The Taskforce on Nature-related Financial Disclosures (TNFD) and the European Financial Reporting Advisory Group (EFRAG) jointly released a correspondence mapping between TNFD’s recommended disclosures and European Sustainability Reporting Standards (ESRS). 

This new mapping may help asset managers and private market firms that incorporate sustainability considerations into their investment strategies to better align with the TNFD’s disclosure requirements and the ESRS. 

Let’s explore the correspondence mapping between the ESRS and TNFD in detail. 

What is the correspondence mapping of EFRAG and TNFD?

The EFRAG and TNFD have collaborated for more than two years to maximize the consistency of ESRS environmental standards and the TFND recommendations as they were developed in parallel. The joint correspondence mapping released by EFRAG and TNFD helps align the ESRS environmental standards beyond climate change, such as biodiversity and deforestation — and TNFD recommendations. 

With 14 TNFD-recommended disclosures reflected in the ESRS, there is a high level of correlation between both sustainability standards, which should help companies with compliance under the Corporate Sustainability Reporting Directive (CSRD). 

Key areas of the EFRAG and TNFD mapping

The level of alignment between the ESRS environmental standards and TNFD recommendations is reflected in the following: 

• Materiality approach: The ESRS requires disclosures to be based on the double materiality principle. However, the TNFD provides for more flexibility in implementing the double-materiality approach. 
  
  

• LEAP methodology: TNFD developed the Locate, Evaluate, Assess, Prepare (LEAP) methodology for market participants to identify and assess their nature-related issues. The ESRS states that companies may conduct their materiality assessments regarding sustainability matters using the LEAP approach. 
  
  

• Reporting pillars: Both the ESRS reporting areas and TNFD recommended disclosures are organized around the four disclosure pillars of Task Force on Climate-related Financial Disclosures (TCFD) — Governance, Strategy, Risk Management and Metric and Targets.
  
  

• Recommended disclosures and metrics: All 14 disclosures of TNFD are reflected in the ESRS. Both disclosures are designed to provide relevant and faithful information on nature-related sustainability matters. 

Next steps

By aligning their standards, EFRAG and TNFD are providing public and private market participants with better tools needed for high-quality and consistent sustainability reporting, which is essential for fostering sustainable development.

While you’re here…

Correspondence mapping and collaboration between standards like EFRAG and TNFD may require more detailed due diligence processes, risk monitoring, and ESG performance assessments and reporting when incorporating sustainability standards. These are areas where Auquan can help. 

Auquan automates and streamlines sustainable deal sourcing, due diligence, monitoring, and compliance workflows so teams can move faster and more efficiently. Using advanced AI, Auquan generates material and sustainability insights on any entity worldwide — public or private — fine-tuned for your team’s investment and lending requirements.

Let’s explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best: making strategic decisions ahead of the market.