TNFD and EFRAG publish correspondence mapping

On 20 June 2024, the Taskforce on Nature-related Financial Disclosures (TNFD) and the European Financial Reporting Advisory Group (EFRAG) have jointly published a Correspondence Mapping for the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) and the TNFD’s recommended disclosures. Their press release highlights that all 14 TNFD recommended disclosures are reflected in the ESRS. The mapping focuses on those ESRS disclosure requirements that correspond to the disclosures recommended by the TNFD. 

According to the press release, EFRAG and TNFD have collaborated closely for over two years to maximise the consistency of the ESRS environmental standards with the TNFD recommendations as they were being developed in parallel. The TNFD published the final version of its recommendations on a framework to identify, assess, manage, and disclose nature-related issues on 18 September 2023. For more information on TNFD recommendations, see our previous blog post. 

The detailed correspondence mapping is aimed at helping companies understand the commonalities between the two frameworks. It should also assist European companies in scope of the CSRD considering alignment with TNFD. At the initiative of EFRAG, it was decided to call this a correspondence table rather than as an interoperability table to avoid the implication that the TNFD and ESRS disclosures are necessarily equivalent or interchangeable, considering that the TNFD is a voluntary framework while the ESRS is a regulatory act. It should also be noted that this is a “one way” mapping that highlights the differences and incrementality in what is recommended by TNFD with respect to ESRS (so any requirement that is incremental in the ESRS is not captured). 

The mapping highlights that there is a strong consistency between the TNFD’s core global disclosure metrics and the related metrics in the ESRS, including in the following areas: 

• Concepts and definitions: both the TNFD and ESRS recommend disclosures on nature-related impacts, risks and opportunities as well as dependencies on nature to the extent that they generate material risks (DIROs). 
• Approach to materiality: The ESRS require disclosures to be based on a double materiality principle, and the TNFD enables a double materiality approach to be used. As stated in its final Recommendations, the TNFD approach enables report preparers to use both a financial and impact materiality lens to inform their materiality assessment. 
• The LEAP approach: The TNFD developed the LEAP (Locate-Evaluate-Access-Prepare) approach, which is a suggested guidance for market participants to identify and assess their nature-related issues. The ESRS state that companies may conduct their materiality assessment on the sustainability constituents of pollution, water, biodiversity and ecosystems, and circular economy (all ESRS environmental standards beyond climate change) using the LEAP approach. However, there are differences, both in terms of terminology, definitions and granularity, as well as some of the substantive disclosure requirements. For example, whereas TNFD requires disclosure of nature-related transition plans where these have been put in place, this is a voluntary disclosure in the ESRS.
• Reporting pillars: Both the TNFD recommended disclosures and the ESRS reporting areas are organised around the four disclosure pillars of the Task Force on Climate-related Financial Disclosures (TCFD), which have now been incorporated into the ISSB’s IFRS Standards. These pillars are Governance, Strategy, Risk Management, and Metrics and Targets. 

According to the press release, EFRAG and TNFD will develop guidance and tools to support the disclosure of nature-related information, although no specific deadlines are mentioned. 

ESRS-TNFD mapping is part of a broader effort to assist companies that navigate various mandatory and voluntary reporting standards. Another mapping exercise was carried out recently which compared various regulatory and mandatory disclosure frameworks, including TNFD, ESRS and GRI. Thematic report on biodiversity disclosure prepared by Arcadis and published by the EU Business & Biodiversity Platform concludes that these reporting standards are well aligned on most of the selected characteristics. 

For more information on Linklaters' nature and biodiversity materials, click here and on the CSRD materials, click here.