TNFD Priority Locations Explained: Selection Criteria, Granularity and Disclosure

Educational practitioner material. TNFD recommendations and LEAP guidance should be applied to the organisation’s facts, stated materiality approach and reporting context.

A material location is identified through the organisation’s assessment of dependencies, impacts, risks and opportunities under its stated materiality approach. Materiality can emerge after Evaluate and Assess: a location may become material because an ecosystem-service dependency threatens cash flow, because an impact is material under a broader impact lens, or because an opportunity is strategically significant. The methodology should state which lens was applied and how location influenced the conclusion.

Material locations and sensitive locations overlap but are not identical. A logistics hub may face a material water or flood risk without meeting the organisation’s sensitivity thresholds. Conversely, an operation in a high-integrity ecosystem is a sensitive priority location even where current activity is small and no material issue has yet been concluded.

Figure 1. Priority-location selection matrix. London Reporting Academy visual.

TNFD’s location general requirement encourages geographic disaggregation as far as possible and improvement in geolocation precision over time. The organisation should not aggregate or disaggregate in a way that obscures material information. The right unit is the one that preserves the differences relevant to the dependency, impact, risk or opportunity.

Aggregation test

Do the grouped locations share the natural characteristics and issue being disclosed?

Would separate presentation change a user’s understanding of exposure, impact, risk, response or target coverage?

Are water-stressed and non-stressed basins being inappropriately combined?

Are high-integrity and degraded ecosystems being combined despite different consequences?

Can the organisation explain the scientific and reporting rationale for aggregation and preserve the underlying register?

Water risk should be assessed at the relevant hydrological scale and should cover the physical risk relevant to the activity - for example scarcity, drought, flood or quality. A site in a country with moderate average risk may be in a high-risk basin, and two sites in the same country can require different conclusions. The source date and scenario or period also matter because risk can change seasonally and over time.

Ecosystem integrity requires both condition and trend. High-integrity ecosystems can be sensitive because additional pressure may create disproportionate loss. Rapidly declining ecosystems can be sensitive even when current integrity is already low. The organisation should retain the indicator, threshold, spatial resolution and trend period used and avoid describing a modelled index as a definitive local ecological survey.

Strategy D extends, where possible, to upstream and downstream value chains. The organisation may have exact locations for strategic suppliers, approximate origin regions for commodities and no origin evidence for some Tier N activities. This is not a reason to publish a false level of precision. The register should show verified, declared, estimated and unknown locations separately, use proxies at the best defensible scale and explain how traceability will improve.

When full traceability is not proportionate or available, selection can combine commodity/activity screening, exposure concentration, probable origin, sensitivity layers and supplier evidence. The public disclosure should explain breadth, depth and limitations. The internal register should preserve the supplier or counterparty detail needed for engagement and control, subject to data protection and contractual requirements.

TNFD does not provide a blanket reason to omit all location information because it is commercially sensitive. There can nevertheless be genuine legal, physical-security, privacy, Indigenous data sovereignty or contractual concerns about publishing exact coordinates or counterparties. This should be treated as a controlled publication judgement, not as a way to remove material information.

Why this structure works: it distinguishes sensitive and material, gives counts and coverage, states granularity, explains proxy and aggregation, preserves the improvement plan and avoids claiming that all value-chain origins are known. The numbers are illustrative and should not be copied.