Nature-related risk is increasingly being recognised as a driver of financial performance, resilience and long-term asset value, not just an environmental consideration. As expectations around sustainability disclosures continue to evolve, businesses are being asked to look beyond climate alone and consider how biodiversity, land, water and ecosystem services influence project viability and value creation.
The Taskforce on Nature-related Financial Disclosures (TNFD) was established to help organisations identify, assess and disclose nature-related risks and opportunities in a way that informs investment and lending decisions. Just like TCFD before it, the TNFD provides a structured framework for understanding how environmental degradation can translate into financial impacts through supply chains, operational constraints, regulatory approvals, and community expectations.
What has changed recently is the growing signal that nature-related risk is likely to follow climate into mainstream sustainability reporting. The International Sustainability Standards Board (ISSB) has confirmed it will begin developing formal nature-related disclosure requirements, drawing on the TNFD framework. For organisations already building governance, systems and data processes to meet climate-reporting requirements, this suggests that many of the same foundations are likely to underpin future nature-related disclosures.
The TNFD is built around the LEAP approach — a structured process that helps organisations Locate their interfaces with nature, Evaluate dependencies and impacts, Assess related risks and opportunities, and Prepare to respond and disclose. Rather than prescribing metrics upfront, the framework is designed to guide organisations in understanding where nature-related issues could become financially material, using existing data and governance structures as a starting point.
For Australian companies already preparing for mandatory climate reporting under AASB S2, this development is highly relevant. While the ASRS is solely focused on climate-related financial disclosures, Australia has aligned this regime with the ISSB principles. This means future expansions of ISSB standards, including those of nature, are likely to influence the direction of Australian reporting expectations over time.
Nature-related risks are already financially material for many Australian sectors. Land access, water availability, rehabilitation obligations and biodiversity offset requirements can materially affect project approvals, operating costs and long-term value of assets, particularly for mining, energy, infrastructure and agricultural industries.
In many cases, these risks are also closely linked to physical climate risks, meaning climate and nature risks are often interconnected rather than separate challenges.
At Futureproof, we are increasingly seeing clients directly and indirectly considering these climate-nature interdependencies, particularly where physical impacts are already influencing operational and investment decisions.
While nature-related reporting is not yet mandatory, companies do not need to wait for formal requirements to begin engaging with these risks. Using TNFD concepts to identify where nature-related dependencies and impacts intersect with climate risk, land use, water access or supply chains is becoming a logical next step for organisations already investing in climate risk and transition planning. Those that start this thinking early will be better positioned as reporting expectations and investor scrutiny continue to expand.
Want to understand how nature-related risks could affect your business? Futureproof works with boards and management teams to assess exposure and prepare for evolving reporting expectations.