The Taskforce on Nature-related Financial Disclosures (TNFD) launched its final framework in September at an invitation-only event at the New York Stock Exchange. This framework outlines what information a company or financial institution should self-report regarding how its relationship with biodiversity has, or will, impact its business.
While many bold claims have been made about the corporate-led taskforce, a closer examination of TNFD’s structure and frameworks reveals that it appears uniquely unqualified to shift businesses or markets on biodiversity and risks rewarding bad behaviour through ample greenwashing loopholes, and detracting from true solutions. There’s also concern that it could operate as a back-door for global corporations to write future laws. For a disclosure initiative, much of TNFD’s work has been mired in secrecy.
What are the problems with the TNFD framework?
To start, one of the issues is the model of TNFD itself. While TNFD has made big claims about the revolutionary power of disclosure initiatives, there is little evidence that this would work for biodiversity – as environmental defenders, academics and economists have raised.
Fundamental aspects of the final TNFD framework make little sense if you are expecting an evidence-based approach, but align with the general habits of global corporations.
For example, the final framework doesn’t recommend:
- That companies disclose and list complaints they face about their biodiversity and human rights practices or reporting.
- Letting local communities know if a company is operating in, sourcing from or financing activities in their local area.
- A baseline recommendation of companies reporting their actual impacts on biodiversity. Instead, it will let companies decide whether they think trashing nature is “material” to their business or not.
- Forms of reporting that allow data to be scrutinised, public and independently verified.
It is hard to argue how investors benefit by not being informed that a company is facing a complaint, why it is more credible for data to take a form that cannot be independently fact-checked or how chaotic, non-standardised and unreliable data will help analyse biodiversity risks.
While the TNFD acknowledges the existence of human rights – which is far better than not doing so – the framework architecture stands in the way of their substantiation. For example, legitimising the kind of toxic secrecy that suggests it is somehow reasonable to deny communities such basic information as the name of a company financing activities in their area. Information is not only important to investors, it underpins human rights, including Indigenous Peoples’ rights to free, prior and informed consent. Indigenous Peoples comprise approximately 5% to 6% of the world’s population but protect 80% of the remaining terrestrial biodiversity and – in a not unrelated statistic – account for almost 40% of environmental defenders killed over the last decade.
The exclusion of lobbying was also critiqued during TNFD’s drafting – which would allow companies to present themselves as biodiversity champions while secretly lobbying against laws to protect nature. TNFD’s final framework now mentions lobbying – but the language is vague, without absolute clarity that this covers industry groups.
Especially concerning are claims that the TNFD “aligns” with Target 15 of the Kunming-Montreal Global Biodiversity Framework (GBF), which calls for businesses to “transparently disclose” on biodiversity, including their impacts. TNFD does not recommend transparent disclosure as it cannot be independently fact-checked against realities on the ground, nor does it recommend impact reporting as a baseline.
Credibility of taskforce members
Key to understanding how TNFD came to these conclusions is who sits on the taskforce. As a corporate-only taskforce, there are no scientists, no government officials, no academics, no rights holders (such as Indigenous Peoples), no civil society organisations (CSOs) and no victim-survivors of corporate harms on the taskforce. It even lacks black members and geographic diversity.
Added to this is the convoluted and vague nature of the framework writing process. During 18 months of drafting, the TNFD failed to provide a single example of what a TNFD report would look like. Up to 98% of the feedback it received has been made in secret.
TNFD also failed to investigate persistent case studies that show how a company engaged in environmental or human rights abuses could use its reporting recommendations to greenwash its reputation. Rainforest Action Network (RAN) has provided several examples of how this could be done. For example, if a company faces frequent, well-evidenced complaints about its biodiversity and human rights harms but essentially disputes the data that underpins them or claims that they’re not material – it can simply just use its own data with no obligation to disclose those concerns. This is something that CSOs encounter frequently.
Another frequent issue is that financial institutions provide high-level statistics of their environmental impacts that are completely unverifiable. This can be seen in existing allegations against TNFD’s own members. There are abundant examples of banks financing companies linked to deforestation that they do not disclose, even where deforestation is explicitly covered under their own policies.
Sidelining environmental defenders
So has TNFD shifted the behaviour of its own taskforce members? Currently, BNP Paribas is facing legal action over its links to deforestation. Bank of America remains the fourth largest banker of fossil fuels. Bayer and Dow continue to rack up penalties for environmental violations, and BlackRock has been kicked out of a UN Women partnership after mass outcry given its own social and environmental record. This list goes on.
TNFD members have faced close to 300 allegations of rights abuses over the last 10 years and several appear multiple times on investor exclusion lists. It must be particularly hurtful for communities and organisations that have long histories of asking corporations on the taskforce to act on their environmental or human rights harms, with little success, to now see them presented as thought leaders on nature.
Legislation problems
A particularly disturbing turn is that some UN agencies, governments and others are pressing for the corporate-led TNFD framework to be the basis of future laws. It is extremely dangerous to suggest that global corporations should write the template of future regulations – a point that the Financial Times has also emphasised. Some academics have even described the TNFD as corporate capture of public policy-making.
The Intergovernmental Platform on Biodiversity and Ecological Services has said that market-based approaches are a key driver of the biodiversity crisis – and to affect change we need to value nature in its own right and having intrinsic value. Yet the TNFD framework is already being discussed as facilitating the further marketisation of biodiversity.
The bigger point is that nothing in TNFD questions the right of corporations to keep the profits they make from environmental or human rights abuses. This is the heart of the problem. Today in many, if not most, jurisdictions it is perfectly legal for a financial institution to finance and profit from a company engaged in environmental crime – at best, it only becomes illegal if a financial crime has taken place. Impunity is so normalised it is rarely even acknowledged.
Profits with impunity exacerbates the systemic risk to our economies from biodiversity loss. It punishes the businesses that are truly embedded in their communities and do business in ways that let people and nature thrive.
The need for evidence-led policy
The outsized hype about the TNFD points to a financial culture that often puts its trust in the very corporations that benefit most from – and have helped shape – the market status quo to set the agenda for change, despite the very obvious conflicts of interest. Also rampant is financial sector exceptionalism – a belief that only financial insiders are qualified to take part in discussions on how to fix markets. Yet it is the victim-survivors of environmental harms and those on the frontlines of our successive environmental crises who have the most at stake from our broken financial system and the most invested in re-imagining it.
The best strategy to improve TNFD is not to tinker for years around the edges of a heavily flawed framework, but to shift the broader governance of markets.
However, there are some immediate steps that would be helpful.
Firstly, would be for investors, financial institutions and the TNFD itself to publicly state that as an initiative written by and for corporations it is not intended or appropriate to form the basis of regulatory discussions.
Secondly, would be for the governments, UN agencies and philanthropic institutions who have pledged, by a back of the envelope estimate, around USD$50mn to the TNFD, to match these funds for initiatives that centre and value the expertise of groups who have been the true leaders on biodiversity and their solutions to fix distorted markets. This must centre Indigenous Peoples, Afro-descendant communities, women’s groups, and youth movements recognising their expertise as critical to public policy which is evidence-led.
Thirdly, would be for central banks and financial regulators to establish a systematic process for centring and engaging with rights holders and grassroots civil society organisations – recognising that in their work defending biodiversity from corporate-led harms they have valuable expertise in understanding what works, and what doesn’t, to shift corporate behaviour. This would help to build trust that central banks will not simply copy and paste text written by Dow, BlackRock, Bank of America, Tata or others into future laws.
As RAN and many other CSOs have highlighted, the TNFD is not the breakthrough framework institutions would have you believe. For a document about disclosures, it is bogged down in secrecy and is confusing and vague at best. Much more needs to be done to ensure a just solution to the biodiversity crisis and justice, accountability and centring the voices of those most impacted is key.
This page was last updated November 2, 2023
Share this article
