26 Jun 2023
TNFD and EY working towards a market-led sustainable society

TNFD and EY working towards a market-led sustainable society

By EY Japan

Multidisciplinary professional services organization

26 Jun 2023

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  • カーボンニュートラル社会の実現 エネルギービジネスの変革に向けたカウントダウン(PDF)

Long-term value (LTV) discussion series
Creating long-term value through market-led rulemaking

In brief

  • At present, over half of global GDP is moderately or highly dependent on nature – and all of the global economy is dependent on nature. The problem of half of the resources in our ecosystems disappearing poses serious risks to future economic activities.
  • The Taskforce on Nature-related Financial Disclosures (TNFD) is developing a framework for measuring how business activities impact nature and providing guidance on scenarios and metrics for assessing impacts, risks and dependencies on nature. EY is participating in this initiative as a taskforce member.
  • EY’s consulting function and sectoral expertise will further refine TNFD’s framework design and utilization.

TNFD is accelerating sustainability initiatives through the market in order to tackle the serious global risks stemming from the loss of natural habitats. As a member of the taskforce, EY provides support for activities designed to bring about a “nature positive” world.

Masaki Moro Executive Director, Climate Change and Sustainability Services (CCaSS), EY Japan

Masaki Moro
Executive Director, Climate Change and Sustainability Services (CCaSS), EY Japan

Ms. Nathalie Borgeaud Lead, Financial Markets Stakeholder Engagement, Taskforce on Nature-related Financial Disclosures (TNFD)

Ms. Nathalie Borgeaud
Lead, Financial Markets Stakeholder Engagement, Taskforce on Nature-related Financial Disclosures (TNFD)

Alexis Gazzo Climate Change and Sustainability Services (CCaSS) Leader, Partner, EY France

Alexis Gazzo
Climate Change and Sustainability Services (CCaSS) Leader, Partner, EY France

The loss of natural habitats poses long-term risks to the global economy
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Section 1

The loss of natural habitats poses long-term risks to the global economy

To respond to the loss of natural habitats, which are vanishing at an astounding pace, TNFD are preparing practical guidelines to help establish a common understanding among investors, corporations and all other stakeholders.

- First, could you tell us about TNFD’s overall vision in creating a framework for nature-related business opportunities and risk management?

Ms. Borgeaud: Before we talk about TNFD, it’s important to discuss why we are having this conversation. The reason we are here is that today, natural habitats are disappearing at an alarming rate. The data are telling us that we have already lost the use of half of our ecosystems in terms of natural resources. According to data summarized by the World Economic Forum, over half of global GDP is moderately or highly dependent on nature. It is important to keep in mind that our economic activities are and will be impacted by the significant damage currently being inflicted on nature. The mission of TNFD is to move market capital flows from “nature negative” to “nature positive.” We need to encourage a shift from financial flows to sustainable economic activities and curb the alarming rate at which natural resources are currently dwindling.

Ms. Nathalie Borgeaud Lead, Financial Markets Stakeholder Engagement, Taskforce on Nature-related Financial Disclosures (TNFD)

Gazzo: These days, the situation regarding nature poses major risks to the global economy. Corporations that also invest need to reassess these impacts on biodiversity, not only in economic terms but also in terms of dependencies on nature. The role of TNFD is to create practical guidelines for this purpose so that investors and corporations can have a better understanding of these risks.

Alexis Gazzo Climate Change and Sustainability Services (CCaSS) Leader, Partner, EY France

Ms. Borgeaud: In practical terms, what TNFD is providing is a risk management and disclosure framework related to nature. Both these parts will ensure transparency that will aid understanding of how nature relates to business activities.

Moro: So, rather than stopping at disclosure of information, corporations are expected to recognize and avoid risk, and to make progress in supporting nature positive outcomes, by being able to contribute to the restoration of natural habitats, sustainability, and the like.

Ms. Borgeaud: That’s absolutely right. What’s of real interest is that the corporations and financial institutions understand the risks and take measures or steps needed in order to transition to a world that would be nature positive.

Gazzo: Bringing disclosure of information into the business process is crucial; we hope that drawing comparisons and scrutiny from different stakeholders will stimulate and motivate corporations and financial institutions to progress and develop their efforts toward sustainability.

A market-led open innovation approach to designing the TNFD framework
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Section 2

A market-led open innovation approach to designing the TNFD framework

The framework must be conducive to comparison and sharing, so it is being developed in a market-led model, with feedback from various stakeholders collated in four beta versions.

- Right now, TNFD is releasing a beta version of its framework in phases. Why is TNFD offering a beta version instead of waiting for the official launch?

Gazzo: We are releasing it as a beta version because our principle is to develop the framework through an iterative process of feedback and improvement.

Ms. Borgeaud: TNFD really wants it to be a market initiative. So far, feedback has been coming from forum members, that is, organizations that support TNFD, but also from all sorts of different institutions and regions. I myself have looked at several hundred pieces of feedback that were anywhere between one page on one topic to 80-page pieces put together by several institutions. The overall innovation process is built on the participation and contributions of many people.

Moro: In Japan, I’ve seen many cases in which clients hesitate to provide feedback because they think it needs to be documented in a meticulous and formal manner. After hearing about the feedback you received on TNFD, I realized that feedback does not always need to be provided so formally.

Masaki Moro Executive Director, Climate Change and Sustainability Services (CCaSS), EY Japan

Ms. Borgeaud: We welcome feedback in every shape or form. Discussions on nature are still ongoing. We need to keep up with all the scientific data that we can obtain from different knowledge partners, and many parts are moving at the same time.

Moro: What expectations do investors have of TNFD?

Ms. Borgeaud: There’s a lot of investor interest in what TNFD does—this is a great opportunity for investors who want to be more attentive to nature. At the same time, it is important to form a collective view on how to view and be more attentive to nature. TNFD’s purpose is to provide that opportunity.

We also have close discussions with the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The NGFS has already identified potential threats to financial stability with respect to climate change and biodiversity, and this has quite obviously caught investors’ attention.

Gazzo: Future risks are being uncovered in sectors directly related to nature, such as agribusiness, as well as in other sectors. I think that the use of TNFD’s framework is going to be a first step for investors to better assess the risks and opportunities related to nature and biodiversity, just like the Task Force on Climate-related Financial Disclosures (TCFD).

Ms. Borgeaud: Many investors are at the point where they understand that up to now, financial management, asset allocation, or investment allocation methodologies have not been adequate for solving nature-related challenges. Rather, it’s important to take specific measures that are meaningful with regard to issues related to nature. This requires a framework that allows for comparisons by sector or biome and cross-sectoral analysis, as well as one that is easily shared by everybody.

Gazzo: Another important perspective is that many stakeholders realize that biodiversity is a challenge that must be tackled immediately. We have to move fast if we want to avoid the catastrophic situation that we could face some years from now. We need to respond to this challenge more effectively with a framework that is comparable and can be a level and transparent playing field for everyone to compare performance. That’s the end goal of TNFD.

Ms. Borgeaud: TNFD is maintaining active dialogues with international organizations, including the Science Based Targets Network for Nature (SBTN) and the Convention on Biological Diversity (CBD). In this process, we will start to be able to see overall scenarios that describe the future.

Gazzo: We don’t currently have a core scenario or one single metric for biodiversity. We are pursuing a process of dialogue and improvement with the goal of completing the framework through an iterative, trial-and-error approach. As we say in French, “le mieux est l’ennemi du bien,” or perfect is the enemy of good. It’s important to accept that even if what we have right now is not perfect, it is still a step in the right direction.

EY’s expertise contributes to realizing the TNFD
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Section 3

EY’s expertise contributes to realizing the TNFD

As an expert in the market with a wealth of specialist knowledge and experience, EY is endeavoring to adapt the framework to society and enliven the debate.

- Could you tell us a bit more about the challenges you have faced behind the scenes in creating TNFD?

Gazzo: Our focus has been less on the technical challenges and more on putting together the heads of participating members from various sectors in countries and regions with different languages and cultures to find common ideas and focal points that can be introduced in different countries and regions. While doing so, we are also engaged in discussions with international financial institutions that are interested in deploying the framework. Because it differs from speaking within the same groups, we feel strongly about the importance of keeping this open-mindedness in our dialogue and responding as flexibly as possible based on deep insight.

Ms. Borgeaud: One of the challenges we have at the secretariat is coordinating the discussions at the many workgroups we have going on at the same time—working groups on scenarios, working groups on data, working groups on metrics, and others. Another key point is making sure that we align with the numerous existing frameworks and standardization bodies. It also raises the question of what role TNFD should play in creating the framework and what should be included and left out. Some examples related to setting targets are partnering closely with SBTN and holding a dialogue with CBD—we believe that it is crucial to collaborate with other organizations to keep the discussions on track.

- What is EY’s role in all of this, and what is TNFD expecting out of EY?

Gazzo: EY has been a member of the taskforce from the start. We’ve been involved in pilots, in metrics, and in specific sectoral working groups. We have had people dedicated to supporting some of these working groups as well. The taskforce and forum bring together a variety of stakeholders that we interact with in the taskforce, which opens up a lot of opportunities to discuss these risks to nature and how best to tackle these problems. We are also trying to bring in EY’s sectoral and methodological expertise and to tie it in with some of the tools, methods, and analytics that we’re developing.

Ms. Borgeaud: First, we have trust in EY as an expert in the market with a wealth of expertise, and we expect EY to actually craft the framework as a taskforce member. EY’s expertise reflects that of its clients and what they need, and by extension, what everyone needs to move forward. That’s critically important. We have expectations for EY around not only designing the framework but also around adapting it to society, bringing it to their client base, and bringing in focus groups to discuss the framework. EY is in an important position to actually pilot the framework together with plenty of different institutions. That’s really worth a lot to TNFD.

Moro: In Japan, EY is playing the role of an evangelist or advocate for spreading the word of TNFD’s initiatives.

Ms. Borgeaud: TNFD is also developing international consultation groups, and we’re so happy that EY plays a prominent role in the Japan Consultation Group, which keeps the group very, very active.

Moro: At EY, we get a lot of questions from our clients about whether TNFD will become mandatory in any way.

Ms. Borgeaud: TNFD is a voluntary framework and has no authority to decide in any case. It will be up to different jurisdictions, or different regulators, to impose TNFD. Some jurisdictions have established mandatory requirements related to nature. Regulators have taken inspiration from them regarding methodologies and approaches they may want to adopt.

- Lastly, how should Japanese stakeholders approach TNFD?

Ms. Borgeaud: I’d like to tell Japanese stakeholders that they should not delay this. There are already plenty of data and tools available, and the basis is there to start the journey to face the nature challenge, so I urge them to act now.

Gazzo: It’s important not to be left behind on this topic but to be one step ahead. The framework of the TNFD is the basis for this. Japanese stakeholders must also be keen to connect with various specialists in this field to accelerate their efforts. Now is the time to act, not to wait.


Faced with the loss of natural habitats at an astounding pace, many stakeholders are beginning to understand and address the risks posed by this loss. The framework provided by TNFD is expected to play a major role as the starting point for understanding and addressing these risks. As a taskforce member, EY will leverage its consulting capabilities and sector-specific expertise to contribute to the realization of TNFD while also supporting its stakeholders.

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By EY Japan

Multidisciplinary professional services organization