LEAP? and the usage in ESG/ sustainability?

The LEAP process in ESG and sustainability (especially in frameworks such as the Task Force on Nature‑Related Financial Disclosures [TNFD] and broader environmental‑risk management) stands for a structured approach used by organizations to identify, assess, and manage nature‑related or sustainability‑related impacts, dependencies, risks, and opportunities.

It serves as a practical method for integrating environmental and social considerations into business strategy and reporting.

Meaning of LEAP

LEAP is an acronym representing the following key stages:

1. Locate

   Organizations identify where their direct operations and upstream or downstream value chains interact with nature or environmental and social systems.

   Example: Mapping company production sites, supply chains, or investment portfolios that intersect with sensitive ecosystems.

2. Evaluate

   Once locations and value‑chain segments are defined, the next step is to evaluate dependencies and impacts on sustainability factors—such as water use, emissions, labor practices, or biodiversity.

   This stage helps determine which environmental and social interactions are material to the organization or to affected stakeholders.

3. Assess

   The assessment phase quantifies and prioritizes the risks and opportunities identified. Companies analyse how environmental degradation, regulatory changes, or shifts in consumer expectations might affect business performance, financial stability, or reputation.

   Example: Assessing how carbon‑pricing mechanisms might influence production costs or market competitiveness.

4. Prepare

   In this final stage, the organization develops strategies, governance mechanisms, and disclosures aligned with responsible business practices and global reporting frameworks—such as the IFRS Sustainability Standards, TCFD, or TNFD guidance.

   Preparation includes defining targets, integrating metrics into enterprise risk management (ERM) systems, and publishing transparent sustainability reports.

Purpose and Application

The LEAP process helps organizations move systematically from data identification to strategic integration.

It ensures that sustainability evaluation is evidence‑based, comparable, and aligned with financial risk management. The approach is adaptable—usable in environmental, social, or governance contexts—and compatible with ESG materiality assessments, life‑cycle analyses, and supply‑chain management.

When embedded into corporate governance, LEAP enables firms to respond effectively to investor demands for robust ESG disclosure and to new mandatory frameworks such as the EU  Corporate  Sustainability  Reporting  Directive (CSRD) and ISSB  IFRS S1/ S2 standards.

Some corporate examples:

1. Nestlé S.A.

   
   

   Locate: Nestlé identified hotspots for agricultural commodity sourcing—particularly coffee and cocoa—in regions facing deforestation.

   
   

   Evaluate: The company analyzed the impact of its upstream operations on land use and community livelihoods.

   
   

   Assess: Scenario analyses were conducted to estimate transition risks under future carbon‑pricing and traceability laws.

   
   

   Prepare: Nestlé launched the Forest‑Positive Strategy 2030, embedding transparency tools that connect suppliers through geolocation mapping.

   
   

   → LEAP Insight: Illustrates strong location‑based biodiversity assessment and risk prioritization consistent with TNFD principles.

   
   

2. HSBC Holdings plc

   
   

   Locate: Mapped loan‑and‑investment portfolios by sector and geography to determine exposure to carbon‑intensive industries.

   
   

   Evaluate: Measured financed emissions using PCAF (Partnership  for  Carbon  Accounting  Financials) methodology to evaluate dependencies on high‑emission sectors.

   
   

   Assess: Modeled climate‑scenario impacts on loan default probabilities and capital adequacy.

   
   

   Prepare: Set a 2050  net‑zero target, developed sectoral transition plans, and disclosed climate risk in alignment with TCFD and ISSB  IFRS  S2 (HSBC, 2023).

   
   

   → LEAP Insight: Demonstrates integration of LEAP logic into financial‑risk assessment and ESG disclosure.

3. IKEA Group (Ingka Holdings B.V.)

Locate: Identified operational and supplier sites influencing forestry, energy, and labor systems.

Evaluate & Assess: Conducted full life‑cycle analyses of furniture products, quantifying emissions and resource dependencies.

Prepare: Implemented circularity programs (e.g., material recycling) and aligns its disclosures with GRI  and  CSRD standards (IKEA, 2023).

• → LEAP Insight: Applies LEAP framework at product‑design level, linking dependencies and impacts to strategic innovation.

References & Additional Readings

1. https://mm.group/news/mmgroup/biodiversity-in-business-from-risk-recognition-to-strategic-integration/

2. https://tnfd.global

3. https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

4. https://tnfd.global/wp-content/uploads/2023/08/Recommendations_of_the_Taskforce_on_Nature-related_Financial_Disclosures_September_2023.pdf

5. https://www.ifrs.org/sustainability/knowledge-hub/introduction-to-issb-and-ifrs-sustainability-disclosure-standards/

6. https://kpmg.com/ch/en/insights/esg-sustainability/reporting-assurance/tnfd-recommendations.html

7. https://www.nestle-esar.com/sustainability/waste-reduction/packaging-strategy

8. https://www.nestle.de/nachhaltigkeit/natur-umwelt/forest-positive

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