate Sustainability Reporting Directive) include ESRS E4 on biodiversity and ecosystems, effectively necessitating alignment with the TNFD. Financial institutions in Europe, North America, and Asia are beginning to incorporate TNFD disclosures into their loan screening and investment criteria, accelerating the movement of disclosure requirements from investors to business partners and suppliers.

Steps for Practical Implementation

The steps to begin TNFD alignment are as follows: First, conduct a "materiality assessment" based on your company's sector, business locations, and supply chain. It is unrealistic to handle all nature-related issues simultaneously, so prioritize natural capital categories with high dependencies, impacts, and regulatory pressure. Next, as LEAP L, cross-reference geotag information of major sites with biodiversity datasets to create a map of overlaps with nature. At this stage, free public data (GBIF, WRI Aqueduct, etc.) can be utilized. Subsequently, perform a qualitative assessment of dependencies, impacts, and risks through LEAP E and A, and establish a disclosure structure by incorporating nature-related issues into existing TCFD committee processes.

The TNFD is currently the most comprehensive international standard for nature-related information disclosure, and connections with SBTs for Nature and the Convention on Biological Diversity have been established. For organizations already compliant with TCFD, using the LEAP approach as an entry point and starting with spatial data acquisition at the L stage is the most practical first step when expanding disclosures to cover nature.

Reference Fact Cards