For several years, it’s appeared that nature reporting is the next natural progression of sustainability. The Taskforce on Nature-related Financial Disclosures (TNFD) followed in the TCFD’s footsteps, forming a foundation for other standard setters and regulators to build on. Earlier this year, the topic was picked up by the ISSB, known for its popular IFRS 1 and IFRS 2 sustainability disclosure standards. Many believed the ISSB would promulgate standalone nature disclosure standards or integrate nature disclosures into existing IFRS standards. To the surprise of many, a recent ISSB staff recommendation letter indicates their preference to adopt only a voluntary practice statement:
“The staff recommends the ISSB propose requirements and guidance for nature-related disclosures in the form of an IFRS Practice Statement:
- (a) to provide prominence and visibility to ISSB’s nature-related requirements and guidance and to signal clearly the importance of nature-related financial information;
- (b) to minimise disruption to the implementation and adoption of IFRS S1 and IFRS S2, leaving IFRS S1 and IFRS S2 unchanged at this stage; and
- (c) to allow the ISSB to assess developments in nature-related disclosures and consider the architecture of ISSB Standards in due course, focusing on supporting the implementation of IFRS S1 rather than developing a new stand-alone ISSB Standard at this stage.”
The staff’s recommendation isn’t a final decision, and the approach is subject to public consultation. The voluntary nature of the practice statement would mean that jurisdictions could choose whether or not to include it in mandatory reporting. Those who choose not to incorporate it would still be considered fully aligned with the ISSB’s reporting standards. The voluntary practice statement may be a stepping stone for nature-related disclosures, or it could be the end of the movement’s momentum.
Our members can learn more about nature-related disclosures here.
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