The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced that it has decided to proceed with the development of proposed requirements for companies to provide nature-related disclosures in the form of an IFRS Practice Statement, instead of a mandatory standalone standard.

In an effort to address concerns about its decision, the ISSB stressed that applying the Practice Statement would have the full effect of an ISSB Standard for companies applying it, while the approach would minimize disruption to ongoing efforts to implement its recently issues sustainability and climate reporting standards.

The ISSB also left the door open to the issuance of nature-related content in a standard in the future, and said that it will include a specific question in its upcoming consultation on whether stakeholders agree that Practice Statement is the right form of standard-setting for nature-related disclosures.

The ISSB was launched in November 2021, with the goal to develop IFRS Sustainability Disclosure Standards to provide investors with information about companies’ sustainability risks and opportunities. The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023.

Late last year, the ISSB announced that it will begin work on standard setting for disclosure requirements on nature-related risks and opportunities, with plans to have an initial draft released by late 2026. Shortly after the ISSB announcement, the Taskforce on Nature-related Financial Disclosures (TNFD) announced that it would end its own technical work program, including its work to develop technical guidance for nature-based reporting, in light of the ISSB initiative. At the time, the ISSB said that it had not yet decided on its approach to nature-related standard-setting, with options available including a new standard, a mix of application guidance or amendments to existing ISSB Standards, industry-based guidance or additional sources of guidance.

An IFRS Practice Statement is a standalone document designed for application with IFRS standards. While not constituting a separate standard, it is a form of standard setting, sharing similarities including being subject to full due process, including public consultation.

Notably, while non-mandatory by design in terms of asserting compliance with IFRS standards, it can become mandatory by jurisdictions that choose to apply it.

Earlier this week, after news had emerged that ISSB staff had recommended the IFRS Practice Statement approach over a standalone standard, several prominent sustainability-focused groups published an open letter expressing concern over the proposed approach, and urging the ISSB “to align with the latest science, private sector momentum and global policy commitments by choosing to introduce a standard on nature.”

In its statement announcing its decision, the ISSB said that its chosen form of standards setting will minimize disruption for companies currently implementing its existing standards. The ISSB also noted that the current standards already require companies to provide material information about all sustainability-related risks and opportunities, with the proposed IFRS Practice Statement aimed at providing them with the ability to do so for information about nature-related risks and opportunities.

ISSB Chair Emmanuel Faber said:

“Providing material nature-related disclosures is not optional; IFRS S1 already requires that. A Practice Statement will guide companies on how to provide such disclosures.”

The ISSB said that it aims to publish an exposure draft for its proposed nature-related IFRS Practice Statement for public comment in October 2026.