Omnibus review of CSRD: Suggestions from the TNFD Co-Chairs on the simplification of the European Sustainability Reporting Standards

  • Date Posted

In light of the ongoing review of the European Sustainability Reporting Standards (ESRS) as part of the European Union Omnibus package, the Taskforce on Nature-related Financial Disclosures (TNFD) sent the following letter to Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, on 10 July 2025.

10 July 2025

Mr Patrick de Cambourg Chair of the EFRAG Sustainability Reporting Board
EFRAG, 35 Square de Meeûs
1000 Brussels
Belgium
cc. European Commissioner for Financial Services and the Savings and Investments Union, Director-General for Financial Stability, Financial Services and Capital Markets Union at the European Commission

Omnibus review of CSRD: Suggestions from the TNFD on the simplification of the European Sustainability Reporting Standards

Dear Mr. de Cambourg,

In light of the ongoing review of the European Sustainability Reporting Standards (ESRS) as part of the European Union Omnibus package, the Taskforce on Nature-related Financial Disclosures (TNFD) offers a specific proposal for consideration by EFRAG with respect to the nature-related topical ESRS (ESRS E2- E5). This proposal was outlined in brief by the TNFD during the previous round of EFRAG consultations.

The Taskforce has valued its multi-year close collaboration with EFRAG [1] and offers this proposal in the spirit of supporting a set of European Sustainability Reporting Standards for nature-related issues [2] that are science-based, practical to implement, aligned to emerging international reporting standards and support the objectives of the EU Green Deal.

Beyond the intrinsic value of nature, business and society critically depend on nature’s provision of ecosystem services. Our impacts on nature today affect the provision of those services in future. New research from the University of Oxford, TNFD and Global Canopy provides over 600 examples of how nature-related risks, stemming from business dependencies and impacts on nature, translate into financially material outcomes to business and economies, across sectors and geographies. [3] This underscores the importance and urgency of a holistic, science-based and practical approach to nature-related corporate reporting to ensure that businesses, their capital providers and other stakeholders have timely, decision-useful information.

The proposal outlined below is based on the TNFD’s extensive research and market engagement on nature-related corporate disclosure and assessment since the Taskforce was launched in 2021 with the support of the G20. Following the release of the TNFD recommendations in September 2023, 600 organisations globally, representing over Euro 13 trillion in Assets under Management (AUM), have now voluntarily committed to making nature-related disclosures aligned to the TNFD recommendations. Over 110 of these TNFD adopters are headquartered in EU jurisdictions and a large proportion of other TNFD adopters outside of Europe fall under CSRD. More than 100 first generation TNFD-aligned disclosure reports have been published in the past 18 months, including many in Europe that have used TNFD guidance to help meet their CSRD requirements.

Just as TCFD has inspired ESRS E1, TNFD – which builds on the same structure, approach and language as TCFD – can serve as an important reference for shaping the ESRS environmental standards beyond climate. This can also support alignment to other international reporting standards and ensure consistency and decision-usefulness of information to the users of corporate reporting.

Our proposal

The Taskforce proposes consideration of the consolidation of the existing ESRS E2-E5 environmental standards into one integrated ‘E2’ nature standard. This would be in addition to, and complement, modifications along the other levers of simplification already under consideration by EFRAG.

Consistent with the conceptual foundations of the TNFD’s approach developed and market tested over the past four years, an integrated nature standard should encompass four of the five drivers of nature change recognised in the best available science from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) [4] (recognising that the fifth driver of nature change identified by IPBES, climate change, is already covered by ESRS E1). An integrated nature standard would also cover all four realms of nature – land, ocean, freshwater and atmosphere.

Three complementary changes would be required to support this proposal to ensure that a consolidated nature standard does not in any way diminish decision-useful reporting of material nature-related issues:

  1. A structured materiality assessment for nature-related issues: It would be essential that undertakings consider potentially material issues against each of these four drivers of nature change in a structured, systematic way to avoid selective screening of potential issues. Ensuring consideration of related climate issues (covered by ESRS E1) would also be critical. The TNFD’s LEAP (Locate, Evaluate, Assess and Prepare) assessment framework provides such an approach to materiality assessment and is now being used successfully by thousands of organisations globally. Application of LEAP is consistent with a double materiality approach, aids simplification, and is already referred to in the ESRS on a voluntary basis. The ESRS could more prominently and explicitly encourage the use of the LEAP approach as a market-tested methodology for nature-related materiality assessment and as an important supplement to other materiality assessment methods, such as stakeholder surveys, already used by CSRD undertakings. [5]
  2. Elevate the current reference to ‘dependencies’ on nature and explicitly refer to the assessment and disclosure of ‘DIROs’, not only ‘IROs’. Market experience with the use of the TNFD LEAP approach and first generation TNFD-aligned disclosures suggests that the concept of ‘dependencies’ has been central to shifting the mindset of businesses with respect to their interaction with nature. Disclosure of dependencies is also seen as highly relevant information for investors and other users of corporate disclosures. At present, dependencies on nature are explicitly disclosed only as part of ESRS E4: Biodiversity and Ecosystems. In our view, dependencies are relevant for disclosure and assessment across all environmental factors. We would encourage EFRAG to consider raising the prominence of ‘dependencies’ in the ESRS (from IROs to DIROs) to facilitate this critical shift in corporate mindset and strengthen the decision-usefulness of ESRS disclosures. This will also ensure that the ESRS are fully aligned with the requirements of Target 15 of the Global Biodiversity Framework (which refers to dependencies, risks and impacts).
  3. Streamline and prioritise the number of quantitative nature-related data points. As EFRAG considers how best to reduce the number of datapoints associated with nature-related standards without losing their scientific rigour, we encourage EFRAG to incorporate a set of cross-sector disclosure indicators organised around the drivers of nature change (excluding climate change already covered by ESRS E1). The TNFD worked with a wide range of scientific organisations, standard bodies and market participants over a 3-year period to review and shortlist assessment and reporting metrics aligned to the drivers of nature change. On this basis, the TNFD recommends 14 ‘core’ cross-sector disclosure indicators and has also developed a set of ‘core’ sector-specific metrics, which are now being used for consistent, decision useful corporate reporting by sector and have been considered in the recently published exposure drafts of the enhanced SASB Standards to improve interoperability and alignment of these standards with the TNFD framework.

Expected benefits of this proposal

As market application of the TNFD’s assessment tools and recommended disclosures over the past 18 months has demonstrated, an integrated approach – covering all four realms of nature, the four drivers of nature change (excluding, but linked to, climate change) and nature-related DIROs – can provide market participants with the ability to assess and disclose material nature-related issues in a way that is both science-based and practical to implement. In short, the TNFD believes that the elements of our proposed approach taken together would make the nature-related aspects of the ESRS stronger in their coverage of nature-related issues and simpler in their application. In particular, it would have the following benefits:

  • Provide a more coherent, conceptually consistent and science-based approach. The ESRS E2-E5 standards currently categorise the CSRD environmental factors as a combination of environmental assets (e.g. freshwater and marine resources, ecosystems), drivers of nature change (e.g. pollution, resource use), thematic issues (e.g. biodiversity) and response strategies (e.g. circular economy). The proposed approach would apply a consistent science-based approach around drivers of nature change across both ESRS E1 (climate change) and a new ESRS E2 (covering nature-related drivers beyond climate change).
  • Reduce the reporting burden by simplifying the structure and presentation of the ESRS. This would include reducing the number, fragmentation and complexity of the disclosure requirements, without compromising the disclosure of information on all major environmental factors listed in the CSRD. This includes their impacts and dependencies on climate, air, land, water and biodiversity, in line with the six environmental objectives of Regulation (EU) 2020/852;
  • Enable the reduction of duplicated mandatory datapoints in the current ESRS E2-E5 standards and ESRS 2 standard by centralising them as cross-cutting datapoints, as already proposed by EFRAG;
  • Ensure a clear and structured approach for the double materiality assessment of all nature-related issues;
  • Improve interoperability with current and emerging global reporting standards on nature-related issues, in particular with the IFRS S1 Standard;
  • Adopt an approach that has been shown to be practical to implement, as evidenced by early TNFD assessment and reporting;
  • Provide report users with a core set of consistent, comparable data across reporting entities, as undertakings in scope of CSRD make progressive improvements in nature-related reporting; and
  • Strengthen alignment of the ESRS to the intent of Target 15 of the Kunming-Montreal Global Biodiversity Framework.

The Taskforce is happy to make itself available, through the TNFD Secretariat, to further explore these elements with EFRAG and its European stakeholders at their convenience. The TNFD intends to provide further technical detail on the proposal outlined above during the upcoming consultation period on the ESRS exposure drafts.

Sincerely,

Co Chair Signatures

[1] Further details on the collaboration between EFRAG and the TNFD are available here: https://tnfd.global/publication/tnfd-esrs-correspondence-mapping/#publication-content.
[2] The TNFD uses the term ‘nature-related issues’ to refer to dependencies and impacts on nature, and related risks and opportunities to the undertaking, also referred to as ‘nature-related DIROs’.
[3] Alvarez, J. et al. (2025) Evidence review on the financial effects of nature-related risks. University of Oxford’s Environmental Change Institute, TNFD and Global Canopy.
[4] The five drivers of nature change identified by IPBES are climate change, land/ocean use change, resource use, pollution and invasive alien species. The TNFD adds ‘freshwater use change’ with respect to the IPBES driver of land/sea use change and adds the potential positive dimensions of nature change.
[5] See TNFD (2023) Guidance on the identification and assessment of nature-related issues: the LEAP approach