The high level of correspondence between the ESRS environmental standards beyond climate change (E2-E5) and the key recommendations and metrics of the TNFD is reflected in the following aspects:
- Concepts and Definitions: Both the TNFD and ESRS emphasize the need to disclose impacts, risks, and opportunities related to nature, including dependencies on nature to the extent that they generate material risks.
- Materiality Approach: The ESRS require disclosures to be based on the principle of double materiality. The TNFD approach allows for various materiality approaches, including the double materiality approach required by the ESRS.
- LEAP Approach: The TNFD has developed the LEAP approach to help market participants identify and assess their nature-related issues. The ESRS state that companies can conduct their materiality assessment on sustainability issues related to pollution, water, biodiversity and ecosystems, and circular economy (all ESRS environmental standards beyond climate change) using the LEAP approach. The LEAP approach is designed to assist reporting organizations in identifying both impact materiality and financial materiality, providing a comprehensive framework for CSRD report preparers.
- Reporting Pillars: Both the disclosures recommended by the TNFD and the reporting areas of the ESRS are organized around the four disclosure pillars of the Task Force on Climate-related Financial Disclosures (TCFD): Governance, Strategy, Risk Management, and Metrics and Targets.
- Recommended Disclosures and Metrics: All 14 recommended disclosures from the TNFD are reflected in the ESRS. The TNFD recommended disclosures and the ESRS requirements are both designed to provide relevant and faithful information on nature-related sustainability issues.
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