The ISSB develops sustainability disclosure standards under the IFRS Foundation to help investors understand sustainability-related risks and opportunities that could affect a company's prospects. Its existing standards, IFRS S1 and IFRS S2, cover general sustainability-related disclosures and climate-related disclosures, respectively. IFRS S1 already requires companies applying the standard to disclose material information about nature-related risks and opportunities that could reasonably be expected to affect their prospects. However, the existing standards do not provide specific guidance on how to report nature-related matters. The proposed IFRS Sustainability Disclosure Practice Statement would provide additional guidance on how companies can disclose information about their dependencies on and impacts on nature, and their exposure to nature-related risks and opportunities that could affect their prospects. Rather than introducing a standalone mandatory standard at this stage, the ISSB has chosen a Practice Statement to complement IFRS S1 and IFRS S2 while minimising disruption for companies implementing these standards. The consultation will also seek feedback on whether this is the most appropriate approach for nature-related disclosures.
The exposure draft builds on the four core areas of sustainability-related financial disclosures: governance, strategy, risk management, and metrics and targets. It provides additional guidance on nature-related matters, including how companies identify and manage related risks and opportunities, assess their exposure and report relevant information to investors.
Companies would be guided in identifying how their dependencies on nature and impacts on natural resources may create risks or opportunities, including those associated with water scarcity and ecosystem degradation.
Companies would be guided in identifying how their dependencies on nature and impacts on natural resources may create risks or opportunities, including those associated with water scarcity and ecosystem degradation.
Disclosures would address how companies have responded, and plan to respond, to nature-related risks and opportunities through their strategies and business decisions.
The proposed guidance addresses how companies oversee nature-related risks and opportunities and how these are identified, assessed, prioritised and monitored through their risk management processes.
The proposals also address the location of assets and business activities across the value chain and the connections between nature-related and climate-related risks and opportunities.
Companies would provide information about the resilience of their strategies and business models to uncertainties arising from nature-related risks.
The proposals include information about the amount and percentage of assets or business activities vulnerable to nature-related risks, as well as those aligned with nature-related opportunities.
Companies would disclose information about their targets, including their objectives, location-specific aspects and whether and how the targets have been informed by laws or regulations.
Together, these disclosures aim to give investors a clearer understanding of how nature-related matters could influence a company's financial outlook and long-term resilience.
The ISSB has drawn extensively on the Taskforce on Nature-related Financial Disclosures (TNFD) framework in developing its proposals. Companies already using the TNFD framework may therefore be better positioned to apply the proposed guidance, although they will need to assess their disclosures against the final requirements. The proposed guidance is intended to complement the ISSB's existing sustainability disclosure standards. Companies using other reporting frameworks should assess how their current disclosures relate to the proposed guidance and whether any information gaps remain. This alignment is relevant for companies operating across multiple markets, where overlapping reporting frameworks can create additional data collection and reporting requirements. Greater interoperability could help organisations build on existing processes, reduce duplication and improve the consistency of information provided to investors and other stakeholders.
Nature-related risks can affect more than environmental performance. They may influence operating costs, supply chain reliability, resource availability and long-term business continuity. For example, a manufacturer operating in a water-stressed region may face production disruptions as water availability declines. Similarly, a company dependent on agricultural inputs may experience supply constraints as soil quality deteriorates or ecosystems become less resilient. Understanding these dependencies can help businesses identify vulnerabilities and incorporate them into strategic and financial planning. Companies can begin preparing for evolving disclosure expectations by:
𝗠𝗮𝗽𝗽𝗶𝗻𝗴 𝗻𝗮𝘁𝘂𝗿𝗲-𝗿𝗲𝗹𝗮𝘁𝗲𝗱 𝗱𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝗰𝗶𝗲𝘀: Identify the natural resources and ecosystem services essential to operations and supply chains.
𝗔𝘀𝘀𝗲𝘀𝘀𝗶𝗻𝗴 𝗲𝘅𝗽𝗼𝘀𝘂𝗿𝗲: Determine which assets, facilities, suppliers and business activities may be vulnerable to nature-related risks.
𝗦𝘁𝗿𝗲𝗻𝗴𝘁𝗵𝗲𝗻𝗶𝗻𝗴 𝗱𝗮𝘁𝗮 𝗾𝘂𝗮𝗹𝗶𝘁𝘆: Review whether existing systems provide reliable information to support sustainability disclosures.
𝗜𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗶𝗻𝗴 𝗳𝗶𝗻𝗱𝗶𝗻𝗴𝘀 𝗶𝗻𝘁𝗼 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆: Connect nature-related assessments with risk management, procurement, financial planning and operational decisions.
𝗥𝗲𝘃𝗶𝗲𝘄𝗶𝗻𝗴 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗿𝗲𝗮𝗱𝗶𝗻𝗲𝘀𝘀: Evaluate existing disclosures under applicable sustainability frameworks and identify gaps.
These actions can help organisations build a clearer understanding of their environmental dependencies while improving their preparedness for future reporting developments.
The proposed Practice Statement would be non-mandatory by design. Companies would not be required to apply it simply to claim compliance with ISSB Standards, although jurisdictions could choose to make its application mandatory. However, this does not mean nature-related risks can be excluded from existing sustainability reporting. IFRS S1 already requires companies applying the standard to disclose material information about sustainability-related risks and opportunities, including nature-related matters, that could reasonably be expected to affect their prospects. The proposed Practice Statement would provide more specific guidance on applying these existing requirements without changing IFRS S1 or IFRS S2. The consultation will help the ISSB assess stakeholder feedback on the proposed approach, including whether nature-related disclosures should eventually take another form, such as a standalone mandatory standard.
The consultation on the exposure draft will remain open until 19 February 2027. Companies, investors and other stakeholders can review the proposals and submit feedback before the ISSB considers the responses and determines the way forward. For businesses, this period provides an opportunity to evaluate current reporting practices, identify information gaps and understand how nature-related dependencies and risks feature in their strategies.
As sustainability disclosure expectations evolve, organisations need reliable data, effective reporting processes and a clear understanding of material risks. Connecting sustainability information with business strategy and decision-making is essential to building a more informed approach to long-term resilience. Cognitud supports organisations in navigating the evolving sustainability landscape by connecting ESG considerations with business priorities and decision-making. As nature-related disclosures receive greater attention, businesses have an opportunity to strengthen their understanding of environmental dependencies and prepare for changing reporting expectations. The ISSB's proposal reinforces an important message: understanding nature-related risks is not only an environmental consideration but also an essential part of assessing business resilience and long-term prospects.
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