The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced that it will begin work on standard setting for disclosure requirements on nature-related risks and opportunities, with plans to have an initial draft released by late next year.
The ISSB said that the new initiative is being undertaken in response to identified investor needs for nature-related disclosures, although it hasn’t yet decided if it will develop a new standalone standard, amend its current standards with new reporting requirements, or take another potential approach.
The IFRS Foundation’s International Sustainability Standards Board was launched in November 2021, with the goal to develop IFRS Sustainability Disclosure Standards to provide investors with information about companies’ sustainability risks and opportunities. The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023.
As part of its 2024 – 2026 work plan following the release of its initial standards, the ISSB has been researching risks and opportunities associated with sustainability topics beyond climate, including exploring information about sustainability-related risks and opportunities associated with biodiversity, ecosystems and ecosystem services (BEES), and deciding whether to pursue standard-setting for disclosure requirements on these topics.
As part of its new standard-setting work the ISSB said that it will draw on the Taskforce on Nature-related Financial Disclosures (TNFD) framework, including its recommendations, metrics and guidance, including the Locate, Evaluate, Assess, Prepare (LEAP) approach.
The TNFD published its final recommendations for nature-related risk management and disclosure in September 2023, centered around 14 recommended disclosures, aimed at helping inform better decision-making by companies and capital providers on nature and biodiversity-related risks, opportunities, dependencies and impacts. To date, more than 730 companies and financial institutions, accounting for more than $9 trillion in market capitalization and $22 trillion in assets under management have committed to adopt the TNFD recommendations.
Earlier this year, the IFRS Foundation and TNFD announced a formal collaboration aimed at enabling nature-related financial disclosures for capital markets, including sharing research, knowledge and technical expertise to inform the ISSB’s BEES initiative, as well as the nature-related aspects of its industry-focused SASB standards enhancement work.
Following the ISSB’s announcement, the TNFD announced that pause the commencement of any new technical guidance beyond that currently in progress, turning its attention to supporting the ISSB’s work program.
The ISSB said that it will agree on its approach to nature-related standard-setting in the coming months, with options available including a new standard, a mix of application guidance or amendments to existing ISSB Standards, industry-based guidance or additional sources of guidance. The organization added that it aims to have an exposure draft of incremental disclosure requirements ready by the Convention on Biological Diversity COP17 in October 2026.
ISSB Chair, Emmanuel Faber said:
“The ISSB recognises that there is a clear investor need for information about nature-related risks and opportunities. Drawing on the TNFD framework enables us to meet this need efficiently, reducing fragmentation and building on leading practice.”
