The International Sustainability Standards Board (ISSB) has launched a public consultation on proposed guidance for reporting nature-related risks and opportunities, with comments invited until 19 February 2027.
Drawing on the work of the Taskforce on Nature-related Financial Disclosures (TNFD), the proposals seek to improve the relevance, consistency and comparability of information provided to investors about how businesses depend on, affect and are exposed to nature.
The ISSB proposes issuing the guidance as a Practice Statement rather than a mandatory IFRS Sustainability Disclosure Standard, while seeking feedback on whether another form of publication would be more appropriate.
Key Developments and Reporting Implications
1. Greater Focus on Nature-Related Financial Risks and Opportunities
The proposed guidance is intended to support companies in identifying and communicating nature-related matters that may influence their financial prospects.
Relevant exposures may include:
- Dependence on natural resources, including water, land and biological resources.
- Environmental degradation affecting business operations and supply chains.
- Biodiversity loss and ecosystem changes that may disrupt production or increase operating costs.
- Regulatory, market and reputational developments arising from nature-related impacts.
- Business opportunities associated with improved resource efficiency and sustainable practices.
For financial reporting purposes, companies should consider how material nature-related risks could affect asset values, impairment assessments, provisions, capital expenditure and future cash flows.
2. Alignment with Existing Sustainability Reporting Frameworks
The proposals draw on the TNFD’s work and are intended to complement the ISSB’s existing sustainability disclosure framework.
This approach may help companies incorporate nature-related considerations into their broader sustainability reporting processes rather than establishing entirely separate reporting systems.
Companies applying IFRS S1 and IFRS S2 should consider how nature-related matters interact with their existing assessments of sustainability-related and climate-related risks and opportunities.
3. Proposed Practice Statement Rather Than Mandatory Standard
The ISSB proposes publishing the guidance as a Practice Statement, rather than introducing a new mandatory disclosure standard at this stage.
This distinction is important because a Practice Statement would provide guidance on applying sustainability reporting principles without itself imposing the same requirements as a mandatory standard.
However, the ISSB is seeking stakeholder views on the most appropriate form of publication, including whether the guidance should instead be issued as a standard.
Companies should therefore monitor the consultation outcome before determining whether additional reporting obligations may arise.
4. Implications for Financial Reporting and Assurance
Nature-related risks may have financial consequences even where specific nature-related disclosures are not independently mandated.
Accounting and finance teams may need to consider whether identified risks affect:
- Impairment testing and the recoverable amounts of assets.
- Useful lives and residual values of property, plant and equipment.
- Provisions and contingent liabilities arising from environmental obligations.
- Inventory valuation and supply chain-related exposures.
- Significant assumptions used in forecasts and going concern assessments.
For auditors and sustainability assurance practitioners, the proposals may also increase attention on the reliability of underlying environmental data, management’s risk assessments and consistency between sustainability disclosures and financial statements.
Practical Considerations
- Nature-related risk assessment: Identify business activities, assets and supply chains exposed to nature-related risks and dependencies.
- Data availability: Assess whether existing systems capture relevant information on resource consumption, biodiversity exposure and environmental impacts.
- Materiality assessment: Determine which nature-related risks and opportunities could reasonably affect the company’s prospects.
- Governance and oversight: Clarify the responsibilities of directors, management and sustainability reporting teams.
- Reporting integration: Consider how nature-related disclosures can be incorporated into existing IFRS S1 and IFRS S2 reporting processes.
- Financial reporting consistency: Evaluate whether nature-related assumptions are consistent with impairment models, forecasts and other accounting estimates.
- Assurance readiness: Establish appropriate documentation, methodologies and internal controls over information that may eventually be subject to independent assurance.
Recommended Action
Companies, particularly those operating in sectors dependent on natural resources or exposed to environmental risks, should assess the potential implications of the ISSB’s proposals for their sustainability reporting frameworks.
Accounting and sustainability teams should review existing risk assessments, identify significant information gaps and consider whether current governance and data collection arrangements are sufficient to support future nature-related disclosures.
Businesses and professional organisations may also wish to participate in the consultation before the 19 February 2027 deadline.
Technical Note
The IFRS Foundation’s announcement dated 22 October 2026 confirms the consultation deadline and proposed Practice Statement approach.
The proposed Practice Statement is non-mandatory, but this does not mean that nature-related disclosures are entirely voluntary. Companies applying IFRS S1 must already disclose material nature-related risks and opportunities that could reasonably be expected to affect their prospects.
The proposed Practice Statement is intended to provide more specific guidance on fulfilling those existing obligations. It does not automatically introduce a separate mandatory reporting requirement.
This article provides general technical information and does not constitute specific accounting, sustainability reporting or assurance advice. The proposals remain subject to consultation and should not be interpreted as final or mandatory reporting requirements.
Source: IFRS Foundation, 22 October 2026.