Mar 16, 2022 - Economy

ESG disclosure frameworks' so hot right now

Illustration: Shoshana Gordon/Axios

The Taskforce on Nature-related Disclosures (TNFD) released its first draft of a working risk assessment and disclosure framework for financial institutions.

Why it matters: ESG is is nearly universal among institutional LPs, according to a survey from Adams Street Partners. But without specific guidelines, most ESG promises are, well, promises.

State of play: TNFD's framework comes roughly a week before the SEC is expected to vote on additional climate-related risk disclosures for businesses operating in the U.S. As the name implies, TNFD's framework focuses more narrowly on nature-related risks like fallowing fields or extreme weather kneecapping logistics networks.

  • Several investors have told Megan they don't expect the SEC disclosures will negatively impact industry-wide deal-making, but it could hold executives' feet to the fire depending if it really gets into the weeds on topics like Scope 3 emissions.

What's in the TNFD framework: Industry- and geography-specific recommendations and analysis for companies and financial institutions as they build their own risk assessments and disclosures.

  • It also includes a dictionary to ensure disparate industries are talking about nature-related risks in the same way.

What's next: The working document will be finalized near the end of Q3 2023, the organization told Axios on a press call. Its writers will continue to update and refine the framework based on input from investors, executives, and industry stakeholders.

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