ISSB aligns nature disclosure with TNFD

The International Sustainability Standards Board is preparing nature-related disclosure guidance that would allow companies to use metrics from the Taskforce on Nature-related Financial Disclosures framework, giving preparers a clearer path through a fragmented reporting landscape.

The ISSB has proposed allowing companies to draw on TNFD disclosure metrics where they support the objective of IFRS S1 and do not conflict with ISSB Standards or the planned Practice Statement.

The update comes as the ISSB develops an IFRS Practice Statement on nature-related risks and opportunities, with an exposure draft expected later this year. The board decided in April to proceed through a Practice Statement rather than a mandatory standalone standard at this stage.

That approach is intended to avoid disruption while companies and jurisdictions continue implementing the ISSB’s existing sustainability and climate standards, IFRS S1 and IFRS S2. IFRS Practice Statements still go through standard-setting due process, including consultation, and can become mandatory where jurisdictions choose to require them.

The ISSB’s June staff paper recommended that the Practice Statement permit companies to refer to and consider the applicability of TNFD disclosure metrics where those metrics help meet the objectives of IFRS S1 and do not conflict with ISSB requirements.

The board has also proposed that companies claiming compliance with the Practice Statement should comply with all of its requirements, reducing the risk of selective adoption and fragmented reporting.

Sue Lloyd, vice-chair of the ISSB, said: “The ISSB sees a real opportunity to address fragmentation in the disclosure landscape through the proposed Practice Statement by drawing on the TNFD framework and building on IFRS S1 and IFRS S2.

“Proposing a Practice Statement enables us to do this without disrupting implementation and adoption of ISSB Standards around the world. However, by developing these proposals in the form of a Practice Statement, we are leaving the door open for a Standard in the future.”

Nature-related reporting has been gaining ground as investors and regulators look beyond climate emissions. Biodiversity loss, water stress, land use, deforestation, ocean health, and ecosystem dependency are now becoming part of the same financial risk conversation that climate disclosure has dominated for several years.

The development follows a wider expansion of environmental reporting requirements and questionnaires. CDP’s addition of an ocean disclosure category has already brought ocean-related dependencies, impacts, supply chain engagement, targets, and board oversight into the 2026 disclosure cycle. ISSB alignment with TNFD metrics would add another layer of structure to that broader nature agenda.

The practical challenge remains data. Many companies still struggle to produce reliable Scope 3 emissions information. Nature-related disclosure requires a broader mapping exercise, including assets, sites, supply chains, commodities, water basins, habitats, land use, and exposure to physical and transition risks.

The ISSB staff paper notes that the board has tentatively decided to require disclosure of the amount and percentage of assets or business activities vulnerable to identified nature-related risks and aligned with identified nature-related opportunities. That type of disclosure would require sustainability teams to work more closely with finance, procurement, operations, real estate, and risk functions.

The TNFD framework gives companies an established reference point. Its recommendations are structured around governance, strategy, risk and impact management, and metrics and targets, echoing the architecture used in climate-related disclosure. That familiarity may help companies build nature reporting without starting from a blank page.

Alignment also improves investor comparability. Fragmented ESG reporting increases cost for preparers and makes it harder for users to compare performance. If ISSB and TNFD expectations are brought closer together, companies may be able to use one set of internal processes to satisfy multiple investor, lender, customer, and regulatory demands.

The Practice Statement route still leaves some uncertainty. A non-mandatory document may help companies prepare without immediate regulatory pressure, but adoption will depend on jurisdictions, investor expectations, and market practice. Companies operating across multiple markets may still face overlapping requirements, particularly where European Sustainability Reporting Standards, Global Reporting Initiative standards, CDP questionnaires, and customer-specific disclosure requests apply.

Nature risk is also more location-specific than climate emissions. A tonne of carbon dioxide can be measured globally, but water stress, biodiversity dependency, and ecosystem impact depend on geography and context. Comparable reporting is therefore harder, and companies will need better site-level and supply chain information.

The ISSB’s direction gives companies an early signal of where sustainability reporting is heading. Organisations with land, water, agriculture, commodities, infrastructure, property, mining, energy, food, fashion, tourism, and manufacturing exposure will need to understand where nature dependencies can affect cost, continuity, regulation, insurance, and finance.

The proposed alignment does not yet create a final rulebook, but it reduces the risk of nature reporting developing through disconnected frameworks. As climate disclosure becomes more established, biodiversity, water, land, and ecosystem risk are being drawn into the same governance and financial reporting architecture.