Nature-Related Risks and Opportunities Assessment according to TNFD
Understand where your business depends on water, resources, and natural habitats, and how it impacts them. Albuad Environmental Company helps you turn this relationship into priorities for risk management and improved operational and investment decisions using the LEAP methodology.
What is a Nature Risk Assessment according to TNFD?
It is an assessment that links an organization's activities and value chain to nature to determine its dependence on ecosystem services and its impacts, followed by analyzing the risks and opportunities arising from this relationship. The recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) provide a framework for organizing and disclosing this understanding.
An organization may depend on water availability, soil stability, or production inputs, while its activities impact water quality, land use, or habitat condition. Work begins by understanding these relationships at their actual locations and then identifying what warrants intervention and monitoring.
What do you get? A priority map, dependence and impact register, risk and opportunity matrix, and a response plan with clear indicators and responsibilities according to the agreed assessment scope.
Scope of the Nature-Related Risks and Opportunities Assessment Service
We determine the depth of the analysis based on the nature of the activity, asset distribution, site sensitivity, available data, and the objective of the assessment.
Business boundaries and value chain
Identify the assets, operations, products, and suppliers included in the assessment, and document the boundaries, timeframes, and data provision responsibilities.
Priority locations and resources
Review site coordinates, water sources, land uses, and surrounding habitats to identify dependency or impact areas that require deeper study.
Dependency and impact on nature
Analyze the resources and ecosystem services that support the activity, assess the resulting pressures, and distinguish between measured data, estimates, and gaps.
Operational risks and opportunities
Link the results to resource availability, supply stability, operational efficiency, response costs, and opportunities to improve resource use or supplier management.
Scenarios and financial impact channels
Test specific assumptions about resource changes or ecosystem health, and identify impact channels on costs, revenues, and investments in coordination with the finance team.
Response, measurement, and disclosure
Compare response alternatives, develop indicators, create a data plan, and prepare disclosure inputs that reflect the assessment boundaries and available evidence.
How do we use the LEAP methodology?
After agreeing on the scope and objectives, we use the LEAP stages to organize the work, from identifying the relationship with natural locations to preparing the response and report.
Identify interaction points
Link businesses and the value chain to locations, resources, and habitats, and identify priority locations.
Evaluate dependency and impact
Determine what the activity needs from nature and the impacts it causes, and review supporting evidence.
Risk and Opportunity Analysis
Assess the implications of results on the business, prioritize, and review existing management procedures.
Prepare Response and Report
Define business procedures, responsibilities, and indicators, and prepare the agreed disclosure inputs.
How does nature relate to business risks and opportunities?
The following examples illustrate the analysis logic only. Actual risks, their probabilities, and significance are determined after reviewing the entity's data and site conditions.
| Relationship with Nature | Potential Impact Pathway | Assessable Response |
|---|---|---|
| Reliance on a specific water source. | Decline in availability or change in quality, along with potential treatment costs or disruptions. | Improve water efficiency, review alternatives, and reuse where technical and regulatory requirements permit. |
| Operating near sensitive habitats. | Interference of activities with habitats and the potential need for design modifications or additional protection procedures. | Avoid and minimize impact, compare alternatives, and determine monitoring or restoration needs. |
| Reliance on suppliers in areas affected by resource degradation. | Disruption of quantities or quality, or increase in input costs. | Improve supplier tracking, diversify sources, and develop procurement and resource management standards. |
The scenario is a tool to test potential conditions and assumptions. When financial estimation is requested, we clarify the inputs, assumptions, and result sensitivity, and execute it in coordination with the financial team to the extent that data permits.
TNFD Assessment Outputs
The final outputs are determined in the scope of work and may include:
- Priority Map: Locations, assets, and suppliers that warrant more detailed analysis.
- Dependencies and Impacts Register: Relationship with resources, habitats, sources of evidence, and confidence level.
- Risks and Opportunities Matrix: Issue description, impact channel, priority, and existing management.
- Scenario Cards: Assumptions, time horizon, outcomes, and analysis boundaries.
- Financial Impact Channels: Linking results to costs, revenues, assets, and investments.
- Response and Measurement Plan: Actions, responsibilities, indicators, and data completion needs.
Who benefits from the service?
Industrial facilities, mining, agriculture and food companies, infrastructure developers, tourism destinations, and owners of multi-site portfolios. An appropriate scope can also be defined for government entities and investment groups depending on the nature of their assets and decisions.
The importance of the assessment increases when expanding into new locations, reviewing suppliers, evaluating operational resilience, or preparing for disclosure requests from investors and customers.
What data is required to get started?
- List of locations, their coordinates, and the nature of activities.
- Water sources, key materials, and available usage, discharge, and waste data.
- Previous environmental studies, habitat data, and biodiversity data.
- Key suppliers and supply regions based on available information.
- Assessment objective, priority assets, and data officers.
Implementation mechanism and quality control of results.
We start with a meeting to define the objective and boundaries, then review data and develop a plan to verify priority issues. This is followed by dependency, impact, and risk analysis, and discussing the findings with the environmental, operational, procurement, and financial teams before delivering the response plan.
We link each finding to its source, date, and limitations, and clarify estimates and gaps. When a decision requires a field survey or additional analysis, we define the need, methodology, and outputs before adding them to the scope of work.
The findings can support disclosure inputs across governance, strategy, risk management, impact, metrics, and targets. The coverage of these pillars is determined according to a clear mandate and in coordination with the client's governance and reporting officers.
Frequently asked questions about nature risk assessment.
Is the TNFD assessment the same as an Environmental Impact Assessment (EIA)?
An EIA studies the impacts of a specific project and its management requirements within its scope. On the other hand, a TNFD assessment links dependencies and impacts on nature to business risks and opportunities, and can include multiple assets and the value chain. Data from the EIA serves as one of its inputs.
Does the service include a TNFD certification?
The service includes an assessment, technical outputs, and disclosure inputs according to the agreed scope. TNFD recommendations are a framework for assessment and disclosure, and we do not provide the service as an issuance of certification for the entity.
Can we start with a single site?
Yes. An initial assessment for a site, activity, or group of suppliers can be carried out and then expanded gradually. The outputs clarify the scope boundaries so that the results are used in their proper context.
Does the assessment require a site visit or biodiversity surveys?
This is determined after reviewing site sensitivity, data quality, and the required decision. Desk review may be sufficient to prioritize, while some issues require field verification or specialized surveys within a defined additional scope.
Do all risks convert into financial figures?
We identify financial impact channels first. Quantitative estimation is conducted when data and a suitable methodology are available in coordination with the financial team, while clarifying assumptions and uncertainty. Some results may be qualitative in the initial phase.
How long does the service take and what determines its cost?
This depends on the number of sites, sectors, depth of the value chain, data quality, and the need for field work, scenarios, or financial estimates. We provide a defined scope, schedule, and outputs after an initial review of these elements.
Identify where your business depends on nature
Share the nature of your activity, your locations, and the objective of the assessment so we can propose a scope that outlines the risks and opportunities worth intervening in, along with the data necessary for decision-making.