Last week I blogged on the growing adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) framework. With nature disclosures becoming more popular and necessary, the ISSB is also looking to tackle nature-related disclosures. Some readers may remember the controversy surrounding the ISSB’s approach. For several years, the ISSB has weighed including nature-related standards in its framework. However, last summer they ultimately decided to adopt a voluntary practice statement, instead of mandatory integration. Now, the agency has issued a draft nature practice statement for public consultation. The ISSB explains the difference in a practice statement and a standard in the release:
“The ISSB has drawn extensively from the work of the Taskforce on Nature-related Financial Disclosures (TNFD) in developing its proposals. The ISSB’s proposals come in the form of a Practice Statement—a stand-alone, prominent part of IFRS Foundation materials, subject to the IFRS Foundation’s full due process. From a content and drafting perspective, there is no difference between a Practice Statement and a Standard. The key difference is that a company is not required to comply with a Practice Statement to state compliance with ISSB Standards, so this approach supports high-quality nature-related disclosures but prevents disruption in companies and jurisdictions’ efforts to implement the ISSB Standards.”
The consultation will run through February 19, 2027, and stakeholders can respond to the drafts through ISSB’s survey or through comment letters. While many were disappointed to see nature-related standards adopted on a strictly voluntary basis, ISSB adoption is ongoing globally. With several major economies still weighing or implementing ISSB standards, adding new requirements may cause significant disruptions. However, some jurisdictions have been using ISSB standards for several years now. The voluntary nature of the practice statement allows these jurisdictions to advance their reporting if they desire. We’ll see how widely used the practice statement becomes. The adoption rate will likely determine if its contents ever become a mandatory standalone standard.
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