Nature and Climate Risk: Reporting Gaps for Finance Teams

Reviewed by Viveck J. Suman on 6 November 2026

Quick answer: A carbon footprint covers greenhouse gas emissions only. Nature-related risks, such as water scarcity, soil loss and damage to ecosystems a business depends on, are a separate set of financial risks. The Taskforce on Nature-related Financial Disclosures (TNFD) gives companies a framework of 14 recommended disclosures to report them.

Why carbon alone leaves a gap

A company can have a clear emissions inventory and still depend on a river basin that is running short of water or on soil that is degrading. Those dependencies can affect costs, output and asset values, but they do not appear in a Scope 1, 2 or 3 figure.

What TNFD recommends

TNFD’s recommendations follow the same four pillars finance teams already know from climate reporting:

• Governance
• Strategy
• Risk and impact management
• Metrics and targets

TNFD also offers a method called LEAP (Locate, Evaluate, Assess, Prepare) for working out where a company meets nature and how much it depends on it.

Where the standards are heading

The ISSB, which sets the IFRS S1 and S2 sustainability standards, has been working on nature-related disclosures and has said it will draw on the TNFD framework. Check the IFRS Foundation site for the current stage of that project before relying on any date.

Three reporting gaps to check

1. Location data. Do you know which sites and suppliers sit in water-stressed or ecologically sensitive areas?
2. Dependencies. Have you listed which natural inputs your revenue relies on (water, raw materials, pollination)?
3. Link to the numbers. Are any nature risks reflected in impairment tests, insurance or capital planning?

Frequently asked questions

Is TNFD mandatory in India? No. It is voluntary. Indian listed companies report under SEBI’s BRSR, which has its own environmental indicators.

Is nature reporting only for large companies? TNFD is designed for any size, but the workload scales with how much your business depends on natural resources.

Where do I build these skills? See all our programmes to find the one that fits your role.

Sources: TNFD recommendations; IFRS Foundation, nature-related disclosures project. Last checked 6 November 2026.