USGBC seeks to strengthen nature impact indicators for TNFD metrics

Published on
15 Apr 2024
Several people working together on a landscaping project.

Feature image credit: © Dale Horchner, Design Workshop.

USGBC has submitted comments on the Taskforce on Nature-based Financial Disclosures' (TNFD) latest draft document, the "Discussion Paper on Draft Sector Metrics" for the SASB Standards sectors including construction materials, infrastructure and real estate.

The TNFD document's framework will eventually be used by corporations around the world to assess and reduce negative impacts on nature while encouraging positive restorative actions. The principles and many of the indicators presented align with credits in SITES and LEED—not surprising, because our focus has long included protecting and restoring ecosystem services, biodiversity and water resources, as well as promoting low-carbon embodied materials and reducing waste and pollution. Helping make the alignment of metrics in TNFD and these sectors stronger will enable more consistent reporting and streamlined efforts.

We also see additional metrics in our programs—such as the use of environmental product declarations—that are not currently included in TNFD's document, which provides opportunities to add further alignment and depth to the assessment of nature impacts and risks.

In sum, TNFD's discussion paper provides nonbinding, sector-specific considerations on the global metrics for nature impacts recommended for disclosure by participating companies. Several SITES credits are already included in the draft as metrics recommended for use. Our comments suggest areas for strengthening the indicators with additional metrics and recommended opportunities to align with SITES and LEED metrics (see highlights below).

Ultimately, corporations will use the metrics and guidance to better understand their potential impacts on nature—from land disturbance to land restoration—and to help prioritize company policies and investments.

Global context for nature reporting

TNFD was initiated in 2020, and the following year the G20 Sustainable Finance Roadmap called for extending financial disclosure standards, as well as risk analysis, from climate-related alone to include other sustainability areas such as nature and biodiversity. Subsequently, the Kunming-Montreal Global Biodiversity Framework also incorporated this ideal with target 15, calling for businesses to assess, disclose and reduce biodiversity-related risks and negative Impacts.

With this global momentum, in September 2023, TNFD issued the Final TNFD Recommendations, representing a significant development for nature-related reporting. TNFD starts from the finding that “[c]entral banks and financial supervisors are increasingly recognizing nature loss as a source of systemic risk to financial systems and economies,” making nature a core and strategic risk management issue alongside climate change.

As the need for ESG data grows, reporting frameworks such as TNFD will provide the much-needed consolidated approach to reveal an organization’s impact on nature and, ideally, guide better decision-making that protects and restores ecosystems.

TNFD framework: A brief history and description

At its heart, TNFD recommends that companies identify and measure dependencies and impacts, and risks and opportunities, considering positive and negative drivers of nature change, changes to the state of nature and changes to ecosystem services.

TNFD identifies how these drivers and nature change can interact to create nature-related risks, including ecosystem stability risk, physical risk, transition risk and financial stability risk. The recommendations focus on disclosure of these risks under four pillars: governance, strategy, risk and impact management, and metrics and targets.

Companies start with financial materiality (e.g., disclose material information that could reasonably be expected to affect the entity’s financial prospects) and may also report based on impact materiality (i.e., the entity’s most significant impacts on the economy, environment and people).

TNFD’s recommended core disclosure metrics, organized around 14 core global indicators, are largely related to the five drivers of nature change:

  • Climate change.
  • Land/freshwater/ocean use change.
  • Resource use/replenishment.
  • Pollution/pollution removal.
  • Invasive alien species introduction/removal.

The core global metrics aim to be items that can be assessed and reported by all companies. For example, metrics under the driver “pollution” cover such items as wastewater discharge, pollutants released or removed, and light pollution.

Sector-specific metrics

To aid companies endeavoring to assess and disclose these factors and risks, TNFD is now developing further sector-specific metrics, including for construction materials and real estate (e.g., the previously mentioned "Discussion Paper on Draft Sector Metrics" document). These metrics add specificity to how these sectors can apply the core global metrics.

In TNFD's "Discussion Paper on Draft Sector Metrics" document for SASB sectors including construction materials, infrastructure and real estate, we saw the potential for metrics to align with SITES and LEED. For example, under “pollution,” we suggest the guidance reference the SITES and LEED standards for light pollution too, with metrics such as “the proportion of lighting that is compliant” or “the amount and proportion of area with no nighttime light or compliant lighting.”

Another example is related to land use change metrics, where companies in the real estate sector could consider reporting metrics on the “proportion of disturbed area restored for habitat” and “areas with improved biomass density.”

View USGBC's comments to see all of the areas—such as invasive species, integrated pest management and waste diversion/composting—where these TNFD metrics could align with SITES and LEED.

Final thoughts

If the concepts of risks and dependencies looks familiar, it is because the model for TNFD is the Taskforce on Climate-related Financial Disclosure (TCFD). Since TCFD's release of recommendations in 2017, frameworks and requirements for climate-related disclosures have expanded and are in use around the globe by thousands of companies.

So far, 320 companies from 46 countries are early adopters that have committed to reporting TNFD-aligned disclosures. These include building furnishings company IKEA, five cement and concrete companies (including Holcim), a general construction materials company (LIXL), 14 real estate entities, and 10 engineering and construction services firms.

TNFD is an important addition to the corporate sustainability reporting system, as it presents a first step in acknowledging nature, and we expect its use to expand rapidly over the coming years.

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