ISSB plans nature-related disclosure proposals

The International Sustainability Standards Board intends to issue an exposure draft of its nature-related disclosure proposals in October, to be used in conjunction with its existing standards for climate and environmental disclosures.

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ISSB vice chair Sue Lloyd announced the plans Monday during an International Financial Reporting Standards Foundation conference in London. The ISSB has been developing a practice statement on nature-related disclosures since it began taking on the work of the Taskforce on Nature-Related Financial Disclosures as part of a gradual move toward consolidating the various sustainability-related accounting standard-setters. The ISSB is drawing on the TNFD framework it inherited last year to develop the proposals. The practice statement will complement IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, without changing the requirements in the ISSB standards. 

“The ISSB sees a real opportunity to address fragmentation in the disclosure landscape through the proposed practice statement by drawing on the TNFD framework and building on IFRS S1 and IFRS S2,” said Lloyd in a statement Monday. “‘Proposing a Practice Statement enables us to do this without disrupting implementation and adoption of ISSB Standards around the world. However, by developing these proposals in the form of a practice statement, we are leaving the door open for a standard in the future. We look forward to hearing your feedback when we consult on these proposals later this year.”

The practice statement will be a tool that companies can choose to use when providing nature-related information to investors, but a jurisdiction can decide to require companies to use it. Use of the practice statement is not required for companies to comply with ISSB standards. IFRS S1 already requires some nature-related disclosures.

The practice statement will specify aspects about material information on nature for companies to disclose to investors. 

The goal is to avoid overload but support improved nature-related disclosure Companies will able to identify nature-related risks and opportunities, with the option to use the TNFD LEAP approach, short Locate, Evaluate, Assess and Prepare.  

The practice statement will help companies explain how nature affects their strategy and business model, including their value creation, decision-making and resilience, supported by scenario analysis. They will be able to disclose metrics and targets to explain performance. One new metric is being proposed. The approach keeps a path open for future standards. Sustainability Accounting Standards Board and TNFD metrics, Global Reporting Initiative standards and European Sustainability Reporting Standards will be available for use. Location matters, and engagement with indigenous peoples, local communities and affected stakeholders is an important consideration and relevant for disclosure.

Separately Monday, the International Federation of Accountants, the American Institute of CPAs and the Chartered Institute of Management Accountants released a report on how the world’s largest companies are using ISSB and ESRS disclosures. One-third of companies with sustainability information disclosures in 2024 referenced the use or future use of ISSB standards, compared to only 16% that did so the previous year.

Turkey adopted the ISSB standards starting in fiscal year 2024 and several other jurisdictions will implement ISSB requirements in reports that will be published in 2026. Some 20% of companies that disclosed sustainability information in 2024 said they used or plan to use ESRS, which suggests their implementation in the European Union may be having a cross-border impact. Use of other standards and frameworks — the Task Force on Climate-Related Financial Disclosures framework, GRI standards and U.N. Sustainability Development Goals — all fell by single digits between 2023 and 2024.