June 1, 2023
Japanese Bankers Association
JBA comments on the TNFD Nature-related Risk & Opportunity Management and Disclosure Framework Beta v0.4Questions

CommentsGeneral Feedback
Draft Disclosure Recommendations

How could we improve the TNFD Draft Disclosure
Recommendations?

Although the TNFD framework groups together the disclosure of risk management and impact management, it should berecognised that these are very different concepts that require different metrics and different approaches to materiality. We
believe that conflating or linking the two will create confusion about the specific goals and objectives that an entity seeks toachieve and make it difficult for investors to identify information that is useful for making decisions, for regulators to adopt
disclosures that are appropriate to their jurisdiction, and for issuers to actually prepare disclosures. This is because risk
management is concerned with a company's ability to identify, assess, and mitigate potential threats to financial performance
arising from nature-related risks, whereas impact refers to the positive or negative effects of a company's operations on theenvironment and ecosystems. In light of this difference, we suggest that TNFD consider specifying that disclosure
recommendations regarding governance and nature-related risk management should focus on materiality, which we believe isdifferent from the disclosure of impact.

Specific feedback on v0.4 of the TNFD beta framework
Location prioritisationa) Do you agree with the revised criteria to help organisations
No
identify priority locations for L3 of the LEAP approach anddisclosure recommendation Strategy D?

＜If the answer to a) was "No" ＞b) How should the location prioritisation criteria be changed?

We agree that "integrity" is included in the criteria for location prioritisation. On the other hand, the Guidance should explain
the level of integrity degradation of ecosystems to be prioritised and the relationship between business and the degradation ofrelevant ecosystems to assess its importance.

Disclosure metricsb) From the 14 core global disclosure metrics, are there any
that you think are not relevant to all sectors or possible forcompanies to report? Please specify which.

None in particular. The concept of core global disclosure metrics is presented in this version, and we believe this explanation
is sufficient to confirm the extent to which a company's strategy is resilient. On the other hand, in general there is no
explanation of how to perform disclosure in concrete terms, and it is left to each company to decide. From the perspective of
how companies' efforts in each sector can be compared and integrated to contribute to the 2030 targets of the KunmingMontreal Global Biodiversity Framework and ensure consistency, more specific guidance on disclosure methods is needed.

Additional Guidance by Sector and BiomeHow helpful is the additional guidance for sectors and biomes
provided in this release? What changes would you like to see
to make this additional guidance more useful?

<Annex 4.4: Additional draft disclosure guidance for financial institutions - Strategy>- We believe that it is difficult for financial institutions to develop investment and financing policies that include biomes,
which vary from location to location.
- When conducting a scenario analysis related to natural capital, financial institutions are required to disclose how it isintegrated with or deviates from the scenario analysis and stress tests conducted in a climate-related context. We understandthat taking both climate change and nature into account and making integrated decisions in the future is consistent withrequiring an explanation of the relationship with climate in the recommended disclosures. We recognise that the differencewith scenario analysis in climate change is location, which is a more bottom-up approach at a stage when trading partners are
not making progress in disclosure. Please explain how climate-related scenario analysis and natural capital scenario analysis
can be developed into an integrated approach.
<Annex 4.4: Additional draft disclosure guidance for financial institutions - Risk and Impact Management>
Financial institutions' involvement with cases brought to the NCP under the OECD Guidelines for Multinational Enterprises is
proposed as Recommended Disclosure D of Risk and Impact Management, but we believe this is inappropriate for thefollowing reasons:- Cases in which the NCP mediates a dialogue can not be disclosed during the mediation period according to theconfidentiality agreement, and after mediation ends the NCP discloses its background and views. Therefore, it is not possible
for companies to disclose information in a timely and appropriate manner and it is inappropriate to include this in the TNFD
recommendations.
- Since the OECD Guidelines for Multinational Enterprises are not limited to financial institutions, it is inappropriate toinclude them only in additional guidance for financial institutions.

Target setting

Is the approach TNFD has take to target setting appropriate?
How could the draft guidance on target setting be improved?

In Annex 4.8, the concept of target setting was organised and made easier to understand by presenting 3 types of targets(nature interface targets, operational targets, business model targets). On the other hand, it is unclear whether science-basedtarget setting, which is regarded as a key point of target values and trajectory setting, is possible in operational targets andbusiness model targets. More careful guidance is needed.
In addition, although annual reporting is recommended, it might be difficult to detect changes in some indicators on a year-toyear basis. Therefore, it is better to present the idea of indicators that do not require annual reporting.
It is recommended for targets to be updated at least every five years, but another idea would be to align the timing of such
updates with updates to the company's mid-term management plan, etc. A fixed term could undermine a company's initiativeand ingenuity.