TNFD Biodiversity Disclosure: LEAP Assessment Explained

Key Takeaways

• TNFD uses 14 disclosure recommendations across four TCFD-mirrored pillars, but introduces two concepts not present in climate reporting: dependencies (what nature provides the firm) and impacts (what the firm does to nature).
• The LEAP approach, Locate, Evaluate, Assess, Prepare, is TNFD's structured assessment workflow for identifying and quantifying nature-related issues at the location level, since biodiversity risk is site-specific, not a global aggregate.
• A common investor mistake is treating TNFD as a climate add-on using aggregated footprint data, effective nature disclosure requires geospatial location data overlaid on biodiversity sensitivity maps, not just total tonnes of waste.
• The Kunming-Montreal Global Biodiversity Framework's Target 15 explicitly requires private-sector nature-related disclosure, anchoring investor expectations to TNFD-aligned reporting as a compliance baseline.

What It Is

The TNFD framework consists of 14 disclosure recommendations across four pillars: governance, strategy, risk and impact management, and metrics and targets. The pillars deliberately mirror TCFD so that an organisation already disclosing on climate can extend the same architecture to nature.

The framework introduces two distinct concepts beyond climate. First, dependencies capture the extent to which an organisation relies on ecosystem services (water provision, pollination, soil stability). Second, impacts capture how the organisation alters the state of nature (land conversion, water pollution, species disturbance). Climate disclosure rarely separates these; nature disclosure must.

The Intuition

Climate is largely a single-metric problem (tonnes of CO2 equivalent). Nature is multi-dimensional: species, ecosystems, freshwater, soil, marine systems, all with location-specific dynamics. A factory in a water-stressed basin and an identical factory in a water-rich basin have very different nature footprints even when their financial accounts look the same.

Investors needed a way to surface that location-specific exposure without having to commission bespoke ecological studies for every holding. TNFD's answer is the LEAP approach, a structured assessment workflow that an issuer (or an investor doing due diligence) follows to identify and quantify nature-related issues.

How It Works

LEAP has four phases:

TNFD LEAP approach (final v1.1, October 2023)

L - Locate     Identify the organisation's interface with nature, including
               direct operations, value chain, and sensitive locations.
E - Evaluate   Assess dependencies on and impacts to nature for each location.
A - Assess     Identify nature-related risks (physical, transition, systemic)
               and opportunities, then estimate materiality.
P - Prepare    Set responses, targets, metrics, governance, and external
               disclosures aligned with TNFD recommendations.

The 14 disclosure recommendations follow LEAP outputs. Of particular note is the recommendation to disclose locations of assets and activities in or near sensitive areas, defined by reference to integrated biodiversity indicators such as Key Biodiversity Areas or the Integrated Biodiversity Assessment Tool. This priority location disclosure is what distinguishes nature reporting from emissions reporting.

The TNFD also published 14 sector guidance documents, including specific frameworks for financial institutions, agriculture, food and beverage, mining, and forestry, alongside its core recommendations.

Worked Example

A consumer goods firm sourcing palm oil applies LEAP to a single product line:

• Locate. It maps 32 mills supplying its palm oil and overlays them on the Integrated Biodiversity Assessment Tool. Eight mills sit within 50 km of a Key Biodiversity Area; three sit on peatland-rich terrain in Sumatra.
• Evaluate. Dependencies include freshwater, soil fertility, and pollination. Impacts include land conversion (zero in 2024 within direct supply, but historic conversion within 50 km), water withdrawal, and effluent discharge.
• Assess. Physical risk is moderate (drought exposure in two basins). Transition risk is higher: a major buyer publicly committed to deforestation-free sourcing by 2027, exposing the firm to volume loss if traceability gaps remain. Systemic risk arises from biodiversity-driven yield variability.
• Prepare. The firm sets a 2027 traceability target to mill level for 100% of supply, a 2030 zero-conversion target verified by third-party satellite monitoring, and a freshwater intensity reduction target for two highest-stress basins.

The TNFD report would disclose those targets, the priority locations, the methods used, and the metrics tracked.

Common Mistakes

1. Treating TNFD as a climate add-on. Nature has location-specific dynamics that climate metrics gloss over. A nature-related risk assessment must include geospatial data, not just a footprint number.

2. Skipping value-chain coverage. Many issuers' biggest nature impacts sit upstream in agriculture or extractives, not in direct operations. The TNFD framework explicitly requires upstream and downstream consideration.

3. Confusing impact data with dependency data. Impacts measure what the firm does to nature; dependencies measure what nature provides to the firm. Both matter for risk, but they are not the same metric set.

4. Selecting metrics without locations. A "tonnes of waste discharged" number says little without the receiving water body's status. TNFD core metrics ask for both quantity and the sensitivity of the location.

5. Ignoring the GBF link. The Kunming-Montreal Global Biodiversity Framework adopted in December 2022 contains 23 targets, with Target 15 explicitly addressing private-sector disclosure. Investor expectations are increasingly anchored to GBF targets, and TNFD-aligned disclosures should reference them.

Frequently Asked Questions

Q: What is TNFD biodiversity disclosure in simple terms? It is a structured framework for companies to report how their operations depend on and affect nature, freshwater, ecosystems, species, with disclosures organised across governance, strategy, risk management, and metrics, mirroring the TCFD structure but applied to biodiversity rather than climate.

Q: How does TNFD biodiversity disclosure affect investment decisions? It surfaces location-specific nature risks that aggregate emissions data misses entirely. A company with 10% of its revenue dependent on water from a drought-stressed basin or raw materials from deforestation-risk regions carries different financial exposure than its carbon footprint alone suggests.

Q: What is a real-world example of the TNFD LEAP approach? A consumer-goods firm applies LEAP to its palm-oil supply chain: Locate finds eight mills near Key Biodiversity Areas; Evaluate identifies freshwater, soil, and pollination dependencies plus land-conversion impacts; Assess flags high transition risk from a buyer's 2027 deforestation-free commitment; Prepare sets traceability and zero-conversion targets with satellite verification.

Q: How can investors use TNFD disclosures to improve portfolio analysis? Focus on priority location disclosures, sites in or near Key Biodiversity Areas or peatland, as these carry the highest transition and physical risk. Also check whether the disclosure distinguishes between what the company does to nature (impacts) and what nature does for the company (dependencies), since each drives different financial risk pathways.

Q: How is TNFD biodiversity disclosure different from climate disclosure? Climate risk can be expressed as a single metric (tCO2e) applicable globally. Nature risk is inherently local: withdrawing water in a stressed basin and an abundant one carry entirely different exposures. TNFD therefore requires basin- and site-level data and geospatial context that climate disclosure frameworks do not mandate.

Sources

1. TNFD. "Recommendations of the Taskforce on Nature-related Financial Disclosures, September 2023." https://tnfd.global/wp-content/uploads/2023/08/Recommendations_of_the_Taskforce_on_Nature-related_Financial_Disclosures_September_2023.pdf
2. TNFD. "Guidance on the identification and assessment of nature-related issues: the LEAP approach, v1.1 October 2023." https://tnfd.global/publication/additional-guidance-on-assessment-of-nature-related-issues-the-leap-approach/
3. TNFD. "Recommendations landing page." https://tnfd.global/recommendations-of-the-tnfd/
4. CBD Secretariat. "Kunming-Montreal Global Biodiversity Framework." https://www.cbd.int/gbf

Disclaimer

This article is educational content only and is not financial advice. Nothing here is a recommendation to buy, sell, or hold any security. Consult a licensed advisor before making investment decisions.