For years, when companies thought about “going green,” their minds went straight to carbon footprints. It is what dominates conversations; carbon calculators, net-zero commitments, scope 1–3 emissions, decarbonisation pathways, energy transition strategies. Yet despite the global obsession with carbon, few businesses have paused to ask the next essential question: Do we truly understand the wider environmental impacts we create, especially those affecting nature and biodiversity?
Nature is collapsing faster than supply chains can adapt. Forests are shrinking, oceans are warming, fisheries are collapsing, and pollinators are disappearing. In many cases, businesses unknowingly exacerbate this decline, while simultaneously relying on the very ecosystems they degrade.
Until recently, companies lacked a global framework to measure or disclose these nature-related risks. That changed with the formation of TNFD.
This is what the Taskforce on Nature-related Financial Disclosures (TNFD) tries to tackle. The TNFD is rapidly moving from a niche sustainability concept to a mainstream corporate expectation. More than 500 companies and financial institutions have already committed to begin nature-related reporting aligned with TNFD, a significant rise from 320 earlier this year, as announced at the COP16 Biodiversity Conference. These companies will publish TNFD-aligned disclosures starting from FY2024 or FY2025, signalling a turning point in global sustainability governance.
Nature Loss Matters to Business More Than Ever
For decades, the “E” in ESG was almost synonymous with climate. Yet the data tells us a different story unfolding beneath the surface. Wildlife populations have fallen by an average of 73% between 1970 and 2020, according to WWF’s Living Planet Report. More than half of global GDP—about US$58 trillion—depends on nature in some form, from raw materials to water, pollination, soil fertility, and climate regulation.
What Exactly Is TNFD and How Does It Differ from TCFD?
TNFD was launched in 2021, supported by UNDP, UNEP-FI, WWF, Global Canopy, and backed by global regulators and financial institutions. It was modelled after the well-known TCFD, but rather than focusing on climate change alone, TNFD addresses the full spectrum of nature-related risks and dependencies.
The distinction matters. Climate risk focuses on greenhouse gases and temperature-related impacts. Nature-related risk goes deeper. It examines how ecosystems, biodiversity, water systems, land use, and natural capital interact with business activities. TNFD reflects the reality that climate and nature are interdependent yet distinct. A company may have low carbon emissions yet still cause biodiversity destruction. Conversely, a nature-dependent company may face supply chain disruption unrelated to its carbon footprint.
Why Corporates Need to Care About Nature-Related Risks
Nature-related risks refer to threats arising from environmental degradation, biodiversity loss, and ecosystem decline. They manifest through disruptions in raw materials, unstable supply chains, regulatory tightening, and shifting market preferences. For example, agricultural companies face yield uncertainty as soil health deteriorates. Food manufacturers risk shortages as pollinators decline. Construction firms may struggle with water scarcity on project sites. And any sector with land-based operations faces growing scrutiny over ecological impacts.
In turn, companies also depend on nature. From freshwater to pollination, the ecosystem services are woven into business operations. When these services decline, the financial consequences are immediate and tangible.
Now, Biodiversity Reporting Is Becoming a Corporate Requirement
Global policy momentum is shifting fast. ISSB is exploring new standards on biodiversity and ecosystems, and the TNFD framework is shaping future disclosure requirements. CDP is integrating the TNFD structure into its questionnaire. The GRI’s new Biodiversity Standard was developed in close collaboration with TNFD.
This convergence signals that nature-related reporting is not a passing trend. It is becoming embedded in mainstream corporate disclosures.
For organisations seeking guidance on implementing these standards, AsiaESG offers comprehensive support through its ESG training programmes, designed to equip teams with the knowledge needed to navigate complex reporting requirements.
As of today, TNFD is not legally mandatory in either Singapore or Malaysia. However, both markets are moving towards mandatory nature-related reporting in several ways.
In Singapore, regulators increasingly encourage biodiversity-related disclosures as part of climate reporting evolution. The Monetary Authority of Singapore (MAS) has signalled enhanced expectations for environmental risk management frameworks, including nature risk amplification.
In Malaysia, Bursa Malaysia’s Sustainability Reporting Framework emphasises biodiversity and ecosystem impact. The direction of travel is clear: companies will soon be expected to disclose nature-related financial risks in alignment with global standards such as TNFD, ISSB, and GRI.
In practice, TNFD alignment is quickly becoming a de facto expectation for listed companies, banks, and multinational supply chain participants.
The Core Elements of the TNFD Framework
TNFD is structured around similar pillars to TCFD, which consist of Governance, Strategy, Risk Management, and Metrics & Targets. Within these pillars, companies are expected to identify, assess, and disclose their nature-related dependencies, impacts, risks, and opportunities.
At the heart of TNFD is the LEAP approach: Locate, Evaluate, Assess, Prepare. Companies must locate where they interact with nature, evaluate dependencies and impacts, assess risks and opportunities, and prepare responses for governance and disclosure.
This step-by-step structure helps companies understand not just where they harm nature, but also where nature matters most to their bottom line.
How Corporates Can Identify Nature-Related Risks and Dependencies
Mapping Operational Footprints and Ecological Locations
The first step in identifying nature-related risks is to move beyond headquarters-level reporting and examine the specific ecosystems where a company operates. This begins with mapping operational sites and supply chain locations, then overlaying them with ecological datasets such as water basins, biodiversity hotspots, protected areas, forest cover, and land-use classifications. This spatial analysis reveals the environmental contexts surrounding each site, offering the clarity needed to understand how local ecosystems interact with business activities. Without this place-based lens, nature-related risks often remain invisible in traditional ESG reporting.
Evaluating Nature Dependencies Across Value Chains
Once locations are mapped, companies must evaluate the ecosystem services they depend on to operate effectively. These dependencies may include access to freshwater for manufacturing, soil quality for agricultural sourcing, fish stocks for food production, forest cover for raw materials, or pollination for crops. Each dependency carries its own ecological vulnerabilities. For example, a water-intensive facility located in a stressed watershed faces an immediate operational risk when seasonal droughts intensify. Evaluating these dependencies allows companies to understand where their business continuity relies on stable, functioning ecosystems.
Assessing Impacts Generated by Business Activities
In parallel with identifying dependencies, companies must assess the direct and indirect impacts their operations have on nature. These impacts can include deforestation caused by land expansion, degradation of soil from agricultural practices, pollution from industrial activity, habitat fragmentation from infrastructure development, or water contamination from chemical usage. Quantifying these impacts is essential because they often correlate with increasing regulatory scrutiny and community expectations. A clear assessment shows where operations may be contributing to ecological decline and where mitigation strategies are urgently required.
Recognising Exposure Embedded Within Global Supply Chains
Many corporates underestimate the depth of their nature-related exposure because risks often originate in upstream supply chains rather than within their own operations. Agricultural commodities may come from deforestation-prone regions. Minerals may be sourced from ecologically sensitive areas. Manufacturing partners may operate in water-stressed basins. When companies conduct a thorough review, they frequently discover that significant portions of their supply chain lie within fragile or high-biodiversity zones. This realisation often marks the turning point that shifts nature-related risk from a secondary concern to an urgent strategic priority.
Understanding Regulatory Pressure and Future Compliance Obligations
As governments and financial regulators tighten biodiversity and environmental legislation, companies increasingly face exposure to nature-related compliance risks. New rules on deforestation-free supply chains, water extraction limits, soil protection, marine ecosystem preservation, and hazardous chemical use are becoming more common globally. Corporates operating in high-impact sectors—such as agriculture, food production, construction, manufacturing, and extractives—are particularly vulnerable to regulatory shifts. Identifying these emerging compliance pressures early allows companies to prepare rather than react, reducing both financial and reputational risk.
How to Measure Biodiversity Impact
Measuring biodiversity impact requires both ecological and spatial analysis. Companies often use metrics such as species abundance, ecosystem condition scores, land-use intensity, and habitat fragmentation indices.This form of measurement is inherently place-based—biodiversity changes from one site to another, making standardisation a bit challenging. However, these are the metrics of what companies commonly use to measure biodiversity impact.
1. Species Abundance Assessments
This involves tracking the number of individual organisms within key species populations in and around operational sites. Declines may signal ecological stress caused by business activities, while stability suggests less disruption.
2. Species Richness and Diversity Indexes
Companies measure how many species exist in a given location and how evenly they are distributed. High species richness indicates a healthy ecosystem, while declines may point to habitat degradation.
3. Ecosystem Condition Scores
These scores evaluate the health of an ecosystem—such as forests, wetlands, rivers, or coastal zones based on factors like vegetation structure, soil quality, and presence of invasive species.
4. Habitat Extent and Quality Assessments
Corporates determine how much natural habitat remains in areas where they operate or source materials. They also assess habitat quality, such as fragmentation, degradation, or ecological connectivity.
5. Land-Use and Land-Use Change (LULUC) Analysis
This method tracks how business operations alter land types, e.g., forest to farmland, wetlands to industrial zones. Land-use change is a major driver of biodiversity loss and features prominently in TNFD analysis.
6. Habitat Fragmentation Metrics
Fragmentation occurs when large ecosystems are broken into smaller patches due to development. Measuring patch size, connectivity, and edge effects helps identify long-term ecological risks.
7. Water Quality and Freshwater Biodiversity Monitoring
Companies monitor nutrient loads, chemical pollution, turbidity, and other indicators that directly impact aquatic biodiversity. Freshwater ecosystems are extremely sensitive to corporate activities.
8. Soil Health and Microbial Diversity Testing
Healthy soil supports plant and insect diversity. Soil degradation, contamination, or erosion is measured to understand how operations affect below-ground biodiversity and agricultural productivity.
9. Ecosystem Service Valuation and Dependency Scoring
Businesses quantify their reliance on natural systems—such as pollination, water filtration, or timber supply—and measure how their activities impact these ecosystem services. This links biodiversity to financial risk.
10. Satellite Imaging for Biodiversity and Land-Use Monitoring
High-resolution satellite data helps companies detect deforestation, habitat degradation, illegal logging, or land-use changes across large and remote areas. It is essential for monitoring global supply chains.
There are also other tools to measure biodiversity impact such as satellite imaging, geospatial GIS mapping, environmental DNA (eDNA) Biodiversity Surveys, and ecosystem service evaluation models that help companies quantify location-based impacts.
For companies struggling with the complexity of biodiversity measurement and reporting, AsiaESG provides practical guidance on how to make the ESG reporting process less painful, offering strategies to streamline data collection and framework selection.
Quantifying Nature-Related Financial Risks
When nature declines, the financial risks for businesses are concrete. Drought increases operating costs for manufacturers. Declining fish stocks threaten food producers. Soil degradation weakens agricultural output. Flooding disrupts construction and infrastructure. Regulatory crackdowns raise compliance costs for mining and timber companies. Insurance premiums rise for projects in ecologically sensitive zones.
Financial quantification requires linking ecosystem degradation to cost impacts, revenue volatility, capital expenditure needs, and long-term valuation shifts. Investors are increasingly demanding this level of transparency.
Ignoring nature-related risks already carries consequences. Companies face investor pressure, supply chain exclusion, regulatory scrutiny, and reputational risk. Financial institutions are beginning to integrate nature risk into lending criteria, meaning companies could face higher financing costs or investment withdrawal if they cannot demonstrate responsible nature stewardship. This is what happens If companies do not adopt TNFD. Also, without TNFD alignment, companies risk being left behind as global disclosure standards converge around nature.
Industries Most Exposed to TNFD Expectations
Some industries are naturally more exposed due to their operational footprint or resource dependency. These industries carry elevated risk and scrutiny:
- Agriculture
- Food and beverage
- Consumer goods
- Forestry
- Mining
- Oil and gas
- Energy
- Construction
- Chemicals
- Textiles
- Real estate
- Logistics
- Transportation
- Tourism
How to Communicate Nature-Related Risks to Investors
Investors expect clear, quantitative, and location-based disclosure. They want certainty around risk exposure, mitigation strategies, time horizons, and financial impacts. TNFD-aligned reporting helps companies articulate these risks credibly, integrating nature into financial planning and strategic decision-making.
For organisations seeking to understand broader ESG implementation beyond nature-related disclosures, AsiaESG’s comprehensive guide on navigating ESG excellence provides valuable insights from industry experts on building robust sustainability frameworks.
Prepare Your TNFD Disclosure with AsiaESG
The shift from climate-only reporting to nature-inclusive reporting is accelerating. TNFD is now one of the fastest-growing ESG frameworks in corporate adoption, and businesses that prepare early will gain an advantage in investor confidence, regulatory readiness, and long-term resilience.
As companies in Singapore, Malaysia, and the wider region navigate this transition, expert support becomes an essential asset. AsiaESG provides tailored ESG training programmes designed to equip both individuals and organisations with the knowledge and skills to meet evolving sustainability expectations. As an official partner of GRI and GRESB and an accredited HRD training provider, AsiaESG delivers professional guidance to strengthen your sustainability reporting capabilities, ensuring regulatory compliance and investor-grade disclosures across climate and nature-related topics.
