The International Sustainability Standards Board (ISSB) is set to propose nature-related disclosure requirements in the form of a ‘practice statement’ rather than a standalone reporting standard.
In an update yesterday, the ISSB said that its existing standards already require companies to report on certain nature-related risks and opportunities and that a practice statement would explain to companies how they should provide this information.
“This form of standard-setting therefore minimises disruption, which is particularly important because companies and jurisdictions are in the process of implementing and adopting the ISSB Standards,” the Board said.
The decision comes fewer than six months after the ISSB signalled it would move into a standard-setting process on nature drawing on the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), which said it would be wrapping up its technical work and pivoting to supporting the ISSB’s work.
At the time, it flagged that its eventual proposals may or may not involve a new standard.
Claire Jones, head of responsible investment at UK investment consultancy LCP, described the practice statement as “lower-status”.
From the perspective of UK pension schemes, she said the ISSB’s decision meant the government was unlikely to introduce formal nature-related reporting requirements any time soon.
“Trustees should focus on understanding and managing their nature-related exposures – which is part of their core duty to manage financially material risks – rather than public reporting,” she said.
The UK’s Department for Work and Pensions is expected to publish its findings of a review of existing climate reporting requirements later this year.
The ISSB said it aimed to publish a draft of its practice statement for public comment in October, at which point stakeholders would be able to provide feedback on whether an IFRS practice statement was the right form of standard-setting for nature-related disclosures.
It said the practice statement approach provided the ISSB with a pathway to a standards-based outcome in the future.
