The International Sustainability Standards Board (ISSB) voted last week in favour of a staff proposal for a comprehensive standard-setting project to tackle nature-related risks and opportunities.
ISSB member Richard Barker said the proposal represents “a milestone” because it “really sets out the scope of the work and gives us a pretty good steer to the work plan on a relatively tight timeline to complete this project.”
In a unanimous decision during the 28 January meeting, the board also greenlit a plan to anchor these new disclosures within the existing framework of IFRS S1 and S2.
IFRS S1, S2, materiality filter
This ensures that while the technical scope covers the entirety of the nature-related issues, the actual disclosures remain strictly limited to entity-specific information that is material to a company’s financial prospects.
Although the project scope appears to be broad, ISSB member Veronika Pountcheva noted that this “broad scope should not be read as broad disclosure”.
She explained that the existing materiality requirements of IFRS S1 will prevent reporting under any future nature-reporting rulebook from becoming an exhaustive checklist.
Building on existing literature
The project seeks to build on the board’s research into biodiversity, ecosystems, and ecosystem services (BEES) in a bid to meet growing investor demand for high-quality information on how nature-related impacts translate into material financial risks and opportunities.
Under current thinking, the board hopes to publish an exposure draft for public comment by the COP17 biodiversity conference in October 2026.
Discussions during last week’s meeting confirmed initial signals that the ISSB will draw directly on the recommendations and metrics of the Taskforce on Nature-related Financial Disclosures (TNFD).
By leveraging pre-existing frameworks, the board aims to reduce reporting fragmentation and provide investors with decision-useful data on how nature loss affects a company’s long-term resilience and value.
Challenges ahead
One issue that could potentially weigh on the board’s work in the coming months is the location-specific nature of nature-related risks.
Board members noted that a company’s financial prospects are generally tied to the health of the specific ecosystems in which they operate.
Consequently, the new standard will likely require data that is ‘site-based’ rather than ‘company-wide’ to give investors an insight into local dependencies such as water scarcity or land-rights disputes that could threaten a firm’s operations.
Sue Lloyd noted that while location is a key driver for reporting on nature-related risks, the issue could eventually prompt the board to generally reinforce how it tackles other risks, such as climate and human capital.
