ESRS and TNFD: Starting from scratch?

Introduction

Sustainability teams in the EU are already struggling with the mandatory reporting requirements of the ESRS, so how and when will they be able to tackle voluntary frameworks like the TNFD?

First, it’s important to understand the difference between these frameworks. The ESRS, part of the EU's CSRD, requires broad sustainability reporting, covering environmental, social, and governance (ESG) factors. In contrast, the TNFD is a voluntary global framework focused on helping companies disclose and manage nature-related financial risks.

To help companies avoid starting from scratch and to make things easier, the Taskforce on Nature-related Financial Disclosures (TNFD) and EFRAG have published a guide showing how the ESRS and TNFD’s recommended disclosures overlap, allowing companies to build on what they’re already doing.

Key highlights of the ESRS-TNFD alignment

1. Double Materiality: ESRS mandates a double materiality approach (financial and impact), while TNFD offers flexibility to use the same approach.
2. LEAP Framework: TNFD’s LEAP approach (Locate, Evaluate, Assess, Prepare) is integrated into ESRS to help companies assess nature-related issues and materiality.
3. Reporting Structure: Both frameworks follow the familiar TCFD pillars—Governance, Strategy, Risk Management, and Metrics & Targets—ensuring consistency.
4. Disclosures and Metrics: All 14 TNFD disclosures are reflected in ESRS, making it easier for companies to meet both standards efficiently.

Conclusion

Once companies have tackled their CSRD-compliant sustainability report, transitioning to TNFD disclosures and highlighting the nature-related risks will feel much less daunting, as much of the groundwork will already be in place!

At Leeana, we’ve built the LEAP approach right into our platform and are already offering all the data you need for ESRS E4 compliance. Book a demo to see how it works!

SourceS

TNFD & EFRAG, TNFD - ESRS Correspondence mapping (June 2024), available at https://tnfd.global/wp-content/uploads/2024/07/Correspondence-mapping-ESRS-and-TNFD.pdf?v=1721743967