TNFD addresses plastic disclosures in new recommendations
The final TNFD Recommendations on nature-related issues have just been released after two years of development. Three main changes were identified in this final version, in response to the feedback the TNFD received through its consultation rounds – engagement on social issues, disclosing sensitive locations and value chain transparency. But no less important is the requirement for plastic disclosures. It is proper that the impact of plastic on nature is recognised.
Final TNFD Recommendations
On 18 September, the Taskforce on Nature-related Financial Disclosures (TNFD) released its final recommendations for nature-related risk management and disclosure. The aim of the Recommendations is ‘to inform better decision making by companies and capital providers, and ultimately contribute to a shift in global financial flows toward nature-positive outcomes and the goals of the Kunming-Montreal Global Biodiversity Framework’.i This framework was preceded by four beta versions in March 2022 (v0.1), June 2022 (v0.2), October 2022 (v0.3), and February 2023 (v0.4).
The Recommendations are consistent with the emerging International Financial Reporting Standards (IFRS)ii and Global Reporting Initiative (GRI)iii reporting standards and align with the Global Biodiversity Framework.iv The International Sustainability Standards Board congratulated the TNFD on this publication, noting that the ‘recommendations can help companies communicate nature-related risks and opportunities to investors and other stakeholders’.v Pilot testing has been undertaken by over 200 companies and financial institutions.
A welcome upgrade from the previous version
This final version had three main differences from the previous beta version. Firstly, there was an added engagement disclosure to ‘describe the organisation’s human rights policies and engagement activities and oversight by the board of management, with respect to Indigenous Peoples, Local Communities affected’. Secondly there was a disclosure requirement for sensitive locations – i.e., locations of assets and/or activities in the organisation’s direct operations and, where possible, upstream and downstream value chain(s) that meet the criteria for priority locations. Thirdly, the organisation’s nature-related dependencies, impacts, risks and opportunities in its upstream and downstream value chain(s) should be disclosed.
But there is a further significant upgrade which should be highlighted.
A plastic disclosure is now recommended. Within the core global impact and dependency indicators, plastic pollution has been introduced. Metric number C2.3, which identifies pollution and pollution removal as the driver of nature change, has plastic pollution as an indicator. The disclosure metric will be the ‘plastic footprint as measured by total weight (tonnes) of plastics (polymers, durable goods and packaging) used or sold broken down into raw material content’.
For plastic packaging in particular disclosing the percentage of plastic that is ‘re-usable, compostable, technically recyclable and recyclable in practice and at scale’ should be shared. This aligns with the GBF targets 7 and 11 (B.1 Services provided by ecosystems).
In Annex 5 of the TNFD Recommendations, these terms are defined. For example, plastic is defined as ‘material containing a polymer (a large chain molecule with repeating molecular units) that can be moulded into a finished product’. This includes thermoplastics (e.g. acrylic, polyethylene, polypropylene, polystyrene, PVC, nylon), polyurethanes (e.g. memory foam), elastomers (e.g. neoprene, silicone), thermosets (e.g. epoxy & silicon resins, vulcanised rubber), adhesives (e.g. PVA), coatings (e.g. latex, plastisol) sealants (water-based latex, acrylic) and polypropylene fibres (e.g. in industrial pavements, concretes). This disclosure is aligned with the CDP Plastics Disclosure requirements.vi Note that the definition of recyclable packaging is a ‘packaging or packaging component that is recyclable if its successful post-consumer collection, sorting and recycling is proven to work in practice and at scale’.
Planet Tracker congratulates the TNFD for recognising the important and detrimental impact plastic is having on nature. To date, the plastic industry has been largely resistant to further disclosures. See ‘Single-Use Plastic: Accounting for Change’. With the TNFD’s connectivity with other bodies – notably IFRS/ISSB, GRI, European Union, TCFD, CDP – perhaps this will open the way for a greater transparency on plastic-related issues. Planet Tracker hopes so.
Source: TNFD 19 September 2023 presentation
i TNFD press release (18 September 2023) – Final TNFD Recommendations on nature related issues published and corporates and financial institutions begin adopting
v IFRS press release (19 September 2023) – ISSB congratulates Task Force on Nature-related Financial Disclosures on finalised recommendations