Climate and Nature Reporting Together: How to Integrate TCFD, IFRS S2 and TNFD

Technical status. The work of the TCFD concluded in 2023. IFRS S1 and IFRS S2 fully incorporate the TCFD recommendations, and IFRS S2 adds more specific requirements and guidance. TNFD’s Recommendations are voluntary unless adopted or required by another authority. Applying one framework does not automatically constitute applying the others.

Limitation. This guide addresses process integration and interoperability. It does not establish legal applicability, reporting compliance, framework equivalence or a universal combined statement for a particular jurisdiction.

Climate and nature teams often build separate governance papers, risk registers, scenario workshops, supplier requests, financial models and reports. This creates duplication and inconsistency. The opposite mistake is to force nature into a climate process that only measures greenhouse gas emissions and climate risks.

A better architecture separates three layers:

Shared operating system. Governance, strategy cycles, risk management, data ownership, location mapping, scenario facilitation, financial planning, evidence and controls.

Distinct technical lenses. Climate-related risks and opportunities; nature-related dependencies, impacts, risks and opportunities; and, where applicable, broader sustainability information.

Framework-specific disclosure outputs. TCFD-style reporting, IFRS S1/S2 statements and TNFD-aligned disclosures, each using its own materiality, definitions, requirements and claims.

This approach reduces rework without creating false equivalence.

TCFD - the original four-pillar architecture

TCFD organised climate-related financial disclosure around governance, strategy, risk management, and metrics and targets. It also promoted scenario analysis and climate resilience. Although the task force’s work has concluded, its structure remains influential and may still be used or required in some settings.

IFRS S2 - climate-related financial disclosure with additional requirements

IFRS S2 is an investor-focused climate disclosure standard designed to be applied with IFRS S1. It integrates and builds on the TCFD recommendations. It includes requirements on climate-related risks and opportunities, strategy and decision-making, resilience, greenhouse gas emissions, industry-based information, targets, financial effects and connected information.

An organisation applying IFRS S1 and IFRS S2 meets the TCFD recommendations, but the reverse is not automatically true because IFRS S2 contains additional requirements and more prescriptive detail.

TNFD - nature-related dependencies, impacts, risks and opportunities

TNFD uses the same four pillars to support market adoption and integration. However, it introduces nature-specific concepts: dependencies and impacts as well as risks and opportunities; location and priority-location analysis; upstream and downstream value chains; stakeholder and rights-holder engagement; state-of-nature and impact-driver metrics; and the LEAP assessment approach.

TNFD’s recommended disclosures can support investor information, but the nature assessment may also use a broader impact materiality lens if the organisation states that approach. This is one reason a shared climate process cannot simply be relabelled as nature reporting.

Figure 1. TCFD, IFRS S2 and TNFD can share governance, risk, scenario, data and financial-planning processes while producing framework-specific outputs.

Governance. Share board oversight, management roles, skills, information flow and controls. Preserve climate expertise and transition oversight, while adding nature DIROs, locations, impacts, rights and engagement.

Strategy. Share business-model, value-chain and financial-planning analysis. Preserve lower-carbon transition, GHG targets and climate resilience, while adding dependencies, impacts, priority locations and nature transition.

Risk management. Share identification, assessment, prioritisation, response and ERM integration. Preserve climate hazards and transition drivers, while adding ecosystem-service decline, impact pathways and location sensitivity.

Scenario analysis. Share governance, facilitation, horizons, assumptions and strategic testing. Preserve climate temperature, policy, technology and physical pathways, while adding ecosystem thresholds, state of nature, rights and climate-nature feedbacks.

Metrics and targets. Share data ownership, methods, controls and progress review. Preserve GHG emissions and climate targets, while adding dependency, impact, state-of-nature, risk/opportunity and location metrics.

Financial effects and reporting controls. Share revenue, cost, asset, liability, finance, insurance, evidence and sign-off processes. Preserve each framework’s reporting basis, boundary, definitions and claims.

The board should receive an integrated view of material climate and nature issues, but the paper should preserve different pathways and decisions. A useful governance agenda includes:

material climate-related risks and opportunities;

material nature-related DIROs and priority locations;

interactions between climate and nature;

progress against climate and nature targets;

transition-plan assumptions and capital allocation;

significant impacts and rights-holder concerns;

data and assurance limitations; and

proposed public claims.

Management can use one sustainability or enterprise-risk committee, provided responsibilities, expertise and escalation are clear. Separate specialist working groups may still be needed for GHG accounting, ecological assessment, human rights or location-specific engagement.

Climate and nature risks can enter the same enterprise-risk framework, but not as one undifferentiated ESG risk. The risk record should retain:

the underlying dependency or impact;

the climate or nature driver;

location and value-chain node;

physical, transition, systemic, legal or reputational pathway;

time horizon and trigger;

financial consequence;

affected stakeholders or rights-holders;

management response; and

evidence and confidence.

For example, drought can be a climate hazard, while degraded catchment condition can reduce water regulation and resilience. Both can affect the same facility, but management actions and metrics may differ. An integrated record should show the connection rather than choose one label.

The same scenario team can use common facilitation, governance, horizon definitions, financial models and strategic-response testing. Nature scenarios should add variables that climate scenarios may omit:

ecosystem-service dependencies;

state of nature and ecological thresholds;

land, water, pollution, resource and invasive-species pressures;

cumulative impacts and competing users;

policy and market response to nature loss;

community and rights-holder response;

restoration uncertainty and time lags; and

nature-related opportunity pathways.

Integrated climate-nature scenarios are particularly useful where the two systems reinforce each other. Coastal ecosystem loss can amplify storm impacts; deforestation can affect rainfall and carbon; water stress can constrain low-carbon technology; and ecosystem restoration can improve both carbon storage and physical resilience.

Climate and nature reporting both benefit from a controlled asset and value-chain register. Core fields may include:

legal entity, facility and asset ID;

coordinates, basin, landscape, biome and jurisdiction;

activity, production and technology;

energy and GHG sources;

water, land, pollution and resource interfaces;

sensitive or priority-location flags;

key suppliers, commodities and customer uses;

dependency and impact pathways;

climate hazards and nature condition;

data source, date, method and confidence; and

responsible owner.

The data can be reused, but definitions and aggregation still require framework-specific control. For example, a site coordinate is common data; the meaning of a material climate risk, priority location or significant nature impact is not automatically common.

A climate action should not be assumed sustainable in every other respect. The organisation should apply a nature and social screen before approval and during monitoring.

Figure 2. Every material climate action should pass a nature trade-off and co-benefit screen before it enters the integrated transition plan.

Examples of potential trade-offs include:

solar or wind infrastructure affecting habitat, migration routes or communities;

hydropower changing river connectivity and sediment flows;

bioenergy increasing land, water, fertiliser or food-system pressure;

critical-mineral extraction affecting ecosystems and Indigenous Peoples;

monoculture afforestation reducing ecological integrity or water availability;

carbon-removal projects creating permanence, land-rights or biodiversity concerns;

desalination increasing energy use and marine impacts; and

electrification increasing material and mining exposure.

The screen should examine alternative sites and designs, the mitigation hierarchy, cumulative impacts, rights and engagement, lifecycle effects, residual impacts and monitoring. A climate benefit does not automatically justify avoidable nature harm.

Co-benefits should also be evidenced rather than assumed. Wetland restoration may support flood resilience and carbon storage, but the claimed outcomes need a reference condition, method, location and monitoring period.

An integrated transition plan can have one strategic ambition and governance process, with separate climate and nature objectives and metrics. It should explain:

the material climate and nature pathways;

common and distinct targets;

business-model and value-chain changes;

capital allocation and financial planning;

scenario and resilience analysis;

location-specific actions;

trade-offs and safeguards;

rights-holder and stakeholder engagement;

assumptions and dependencies; and

progress, missed milestones and corrective action.

The plan should not net nature performance against climate performance. A project cannot compensate for habitat conversion merely by reducing emissions, and a biodiversity project does not replace gross GHG reporting.

Confirm the reporting basis. Identify TCFD, IFRS S1/S2, TNFD and jurisdictional claims separately.

Create one controlled source register. Record current standards, guidance, versions and effective status.

Build a shared entity, asset and value-chain register. Include coordinates and material interfaces.

Run connected but distinct assessments. Preserve climate risks/opportunities and nature DIROs.

Reconcile materiality decisions. Explain where outcomes overlap and where they differ.

Integrate ERM and strategic planning. Use a common risk architecture with pathway-specific detail.

Coordinate scenario analysis. Share horizons, governance and financial channels; add nature variables and thresholds.

Screen transition actions. Test climate actions for nature and social harm, and nature actions for climate effects.

Create a master metric and target register. Flag common data, framework-specific definitions and disclosure outputs.

Draft framework-specific disclosures. Avoid a single generic narrative that satisfies none of the frameworks precisely.

Apply common controls. Reconcile data, methods, claims, financial effects and cross-references.

Approve an integrated story. Ensure the annual report, sustainability report and transition plan are consistent.

A utility plans rapid solar, wind and battery investment to reduce emissions. Its IFRS S2 work covers climate transition risk, capex, GHG targets and scenario analysis. The TNFD assessment identifies habitat fragmentation, water pressure, mineral sourcing and community concerns at several project and supply-chain locations.

Instead of creating a separate nature report after investment approval, the utility adds biodiversity and rights criteria to site selection, requires supplier traceability for selected minerals, uses the mitigation hierarchy, redesigns projects near sensitive habitats and includes restoration and monitoring costs in capex. The integrated scenario analysis tests climate policy, drought, grid resilience, permitting and community response.

The climate strategy remains ambitious, but its delivery pathway changes. Disclosure explains shared governance and capex while preserving separate GHG, nature-impact, location and engagement information. This is an illustrative scenario.

Weak: “Our TCFD process covers nature.” Stronger: Identify which processes are shared and which TNFD-specific assessments and disclosures were added.

Weak: “IFRS S2 and TNFD are aligned.” Stronger: Explain interoperability, common architecture and residual differences without claiming equivalence.

Weak: “Renewable investment is nature positive.” Stronger: Disclose the climate benefit, location-specific nature impacts, mitigation actions, residual impacts and evidence.

Weak: “We use one sustainability scenario.” Stronger: Describe climate and nature variables, horizons, pathways, decision uses and limitations.

Weak: “All metrics are managed in one dashboard.” Stronger: Record definitions, boundaries, units, methods, location detail and framework-specific disclosure status.

Treating the four pillars as proof of equivalence. Common architecture does not remove differences in scope and content.

Using a GHG inventory as the nature dataset. Add land, water, pollution, resources, ecosystem condition, dependencies and impacts.

Keeping nature outside finance. Connect material DIROs to budgets, assets, liabilities, access to finance and insurance.

Double counting common actions. Preserve separate objectives and do not aggregate unrelated climate and nature outcomes.

Ignoring climate-nature trade-offs. Add an approval screen and monitoring for material transition actions.

Publishing one generic materiality statement. Explain each framework’s lens, users, criteria and outputs.

Assuming climate scenarios automatically test nature resilience. Add location, ecosystem, impact, rights and threshold variables.

Creating separate teams with conflicting data. Use common registers, definitions and change control.

Copying the same paragraph into every report. Tailor disclosure to the specific requirement and user need.

Claiming integrated reporting before integrating decisions. Evidence how governance, strategy and capital allocation changed.

TNFD Recommendations v1.0

IFRS S2 Climate-related Disclosures

IFRS Foundation: ISSB and TCFD

Comparison of IFRS S2 with the TCFD recommendations

IFRS educational material: Nature and social aspects of climate-related risks and opportunities

TNFD Guidance on nature in transition plans

TNFD Guidance on scenario analysis

Review this article if IFRS S1/S2 or TNFD are revised; the ISSB issues final nature-related requirements; a jurisdiction replaces TCFD-based rules with ISSB-based requirements; or official guidance changes transition-plan, scenario, metrics or interoperability expectations.