|
Listen to this story:
|
Executive Summary
The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Financial Reporting Advisory Group (EFRAG) have jointly published a correspondence mapping between the European Sustainability Reporting Standards (ESRS) and TNFD’s recommended disclosures. This mapping highlights the high level of commonality between the two standards, facilitating easier compliance for companies under the Corporate Sustainability Reporting Directive (CSRD). The collaboration, formalized through a Memorandum of Understanding (MoU), aims to ensure consistent, high-quality sustainability reporting, supporting robust data for stakeholders and sustainable development
Key Impact Points:
- High Commonality: All 14 TNFD recommended disclosures are reflected in ESRS.
- Strategic Alignment: Facilitates compliance with CSRD requirements for European companies.
- Ongoing Collaboration: EFRAG and TNFD will continue to develop guidance and tools for nature-related disclosures.
The Taskforce on Nature-related Financial Disclosures (TNFD) and EFRAG have published a detailed mapping of the correspondence between the European Sustainability Reporting Standards (ESRS) and TNFD’s recommended disclosures and metrics, highlighting a high level of commonality.
Alignment for Clarity:
“Today’s release of the correspondence mapping between the ESRS and the TNFD recommendations marks a significant milestone in advancing nature-related transparency in corporate reporting,” said Patrick de Cambourg, EFRAG SRB Chair.
This mapping helps companies understand the commonalities between ESRS and TNFD, aiding those under the Corporate Sustainability Reporting Directive (CSRD). The collaboration between EFRAG and TNFD, formalized through an MoU, has focused on maximizing consistency in their environmental standards and recommendations.
Consistent Framework:
Tony Goldner, Executive Director of TNFD, stated, “The assessment released today provides that additional clarity to market participants. We look forward to continuing to collaborate with the European Union in the development and sharing of practical guidance.“
Key Aspects of the Correspondence Mapping:
- Concepts and Definitions: Both standards emphasize disclosing nature-related impacts, risks, and opportunities, including dependencies on nature.
- Materiality Approach: ESRS requires a double materiality principle, while TNFD supports various approaches, including double materiality.
- LEAP Approach: TNFD’s LEAP approach is recommended for materiality assessments in ESRS, providing a comprehensive framework for CSRD report preparers.
- Disclosure Pillars: Both follow the TCFD’s four disclosure pillars: Governance, Strategy, Risk Management, and Metrics and Targets.
- Recommended Disclosures and Metrics: All 14 TNFD disclosures are included in ESRS, ensuring relevant and faithful information on nature-related sustainability matters.
Commitment to Transparency:
“Many have asked us for further guidance to ensure their reporting complies with their mandatory CSRD requirements,” Goldner added. EFRAG and TNFD will continue to support the disclosure of nature-related information, promoting transparency and sustainable development.
Related Article: IFRS Foundation and EFRAG Issue Guidance on Interoperability Between Global and European Sustainability Standards
By aligning their standards, EFRAG and TNFD are providing market participants with the tools needed for consistent and high-quality sustainability reporting, crucial for fostering sustainable development.