Many have expected nature-related disclosures to be the next “big thing” in ESG. However, those hopes were deflated when the ISSB recently declined to make such disclosures into a standalone framework. Instead, the ISSB opted to develop a voluntary practice statement. This approach allows companies and jurisdictions to opt into nature reporting, but does not require it for entities to be considered ISSB-aligned. Now more details are emerging on what this practice statement is and how it will function. The ISSB appears to be leveraging the work done by the Taskforce on Nature-related Financial Disclosures (TNFD). A recent article in EST Today describes how the ISSB will utilize the TNFD:
“In its new update, the ISSB outlined a series of proposals agreed to by the board in its June meeting, including, allowing companies to use TNFD disclosure metrics to help meet nature-related disclosure requirements, provided they support the objective of IFRS S1 and don’t conflict with ISSB Standards or the Practice Statement.
The ISSB also said that it has proposed a requirement for companies that wish to assert compliance with the Practice Statement to comply with all of the statement’s requirements, in order to reduce diversity and fragmentation of reporting. In addition, companies applying the Practice Statement would also need to apply IFRS S1 and IFRS S2.”
This is similar to the path that led to IFRS S1 and IFRS S2. The ISSB’s work in developing those standards built on work from the Taskforce on Climate-related Financial Disclosures (TCFD).
Our members can learn more about ESG disclosure frameworks here.
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